What is the purpose of a Local Government Investment Pool (LGIP)?

The primary purpose of a Local Government Investment Pool (LGIP) is to manage surplus funds for local governments effectively. These pools allow multiple local governmental entities to combine their funds into a single investment vehicle, which can lead to lower costs, increased investment diversification, and enhanced returns compared to individual investing. By pooling resources, local governments can benefit from economies of scale and invest in secure, short-term investments that align with their liquidity needs while ensuring compliance with state regulations governing public funds. This approach not only optimizes cash management for municipalities but also helps them earn interest on funds that might otherwise sit idle.

The other options relate to functions and objectives that are not typically associated with LGIPs. For instance, LGIPs do not focus on private sector investments, providing loans, or investing in international markets; their design and regulatory framework are specifically tailored to meet the investment needs of local governments within their jurisdiction.