Dimensions of difference in nonprofit investing
Endowments, foundations and other nonprofit organizations based in the U.S. account for some $3 trillion in endowment and other investment assets. The returns earned on those assets are an important source of funding for thousands of programs, supporting goals related to education, health, social services and any number of other good causes.
This Russell Viewpoint focuses on the variety of reasons that not all nonprofit organizations go about earning those returns in the same way, and the asset allocations they adopt differ, including at least the following three reasons:
- Different risk tolerances
- Different investment beliefs
- Different organizational considerations, such as size, regulation, and peer group effets.
Please remember that all investments carry some level of risk, including the potential loss of principal invested. They do not typically grow at an even rate of return and may experience negative growth. As with any type of portfolio structuring, attempting to reduce risk and increase return could, at certain times, unintentionally reduce returns.