Investing for Art Lovers

Nonprofit cultural institutions are increasingly issuing bonds as an additional revenue-raising vehicle. The number of organizations on Standard & Poor's credit ratings list in this category alone has doubled since 2000 to about 30 organizations.

For instance, the Please Touch Museum in Philadelphia issued $60 million in bonds last October to renovate and restore its 130-year-old Memorial Hall. The bonds helped finance the project quickly. "All large-scale projects have a mismatch in when you need to spend the money [and] when you get the money," says Concetta Anne Bencivenga, CFO of the Please Touch Museum. "We need to pay our contractor now. [A bond issuance] made the most economic sense."

But do bonds issued by these institutions make financial sense for individual investors?

Risks and Rewards

The good news: These bonds are tax-exempt and bring diversity to your portfolio. Also, they usually offer higher yields than municipal bonds. ...