New Report Details the Choices & Performance of Small, Mid-Size Private Foundations
Thursday, November 15, 2012
Posted by: Sheila Gidley
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
(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.