Free working template
Investment Policy Statement Template
Draft the decisions your board has actually made, keep unresolved choices in brackets, and preserve the evidence behind adoption. The sample language is adaptable—not a recommendation to adopt any particular objective, allocation, or delegation.
Published by BoardReady IPS · Educational resource
Word is best for drafting. The PDF is a fixed-layout working copy for review and printing.
Your builder context
This context was carried from the outline builder in this browser. Use it as working-session notes; it has not filled or approved the policy.
Questions to resolve
How should a board use this template?
Gather the organization’s governing documents, gift instruments, committee charter, spending policy, current portfolio report, cash-flow forecast, provider agreements, and recent minutes. Replace every bracketed field only after the authorized body has reached and documented a decision. Leave unknowns marked [OPEN], assign an owner, and do not borrow percentages or powers from another institution merely to make the document look complete.
Working draft · replace bracketed text · educational sample
1. Policy identity, purpose, and scope
Organization: [FULL LEGAL NAME]
Policy title: Investment Policy Statement for [NAME OF POOL OR ASSETS]
Effective date: [DATE] Version: [VERSION]
This Investment Policy Statement (“IPS”) governs [IDENTIFY THE ASSETS, ACCOUNTS, OR POOLS]. Its purpose is to support [MISSION OR FINANCIAL PURPOSE] by recording the objectives, decision rights, implementation boundaries, and oversight process approved by [AUTHORIZED GOVERNING BODY].
This IPS does not govern [OPERATING CASH, SEPARATELY GOVERNED PLANS, OR OTHER EXCLUDED ASSETS]. The organization will administer the assets consistently with its governing documents, applicable gift instruments, controlling law, and other policies identified in Appendix [X]. If a conflict is identified, [ROLE] will pause the affected action and refer it to [AUTHORIZED BODY / COUNSEL] for resolution.
Board evidence to retain: legal entity name, account schedule, fund register, governing documents, gift agreements, board resolutions that created designations, and a list of policies incorporated by reference.
2. Governance, authority, and accountability
An IPS works only when readers can distinguish approval, recommendation, execution, monitoring, custody, and reporting. Complete the table before drafting broad statements such as “the committee oversees investments.”
| Decision or duty | Retained by | Delegated to | Evidence / reporting |
|---|---|---|---|
| Approve and amend the IPS | [BOARD / OTHER BODY] | [NONE OR LIMITED ROLE] | [MINUTES, RESOLUTION, VERSION] |
| Approve strategic allocation and ranges | [BODY] | [SCOPE, IF ANY] | [ANALYSIS AND MINUTES] |
| Select, monitor, and terminate providers | [BODY] | [ROLE AND LIMITS] | [DUE DILIGENCE / REPORT] |
| Rebalance within approved ranges | [BODY] | [ROLE AND DISCRETION] | [TRADE / QUARTERLY REPORT] |
| Approve exceptions | [BODY] | [EMERGENCY LIMIT, IF ANY] | [EXCEPTION LOG] |
| Maintain records and distribute reports | [BODY] | [STAFF / PROVIDER] | [LOCATION AND CADENCE] |
The [AUTHORIZED GOVERNING BODY] approves this IPS and retains [LIST RETAINED DECISIONS]. The [COMMITTEE OR STAFF ROLE] may [LIST DELEGATED DECISIONS] within the boundaries of this IPS and [CHARTER, RESOLUTION, OR AGREEMENT]. [RESPONSIBLE PARTY] will provide [SPECIFIED REPORTS] every [INTERVAL]. Decisions outside delegated authority return to [APPROVING BODY].
Every fiduciary and service provider will disclose actual or potential conflicts through [PROCESS]. The organization will document recusal, approval, mitigation, or other action in [MINUTES / CONFLICT LOG].
3. Investment purpose, objectives, time horizon, and risk
Start with the financial job of the pool. A return objective should be traceable to expected spending or withdrawals, inflation or purchasing-power goals, fees, gifts, liabilities, and the horizon over which the board will evaluate results. “Preserve capital” and “maximize return” are not usable together without priorities and measurement.
The assets exist to [DESCRIBE MISSION OR FINANCIAL JOB]. The organization’s time horizon is [HORIZON AND REASON]. The portfolio objective is [BOARD-APPROVED OBJECTIVE AND MEASUREMENT PERIOD], reflecting [SPENDING / WITHDRAWALS], [INFLATION OR OTHER REFERENCE], [FEES], and [EXPECTED CONTRIBUTIONS]. This is an objective, not a guarantee.
The organization has the financial capacity to accept [DESCRIBE LOSS, VOLATILITY, ILLIQUIDITY, OR OTHER RISKS] because [EVIDENCE]. It is not willing to accept [UNACCEPTABLE OUTCOMES]. The board will monitor market loss, liquidity, concentration, leverage, counterparty, operational, governance, cost, and mission risks through [REPORTS OR TESTS].
Decisions to document
- What outcome would force the organization to reduce programs, breach a restriction, or sell at an unfavorable time?
- Which risks are measurable quarterly, and which require a qualitative governance review?
- What period matches the strategy, and what shorter-term signals still require attention?
- Who can change an objective, and what evidence must support the change?
4. Spending, cash flows, and liquidity
If a separate spending policy controls distributions, identify it precisely rather than restating it inconsistently. For operating reserves, document the timing and authority for draws and replenishment. For endowments, address fund-level restrictions and the calculation process. For private foundations, have tax advisers confirm distribution calculations separately; an IPS spending rate is not the same thing as a federal tax calculation.
Portfolio withdrawals are governed by [SPENDING / RESERVE / DISTRIBUTION POLICY, VERSION AND DATE]. The expected annual amount or method is [METHOD OR OPEN DECISION]. [ROLE] calculates the amount using data as of [VALUATION DATE] and [ROLE] approves it through [PROCESS]. Exceptions require [AUTHORITY, DOCUMENTATION, AND FOLLOW-UP].
The portfolio will maintain sufficient liquidity to meet [EXPECTED CASH NEEDS], [STRESSED CASH NEEDS], expenses, and [CAPITAL CALLS OR OTHER OBLIGATIONS]. At least [BOARD-APPROVED AMOUNT OR METHOD] will be available within [TIME PERIOD] under [DEFINED CONDITIONS]. [ROLE] will provide a rolling [PERIOD] cash-flow and commitment report every [CADENCE].
5. Strategic allocation, ranges, and rebalancing
Complete this table with approved categories that match the organization’s actual reporting. Targets should total 100%. Ranges should express meaningful decision boundaries, not cosmetic bands. Add a role and benchmark for each category; define composite calculation in the monitoring section.
| Asset class / strategy | Role | Target | Minimum | Maximum | Benchmark |
|---|---|---|---|---|---|
| [CATEGORY 1] | [GROWTH / LIQUIDITY / DIVERSIFIER] | [ ]% | [ ]% | [ ]% | [INDEX / METHOD] |
| [CATEGORY 2] | [ROLE] | [ ]% | [ ]% | [ ]% | [INDEX / METHOD] |
| [CATEGORY 3] | [ROLE] | [ ]% | [ ]% | [ ]% | [INDEX / METHOD] |
| [CATEGORY 4] | [ROLE] | [ ]% | [ ]% | [ ]% | [INDEX / METHOD] |
| Total | 100% |
[RESPONSIBLE PARTY] will review allocation at least [CADENCE] and when a range is breached. [DELEGATED ROLE] may rebalance within approved ranges using [CONTRIBUTIONS, WITHDRAWALS, TRADES, OR OTHER METHOD], subject to [LIMITS]. A breach caused by market movement does not by itself require an automatic trade; [ROLE] will evaluate liquidity, costs, taxes if relevant, restrictions, and unusual conditions, then act or seek approval within [TIME PERIOD]. Every breach and response will be reported to [BODY].
6. Diversification, permitted investments, and constraints
The portfolio will be diversified across and within strategies to manage [IDENTIFIED RISKS], subject to the approved ranges. Permitted investments are [LIST OR INCORPORATED SCHEDULE]. Prohibited investments, exposures, or practices are [LIST]. The following require prior approval from [BODY]: [ILLIQUID FUNDS, DERIVATIVES, LEVERAGE, CONCENTRATED POSITIONS, SECURITIES LENDING, OR OTHER ITEMS].
Illiquid commitments may not exceed [BOARD-APPROVED LIMIT OR METHOD]. Before a new commitment, [ROLE] will evaluate existing unfunded commitments, expected calls and distributions, spending, collateral, stressed cash needs, and exit limitations. Donor, legal, tax, mission, environmental, social, governance, concentration, custody, and operational constraints are recorded in [SCHEDULE].
Use specific, monitorable language. If a mission-alignment statement cannot be applied to selection, ownership, voting, monitoring, or reporting, the board has not yet converted the preference into a policy rule.
7. Service-provider selection and oversight
[BODY] may retain [ADVISER / CONSULTANT / OCIO / INVESTMENT MANAGERS / CUSTODIAN] under written agreements that define authority, standard of care, reporting, fees, conflicts, custody, termination, and any discretion. Selection will consider [CRITERIA] and be documented in [DUE-DILIGENCE RECORD].
[ROLE] will review each provider at least [CADENCE] for performance appropriate to its mandate, process, personnel, organization, risk, compliance, service, fees, conflicts, and fit with this IPS. Watch-list placement or termination will follow [PROCESS]. Past underperformance or outperformance alone will not substitute for the documented review.
8. Benchmarks, reporting, compliance, and fees
[RESPONSIBLE PARTY] will report portfolio performance [NET / GROSS] of [SPECIFIED FEES], compare results with [POLICY BENCHMARK AND CALCULATION METHOD], identify departures from policy, and document actions requiring approval. Reports will show the measurement period, source, valuation basis, cash flows, allocation, range compliance, liquidity, unfunded commitments, spending, fees, and material conflicts.
The policy benchmark will use the approved strategic target weights, rebalanced [FREQUENCY], with [NAMED COMPONENT INDEXES]. Any actual-weight benchmark used for attribution or diagnostics will be labeled separately. Manager benchmarks will match each mandate. The committee will examine results over [PERIODS] appropriate to the objectives while monitoring liquidity, risk, and compliance more frequently.
| Report / review | Prepared by | Recipient | Cadence | Evidence retained |
|---|---|---|---|---|
| Portfolio, performance, and allocation | [ROLE] | [BODY] | [MONTHLY / QUARTERLY] | [LOCATION] |
| Compliance and exception log | [ROLE] | [BODY] | [CADENCE] | [LOCATION] |
| Liquidity and commitments | [ROLE] | [BODY] | [CADENCE] | [LOCATION] |
| Fees and provider conflicts | [ROLE] | [BODY] | [CADENCE] | [LOCATION] |
9. Exceptions, breaches, and changes
A person identifying an actual or expected breach will notify [ROLE] within [TIME]. [ROLE] will record the provision, cause, date, financial and governance impact, interim safeguards, responsible owner, proposed remedy, approving authority, and target date in the exception log. Only [BODY] may approve an exception, except [NARROW EMERGENCY AUTHORITY, IF ANY]. Approval of one exception does not amend this IPS.
Material changes in mission, financial condition, spending, gifts, liabilities, law, governance, providers, liquidity, or portfolio structure will trigger an interim review. Amendments require [PROCESS] and a new version number and effective date.
10. Review, adoption, and version control
This IPS will be reviewed at least [ANNUALLY / OTHER APPROVED CADENCE] and after a trigger described above. A scheduled review does not require a change; the minutes will record whether the policy remains appropriate, which evidence was considered, and any assigned follow-up.
Approved by: [AUTHORIZED GOVERNING BODY]
Approval date: [DATE]
Effective date: [DATE]
Version: [VERSION]
Supersedes: [PRIOR VERSION / NONE]
Next scheduled review: [DATE]
Minutes or resolution reference: [REFERENCE]
Authorized signatures, if required: [NAMES / TITLES / DATES]
| Version | Date | Change | Approved by | Record |
|---|---|---|---|---|
| [1.0] | [DATE] | [INITIAL ADOPTION] | [BODY] | [MINUTES / RESOLUTION] |
| [ ] | [ ] | [ ] | [ ] | [ ] |
Fictional example: turning an open question into policy
Illustrative only—this is not a client case or recommendation. A fictional community arts nonprofit holds operating cash, a board-designated long-term reserve, and three donor-restricted endowment funds. Its first draft says the reserve has a “long horizon,” yet the financial plan shows a possible building payment within 18 months.
The finance committee marks liquidity Open, assigns the CFO to prepare a 24-month cash forecast, and asks counsel to confirm restrictions on each endowed fund. After reviewing that evidence, the board chooses to govern operating cash separately, establishes a documented liquid-dollar requirement for the reserve, and retains approval of any reserve draw. The IPS records those decisions and the evidence; it does not solve the issue by copying another nonprofit’s allocation.
Template questions
What sections belong in an investment policy statement?
At minimum, identify purpose and scope; governance and delegated authority; objectives, time horizon, and risk; spending and liquidity; allocation and constraints; rebalancing; provider duties; benchmarks, reporting, and fees; exceptions; and review, approval, and version control. The exact structure should follow the institution’s assets and governing framework.
Is this a legally complete policy?
No. It is an educational working draft. Governing documents, gift instruments, contracts, applicable law, tax status, operations, and professional advice can require different or additional language.
Who should approve an IPS?
The body with authority under the organization’s governing documents and applicable law should approve it—often the full board. A committee may draft or recommend it, but its authority should come from a charter, resolution, or governing document rather than assumption.
Should a template include a model asset allocation?
Not as a universal answer. Allocation depends on the pool’s job, spending and cash flows, risk capacity, constraints, resources, scale, and implementation. This template provides blank targets and ranges so the board can record its own approved decisions.