More not-for-profit organizations seek higher returns

Date: Monday, December 18, 2006
Author: Grant Thornton

CHICAGO--(BUSINESS WIRE)--Alternative investments, such as hedge funds, private equity funds and real estate funds, can often offer higher returns than traditional returns but also come with higher risk. Over the past several years, not-for-profit organizations have been willing to take the risk associated with these funds, according to Grant Thornton LLP’s most recent issue of NFPerspectives, a quarterly newsletter for not-for-profit organizations.

While the lack of transparency means the fund manager’s valuation cannot be challenged, it does allow for protection of proprietary strategies. Fund managers may be tempted to overstate values because their fees are based on the fund’s performance.

“It’s up to each organization to define investment policies and what risk they are willing to take to reap future rewards,” said Frank Jakosz, Grant Thornton assurance partner and Midwest region not-for-profit practice leader. “When it comes to alternative investments, however, some organizations rely on as little as word of mouth from a friend.”