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September 30, 2013 at 07:10 AM
Private foundation endowments returned an average of 12% (net of fees) for the January to December 2012 fiscal year, according to a new study by the Council on Foundations and Commonfund Institute.
The return was a significant improvement over the FY2011 loss of 0.7%.
The study comprised 140 foundations, representing $79 billion in assets.
Foundations with assets between $101 million and $500 million produced the highest return, 12.4%. Organizations with more than $500 million in assets realized an average return of 11.9%, while those with less than $101 million produced an average return of 11.4%.
The study showed that trailing three-year returns for participating foundations averaged 7.9% in 2012, compared with 10.3% in 2011. The decline was the result of 2009’s strong returns being dropped from the three-year calculation.
Trailing five-year returns averaged 1.8%, versus 1.4% in the prior year, reflecting the continuing inclusion of FY2008’s losses in the five-year number. For the trailing 10-year period, returns averaged 7.9%, compared with last year’s 5.2%, as the losses from FY2002 were now no longer included.
“After a mildly negative 2011, private foundations secured double-digit gains in 2012, restoring much needed growth to their endowments,” John Griswold, Commonfund Institute’s executive director, said in a statement.
“Even more heartening is the higher 10-year return, an average of almost 8%. Last year’s 10-year return, in the 5% range, was simply not high enough to sustain spending levels once inflation and investment management costs are taken into account.”
