°µÍø51 Investment Requirements and Guidance
Ronald S. Flagg, President
May 12, 2023
Recent bank failures demand increased vigilance from °µÍø51's grantees to protect °µÍø51 (and non-°µÍø51) funds on deposit with banking institutions, particularly deposits exceeding the $250,000 Federal Deposit Insurance Corporation (FDIC) limit. °µÍø51 strongly advises grantees to implement proactive safeguards in response to the °µÍø51 Office of Inspector General's (OIG) recent "" article, which urged grantees to comply with °µÍø51's banking and investment guidelines. Further, °µÍø51 reminds grantees of its investment requirements outlined in Section 2.3.3 of the °µÍø51 Financial Guide.
°µÍø51 has long advised its grantees to protect °µÍø51 funds that exceed the FDIC's limit. Investment requirements are clearly stated in the °µÍø51 Financial Guide, and instruct grantees to:
- Maintain °µÍø51 funds held for operating expenses in federally insured bank accounts.
- Invest °µÍø51 funds exceeding the FDIC limit and not needed for immediate operating expenses with another financial institution in federally insured accounts or certificates or invest in U.S. Treasury notes or bills or investment instruments (e.g., money market accounts and repurchase agreements that invest in U.S. government securities).
The °µÍø51 Financial Guide acknowledges that the grantees' Board of Directors may adopt policies outside these requirements. In those cases, the Board must acknowledge, by resolution, the divergence from °µÍø51's official policy and accept full responsibility for the security of any investments made outside of °µÍø51's requirements. For purposes of personal liability, grantees' Board members will be held to the standard of care imposed by applicable state or federal law for any losses of °µÍø51 funds resulting from investment decisions may contrary to °µÍø51's requirements.
Grantees must maintain investment policies that explain their investment practices, either conforming to °µÍø51's requirements or electing alternative investment practices. The Financial Oversight Committee of the grantees' Board of Directors must "regularly review and make recommendations about investment policies" as part of its primary responsibilities.
°µÍø51 is primarily concerned with how grantees are assessing and mitigating their financial risk in light of recent and potential banking instability and their compliance with °µÍø51's investment requirements. Considering these concerns, °µÍø51's Office of Compliance and Enforcement (OCE) will offer two online office hours sessions during which °µÍø51 Financial Compliance Analysts (FCAs) will be available to answer grantee questions about °µÍø51's investment requirements. Questions asked during the sessions may be added to the °µÍø51 Financial Guide Frequently Asked Questions, currently under development.
Office hours sessions will be conducted via Zoom on the following dates:
- Wednesday, May 17, 2023, 2:00 PM - 3:00 PM EDT; click for Zoom link.
- Tuesday, May 23, 2023, 2:00 PM - 3:00 PM EDT; click for Zoom link.
If grantees have additional questions after the sessions, they should contact their assigned FCA in OCE.