June 29, 2012 (PLANSPONSOR.com) - Two companion studies of the nonprofit sector show that investment returns were slightly negative in FY2011 after rising in the range of 12% in FY2010 and 21% in FY2009.
The average FY2011 total net return reported by the 179 independent/private foundations and community foundations participating in the 2012 Commonfund Benchmarks Study of Foundations was -0.9% compared with 12.5% in FY2010 and 20.9% in FY2009 (all returns are net of fees). Meanwhile, for FY2011 the 68 operating charities—comprising cultural, religious and social service institutions—participating in the 2012 Commonfund Benchmarks Study of Operating Charities reported an average net return on investment funds of -1.8% compared with 11.6% in FY2010 and 21.5% in FY2009.
The 2011 results mark the first time since FY2008 that foundations and operating charities have reported negative returns.
The average three-year return for participating foundations was 10.5%, a significant improvement from last year’s -0.3%, reflecting the fact that the -26.0% return for FY2008 was no longer part of the calculation. The FY2008 return did enter the five-year calculation, however, with the result that the five-year net return fell to 1.5% from 4.2% in last year’s study. For the last 10 years, participating foundations reported an average annual return of 5.2%, little changed from the average of 5.1% reported last year.
For operating charities, three-year returns averaged 10.0%, up from 0.1% the year before; five-year returns averaged 1.8%, down from 4.7% last year; and the 10-year returns averaged 5.5%, up from 4.9% last year.