The Denver Foundation had entrusted $14 million, or 3 percent of its assets, to Sowood Capital, the hedge fund operator that recently lost roughly half of investors' money.

Sowood's founder Jeff Larson told Bloomberg News last week that his hedge fund would return $1.4 billion to investors after losing a huge stake because of bad bond market bets.

Sowood, based in Boston, had more than $3 billion in assets at the end of June.

Denver Foundation spokeswoman Rebecca Arno did not immediately return a telephone call this morning.

The foundation invests money from donors and uses the earnings on the investments to give grants to nonprofits. It also says it manages money for individuals, families, business or other organizations that "have specific charitable objectives."

The Denver Foundation says it granted $36 million to nonprofits last year.