{"id":1327,"date":"2009-07-23T09:05:45","date_gmt":"2009-07-23T16:05:45","guid":{"rendered":"http:\/\/www.artsjournal.com\/artfulmanager\/wp\/2009\/07\/risk_and_reward\/"},"modified":"2009-07-23T09:05:45","modified_gmt":"2009-07-23T16:05:45","slug":"risk_and_reward","status":"publish","type":"post","link":"https:\/\/www.artsjournal.com\/artfulmanager\/main\/risk_and_reward.php","title":{"rendered":"Risk and reward"},"content":{"rendered":"<p>Forbes offers a <a href=\"http:\/\/www.forbes.com\/2009\/07\/19\/arts-museums-philanthropy-opinions-contributors-economic-crisis.html\">&#8216;told you so&#8217; overview about arts endowments<\/a>, suggesting the significant declines in endowment funds during the recent crash exposed inappropriate risk strategy among nonprofit boards and investment managers. Says the author:<\/p>\n<blockquote><p>The reductions in arts endowments reported over the past year have been<br \/>\nsignificant, raising the question of how they have been managed. If the<br \/>\ninvestment goal of arts endowments is the preservation of capital, how<br \/>\ncan they now face decreases of 35%, aside from the criminal actions of<br \/>\ninvestors like Bernard Madoff?<\/p><\/blockquote>\n<p>He goes on to suggest that endowment investment strategies, which increasingly sought &#8221;total returns&#8221; including capital appreciation rather than just capital preservation, were inappropriate to their mission-based purpose. But the long rise in financial markets over the past many decades made the risk of this strategy less apparent.<\/p>\n<p>In investments, management, and yes, even programming, arts organizations are all about understanding, managing, and adjusting risk when the equation seems likely to balance. That doesn&#8217;t mean risk-aversion, but rather risk-awareness. Many of the groups now smarting for deep declines probably also were quite happy about the large increases in endowment they observed over the past decades. The question is, was the rise worth the fall?<\/p>\n<p>It will be interesting to watch how investment (and program) strategies evolve after this splash of ice-cold water.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Forbes offers a &#8216;told you so&#8217; overview about arts endowments, suggesting the significant declines in endowment funds during the recent crash exposed inappropriate risk strategy among nonprofit boards and investment managers. Says the author: The reductions in arts endowments reported over the past year have been significant, raising the question of how they have been [&hellip;]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_genesis_hide_title":false,"_genesis_hide_breadcrumbs":false,"_genesis_hide_singular_image":false,"_genesis_hide_footer_widgets":false,"_genesis_custom_body_class":"","_genesis_custom_post_class":"","_genesis_layout":"","footnotes":""},"categories":[4],"tags":[],"class_list":{"0":"post-1327","1":"post","2":"type-post","3":"status-publish","4":"format-standard","6":"category-main","7":"entry"},"_links":{"self":[{"href":"https:\/\/www.artsjournal.com\/artfulmanager\/wp-json\/wp\/v2\/posts\/1327","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.artsjournal.com\/artfulmanager\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.artsjournal.com\/artfulmanager\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.artsjournal.com\/artfulmanager\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.artsjournal.com\/artfulmanager\/wp-json\/wp\/v2\/comments?post=1327"}],"version-history":[{"count":0,"href":"https:\/\/www.artsjournal.com\/artfulmanager\/wp-json\/wp\/v2\/posts\/1327\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.artsjournal.com\/artfulmanager\/wp-json\/wp\/v2\/media?parent=1327"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.artsjournal.com\/artfulmanager\/wp-json\/wp\/v2\/categories?post=1327"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.artsjournal.com\/artfulmanager\/wp-json\/wp\/v2\/tags?post=1327"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}