The Robin Hood Foundation, a poverty-fighting New York City charity that has been criticized by lawmakers for investing in hedge funds run by its board members and major donors, has announced it is ending the practice, Bloomberg News reports.

Earlier this month, Sen. Charles Grassley (R-IA), ranking member of the Senate Finance Committee, criticized the nonprofit for having a reserve fund that was invested in seventeen hedge funds, including seven run by board members or members of its leadership council, a panel of major donors. In a letter to donors, executive director David Saltzman said the organization had placed those assets in a newly created contingency fund that the organization itself would manage going forward. The decision to remove assets from hedge funds run by people connected to the charity was made to avoid "even the appearance of any conflict," he added. Grassley called the announcement a "positive step."

The fund in question had increased to $144.5 million by the end of 2005 from about $20 million seven years earlier. The organization also reported that it paid $14 million in management and incentive fees to the seventeen funds in 2005, the most recent year for which tax records were available, including nearly $1.1 million to funds run by the charity's founder, Paul Tudor Jones II, president of Tudor Investment Corp.

"In the charity world, trust is what you're selling," said Jeff Trexler, a lawyer and professor at Pace University in New York City, who specializes in nonprofits. "If you have Congress raising questions about your integrity, you could lose that and you might never get it back."