Foundations, Charities Returns Remain in Double Digits

May 27, 2011 (PLANSPONSOR.com) - Two companion studies of foundations and operating charities show that investment returns were in the range of 12% in FY2010 – the second consecutive year of double-digit returns and a welcome offset to the 26% portfolio decline experienced by these organizations in FY2008.

The average FY2010 total net return earned by the 175 independent/private foundations and community foundations participating in the 2011 Commonfund Benchmarks Study of Foundations was 12.5% (net of fees), compared with 20.9% in FY2009. Meanwhile, the 69 operating charities – comprising cultural, religious and social service institutions – participating in the 2011 Commonfund Benchmarks Study of Operating Charities realized an average net return on investment funds of 11.6% compared with 21.5% in FY2009.  

A press release said the 2010 results were the fourth highest in the nine years that the Foundations Study has been conducted and the third highest in the seven years that the Operating Charities Study has been produced. Returns and all other data in the Studies were for calendar 2010 (January 1, 2010 to December 31, 2010).  

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Both independent/private and community foundations returned an average of 12.5%. Domestic equities provided the strongest return, an average of 17.7% for all Study participants. International equities followed, generating a return of 14.5%.   

After that, broad asset class returns were: alternative strategies, 10.6%; fixed income, 8.1%; and short-term securities/cash/other, 9.2%. Within alternative strategies, energy and natural resources, commodities and managed futures provided the highest return, a gain of 22.1%. This was followed by a 15% return from distressed debt; 11.3% from private equity; 9.4% from venture capital and 9.1% from marketable alternative strategies. The only negative return, -2.5%, came from private equity real estate (non-campus).  

At December 31, 20010, participating foundations’ asset allocations were: 

  • Domestic equities: 26%, 
  • Fixed income: 13%, 
  • International equities: 16%, 
  • Alternative strategies: 38%, and 
  • Short-term securities/cash/other: 7%. 

 

Cultural organizations’ returns averaged 11.5%, religious institutions averaged 11.8% and social service organizations averaged 11%. Domestic equities produced the best return for Study participants, an average of 17.3%, followed by international equities at an average of 12.7%.   

Alternative strategies produced an average return of 8.6%; fixed income, 7.6%; and short-term securities/cash/other, 7.9%. Within the broad alternatives category, energy and natural resources, commodities and managed futures generated the best return, 23.6%. This was followed by an 11.5% return for distressed debt and 11.1% for venture capital. The only negative return, -0.2%, was generated by equity real estate (non-campus).  

At December 31, 2010, participating institutions’ asset allocations were: 

  • Domestic equities: 24%, 
  • Fixed income: 20%, 
  • International equities: 19%, 
  • Alternative strategies: 28%, and 
  • Short-term securities/cash/other: 9%. 

 

For more information, visit http://www.commonfund.org.

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