Charities Recruit Hedge-Funds Managers

As the wealth of hedge funds and other alternative investments soars, nonprofit groups from San Francisco to New York are trying to recruit big-money financiers from hedge funds and private-equity firms for their own boards of directors, The Wall Street Journal reports.

And the newcomers are encouraging nonprofit organizations to take on more risk and debt. When the 170-year-old private Tilton School, in Tilton, N.H., recently discussed a fund-raising campaign for a new dormitory and academic building, two private-equity professionals on the board persuaded the school to finance it with a $17-million, 30-year bond instead.

“They were scared by the idea of taking on debt — they had never used debt,” says T.J. Maloney, president of Lincolnshire Management, a private-equity firm in New York. “We showed them it could be an inexpensive and long-term form of capital.”

But some nonprofit officers worry that the focus on high-stakes fund raising and investing takes charities too far afield from their missions of helping those in need.

Read The Chronicle of Philanthropy’s cover package on this nonprofit trend.

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