When your nonprofit organization invests, it’s not just about growing capital — it’s about upholding your mission. Every investment decision should align with your organization’s objectives, time horizon and, most importantly, risk tolerance.
But what is risk tolerance, and why should it matter to a nonprofit?
Defining Risk Tolerance for Nonprofit Organizations
This component represents the ratio of risk to reward in investment returns your organization is willing to withstand. Failing to assess your tolerance accurately can result in poor investment outcomes, lost donor confidence, and even jeopardize your reputation.
It’s influenced by several factors, including:
• Time Horizon: How long before the funds will be used? For example, a reserve fund with a 10-year horizon might allow for greater volatility than funds needed for next year’s programs.
• Financial Stability: How reliable are your revenue streams? This may include grants, membership fees, and donations. Organizations with inconsistent funding may need more conservative portfolios.
• Mission Criticality: Can investment losses delay or impact your mission? If so, a lower-risk strategy may be necessary.
• Governance Structure: Who’s making investment decisions? Is it a board, a finance committee, or a hired professional?
The OCIO Approach to Risk Management
AAFMAA Wealth Management & Trust LLC (AWM&T) serves as a true fiduciary partner to nonprofits like yours. As your Outsourced Chief Investment Officer (OCIO), we don’t just build portfolios — we design long-term strategies anchored in your organization’s values and vision.
Our approach includes:
• Comprehensive Risk Assessment: We start with a deep-dive conversation to understand your operations, obligations, and priorities.
• Customized Investment Strategy: Portfolios are tailored to align with your risk capacity and your mission.
• Ongoing Monitoring: Risk profiles aren’t static. We continuously assess market shifts and organizational changes to recalibrate when necessary.
Avoiding Investment Mistakes as a Nonprofit
Many nonprofits fall into one of two traps:
• Overexposure to Risk: To chase returns, some organizations take on more risk than they can absorb — jeopardizing liquidity and solvency.
•Overly Cautious: Conversely, being too cautious can erode purchasing power and restrict growth.
A thoughtful, well-documented risk tolerance assessment prevents these pitfalls.
Build Confidence in Your Organization’s Investments
Understanding and articulating your risk tolerance can empower your board and staff to make informed decisions rooted in strategy, not emotion or guesswork. By partnering with AWM&T, you gain a trusted team of professionals to help you navigate risk, maximize opportunity, and protect your mission.
The Veterans you serve are counting on you. A solid financial foundation is necessary for your nonprofit organization’s success. You focus on your mission, we’ll handle your finances. To get started, click here or call 1-910-307-3500 today.
About Us
Founded in 2012, AWM&T was built specifically to meet the unique financial needs of military families. We provide experienced, trustworthy, long-range financial planning, investment management, and trust administration services to support financial independence and security. We aim to be the premier provider of fiduciary services by always working for AAFMAA Members’ best interests.
We are proud to share the mission, vision, and values of AAFMAA, our parent company, consistently building on the Association’s rich history and tradition to provide Members with a source of compassion, trust, and protection. Through AAFMAA’s long-standing legacy and our financial expertise, AWM&T is honored to provide personalized wealth management services to military families across generations.
© 2025 AAFMAA Wealth Management & Trust LLC. Information provided by AAFMAA Wealth Management & Trust LLC is not intended to be tax or legal advice. Nothing contained in this communication should be interpreted as such. We encourage you to seek guidance from your tax or legal advisor. Past performance does not guarantee future results. Investments are not FDIC or SIPC insured, are not deposits, nor are they insured by, issued by, or guaranteed by obligations of any government agency or any bank, and they involve risk including possible loss of principal. No information provided herein is intended as personal investment advice or financial recommendation and should not be interpreted as such. The information provided reflects the general views of AAFMAA Wealth Management and Trust LLC but may not reflect client recommendations, investment strategies, or performance. Current and future financial environments may not reflect those illustrated here. Views of AAFMAA Wealth Management & Trust LLC may change based on new information or considerations.
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