Study: Charities, Foundations Earn 12% On Investments In FY2010

Jun 2 2011 | 3:36pm ET

Foundations and charities averaged 12% returns on their investments in FY2010, well below the 21% chalked up during FY2009, according to two companion studies from Commonfund.

The Communfund Benchmarks Study of Foundations involved 175 independent/private foundations with combined assets of $108.2 billion. Their average net return in FY2010 was 12.5% (net of fees), compared with 20.9% in FY2009 and -26.0% in FY2008.

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 and -25.8% in FY2008.

“Two consecutive years of good performance is a great relief for foundations and operating charities participating in the two Studies after the serious erosion in asset values experienced in FY2008. While three-year returns are just about flat, five- and 10-year returns are edging back into the range of 5 percent, which is an encouraging sign although it still falls short of covering these nonprofit organizations’ spending, inflation and costs,” said John S. Griswold, executive director of Commonfund Institute, which sponsors the studies. “Over the nine years since the inception of the Study, after accounting for investment returns and spending the average foundation is slightly below its original nominal dollar value. This means that the last nine years have left foundations with less, in real terms, than they began with.”

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).

Founded in 1971, Commonfund serves investors including nonprofit institutions, corporate pension plans and family offices through active fund management, investment advice and treasury operations. Directly or through its subsidiaries—Commonfund Capital and Commonfund Asset Management Company—Commonfund manages over $27 billion for over 1,500 clients

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