Foundation Source has released a new whitepaper, Guidelines for Private Foundations Investing in Hedge Funds, that outlines key points to consider when a private foundation’s portfolio includes investments in hedge funds.

The report, aimed at financial advisors, underscores the following factors as vital aspects to think about when a private foundation’s portfolio includes investments in hedge funds:

• Prohibitions on the foundation’s financial transactions with insiders;

• Limitations on the foundation’s ownership interests in business enterprises;

• Fiduciary obligations of business care and prudence;

• Issues of liquidity; and

• Income tax at funding and during foundation holding of hedge fund investments.

“The rules governing these matters often are counterintuitive and may result in adverse consequences to the unwary foundation and its managers,” the report says.  

It can be downloaded here.

Headquartered in Fairfield, CT, Foundation Source works with US private foundations. The firm operates in Atlanta, GA, Chicago, IL, Dallas, TX, Denver, CO, Los Angeles, CA, New York City, Philadelphia, PA, San Francisco, CA, South Florida and Washington, DC.