January 07, 2009
Charities Revamped Investment Policies in 2008, Survey Finds
By Debra E. Blum
More than one out of four nonprofit groups have revised their investment policies within the last year, according to a new survey. That trend is certain to pick up in the coming months, said the researchers who oversaw the report, which was based on survey responses from 652 nonprofit organizations.
“We’re starting to capture the reaction of not-for-profits to what is happening in the economy,” says Frank Kurre, a national managing partner at Grant Thornton, the Chicago accounting and consulting company that conducted the survey. “Organizations are taking a hard look at their investment policies, their investment managers, and asking more and more-detailed questions.”
In many cases, too, Mr. Kurre says, nonprofit officials are paying special attention to their organization’s alternative investments, like hedge funds. Seventy-eight percent of the organizations that said they have such investments said in September, when the survey was conducted, that they perform due diligence before acquiring alternative investments. That practice, says Mr. Kurre, will likely increase in frequency and intensity.
“More and better board oversight of alternative investments is a hot topic now in light of Madoff and other situations,” says Mr. Kurre, referring to the alleged $50-billion Ponzi scheme led by the investor Bernard Madoff.
Grant Thornton’s survey, its sixth annual one, drew information from organizations of all sizes, but half had total annual budgets of at least $20-million.
Beyond the Economy
The report on the survey says that the economic downturn is not the only reason organizations are making changes. Nonprofit groups, it says, are also reacting to new changes in the Form 990, the informational tax return charities must file each year, and the increased interest among federal lawmakers in tightening charity governance and oversight.
The new Form 990, for example, which was just released in its final version last month, requires nonprofit groups to describe the process the board uses to review the form before filing.
In Grant Thornton’s 2007 survey, 30 percent of the respondents said they had established a policy for board members to review the tax document. In the recent survey, 45 percent said they had such a policy.
“That number will climb to the 80s or 90s next year,” Mr. Kurre says. “What’s called for in the new 990 is coming across loud and clear.”
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board policy re review of 990 before filing
what is the ideal policy in this respect? and what is the purpose of such a review?
— Heinz Roesch Jan 20, 06:25 AM #