Tag Archive for: Investing

A post-it with the words "non profit" on it stuck to a calendar A wooden house, cash & a calculator on next to the post-it.
The Acumen Team

How Can Your Nonprofit Keep Pace with Rising Costs?

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Charitable organizations are seeing their donations decrease in value due to inflation. In order to keep pace with rising costs, it is important for nonprofit organizations to diversify their assets. This will help protect them from the negative effects of inflation and ensure that they can continue to serve their communities effectively.

In this blog, we will explore how inflation has impacted nonprofits and ways to combat that.

Inflation Is a Problem
Inflation has become a problem for nonprofits because now:

  • They have to spend more money to maintain the same level of services
  • Their funding doesn’t keep pace with inflation
  • It’s harder to attract and retain donors
  • Their overhead costs go up while their funding remains stagnant

Therefore,

  • It can lead to cuts in programs or services
  • It can force nonprofits to make difficult choices about how to allocate their resources
  • It can put pressure on staff and volunteers
  • It can make it difficult to plan for the future

​​Inflation-Proof Your Portfolio
When choosing investments, nonprofit organizations should consider both stocks and bonds. They should also look into assets like life insurance, which can help protect against inflation. By diversifying their portfolios, nonprofit organizations can keep pace with rising costs.

How Insurance Can Help Inflation-Proof Your Portfolio
While stocks and bonds are important investments for nonprofit organizations, insurance can also play a role in protecting against inflation. Insurance is a safe and liquid option that can help to inflation-proof your portfolio.

When choosing an insurance policy, nonprofit organizations should consider both the death benefit and the cash value of the policy. The death benefit will provide protection in the event of the death of a key member of the organization, while the cash value grows at a competitive rate and can be used to cover expenses in times of need.

Nonprofit organizations should consider purchasing an insurance policy with a high death benefit and a cash value that grows over time with a positive correlation to rising interest rates.

Don’t Forget About Other Investments
While stocks and bonds are important investments for nonprofit organizations, it is also important to diversify your portfolio with other assets. These assets could include real estate, art, or even cryptocurrency.

Other Simple Steps to Offset Inflation
1. Understand what inflation is and how it can impact your nonprofit.

2. Look for ways to increase revenue without raising prices.

3. Consider alternative sources of funding.

4. Invest in assets that will appreciate over time.

5. Review your budget regularly and make adjustments as needed.

6. Be prepared to make changes in your operations if necessary.

7. Educate your staff and volunteers about inflation and how it can affect your nonprofit.

8. Keep a close eye on your expenses and look for ways to cut costs.

9. Advocate for policies that help nonprofits offset the impact of inflation.

10. Remain adaptable in the face of change.

Final Thoughts
Nonprofit organizations face many challenges, but by diversifying their portfolios they can keep pace with rising costs and continue to serve their communities effectively. By considering both stocks, bonds, and assets like insurance, nonprofit organizations can protect themselves from inflation and ensure the longevity of their charity.

Have any questions? Contact us to learn more about how you can help protect your nonprofit from rising costs.

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The Acumen Team

Using Life Insurance as an Investment Tool

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Life insurance is more than what meets the eye. Forbes writes that life insurance is primarily purchased for risk management. How so? Life insurance helps families manage the risk of financial survival after the loss of a breadwinner. 

The death benefit from a life insurance policy can be used by the beneficiaries in many different ways, including to help:

  • Fund day-to-day living expenses, such as food, gas, and medicines
  • Pay off debts, like mortgages, credit cards, and car loans
  • Provide income to surviving relatives for health care or education needs, or
  • Pay federal and state estate taxes

While life insurance is great at managing the economic risk of death and can provide a rate of return on premiums paid over the years in exchange for a  death benefit, it also can be an effective investment tool for the policy owner while the insured is still alive.

Let’s discuss this further.

Life Insurance as an Investment Tool

As you look to diversify your investment portfolio, life insurance can be a dependable, lower-risk option to funnel money into because of its growth potential and tax benefits. 

There are two types of life insurance categories: term life insurance and permanent life insurance. Here, we are focusing only on permanent life insurance because it includes a cash value account in addition to a death benefit. The cash value component is used by the policy owner to protect, grow, and access wealth on a tax-favored basis while the insured is still alive. 

Let’s discuss how permanent life insurance can act as an investment tool.

Permanent Life Insurance

Permanent life insurance is designed to last your lifetime and is composed of three components:

  • Premiums
  • Cash value, and
  • A death benefit

The cash value is a tax-advantaged savings account. It serves as a living benefit that the policy owner can access for any reason before the insured has died.

When you make a premium payment, what happens? A portion goes to pay for the cost to insure a life for the death benefit amount, as well as for policy fees, state premium taxes, and commissions.

The remainder of their premium goes into your cash value account, which can grow and be accessed without paying tax, for you to use for any purpose at a later time.

There are a few different types of permanent life insurance contracts to note—and the main differences between the types of permanent policies have to do with what mechanism grows that cash value account.

Types of Permanent Life Insurance

  • Whole Life Insurance
  • Universal Life Insurance
  • Index Life Insurance
  • Variable Universal Life Insurance

Visit our article “Permanent Life Insurance: What Options Are Available to You?” for more details on each permanent policy.

Life Insurance as an Investment: Cash Value Life Insurance

All four aforementioned permanent life insurance policies include a cash value component which, when structured properly, can serve as a tax-favored investment vehicle that the policyholder can use while the insured is still alive. 

With all life insurance policies, a permanent policy still includes a large tax-free death benefit paid to the beneficiaries when the insured passes away. 

But the cash value component can have tremendous value as well. It’s available to the policyholder while the insured is alive, and grows tax-deferred.

The cash value can be used to offset future premiums and/or accessed tax-free, for any reason, using either policy loans or a withdrawal of principal. This component adds flexibility and provides a tax-favored source of income for retirement, travel, healthcare needs, or emergencies.

A Final Word

Life insurance, when structured properly, can be a low-risk option to stabilize and grow an investment portfolio on a tax-advantaged basis. In order to ensure your life insurance policy is acting as an investment tool, however, you need proper guidance and insight into selecting the right policy.

This is where our team at Acumen Insurance Solutions comes in.

Contact us today to learn more, then read on to find out what permanent life insurance options are available to you.