Weighing the Pros and Cons of Alternative Investments for Your Nonprofit

ARTICLE | July 02, 2026

As nonprofits seek new ways to strengthen their long-term financial health, many are looking beyond traditional stocks, bonds, and mutual funds toward alternative investments such as hedge funds, private equity, real estate, and venture capital. While these assets offer the potential for greater diversification and higher returns, they also introduce a unique set of challenges, including illiquidity, higher management fees, and potential unrelated business income (UBI) tax exposure. For mission-driven organizations, the stakes are high, and a misstep can have lasting financial consequences. Understanding what you are getting into is critical before committing your assets.

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