New Report Details the Choices & Performance of Small, Mid-Size Private Foundations

Download the new report from our friends at Foundation Source, detailing how private foundations with assets of less than $50 million performed throughout the recession. It provides a wealth of benchmarking information on foundation investment performance from 2008-2011, as well as comparative data on asset allocation and grantmaking trends.

This report was written with our community in mind. In addition to the big-picture findings, it also defines six broad personalities for private foundations – what they call "Foundationalities” – based on funding and granting behavior. This can be a helpful tool in understanding the behaviors and motivations of your own philanthropically-minded clients. Here are a few of the major findings:

· The Alternative Investments Boom. Of the four asset classes: cash, equities, fixed income, and alternative investments (e.g., private equity, real estate, commodities), the number of foundations using alternative investments as part of their diversification strategy shifted most significantly during the study period. 38.3% of private foundations used alternative investments on January 1, 2008, while 49.3% incorporated them into their investment strategies by December 31, 2011.

· The Myth of the 5% "Ceiling.” Even during the worst of the recession, private foundations consistently gave well in excess of the 5% annual distribution required by federal law. Disbursements for grants and charitable expenses averaged 11.6% of assets between 2008 and 2011, and the total value of grants increased 4.5% during the same period.

· (Almost) Keeping Pace with Grants and Expenses. The extent to which donors continually replenish capital and add to foundation endowments is often overlooked. For every dollar that was granted to a nonprofit or paid as a charitable expense, 88 cents was received in newly contributed capital from the foundation’s donors.