Community Foundations Bet on Hedge Funds

Community foundations are increasing their investments in hedge funds, according to a new study by the Council on Foundations, as reported in The Chicago Tribune. The study found that of the 165 community foundations it surveyed, 46 percent were invested in hedge funds in 2005, up from 26 percent in 2003.

According to the report, community foundations invested an average of 6.9 percent of assets in hedge funds, with average returns of 7 percent last year. Those percentages may seem paltry compared to the double-digit returns at colleges and universities that started investing in the occasionally risky funds years ago. But community foundation directors increasingly want their organizations to be more competitive with endowed institutions, said Carol Crenshaw, the chief financial officer of the $1.5-billion Chicago Community Trust.