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Abstract: 

For more than a decade, private foundations have been investing in pooled investment entities such as private equity, venture capital, and hedge funds in addition to or in lieu of investing in “traditional” investments such as publicly traded stocks and bonds and Treasury securities. Many high-net-worth families have established family offices to manage and invest the family members’ wealth and the funds held by the family’s private foundation and have formed their own pooled investment vehicles to achieve economies of scale. This article explores the use of pooled investments and how to avoid some of the pitfalls that can occur when family members own more than 35% of the pooled investment vehicle and the entity itself becomes a disqualified person with respect to the family private foundation.

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Affiliations:  1: Hunton & Williams LLP; 2: Mitchell Silberberg & Knupp LLP.