FEG Investment Advisors Releases 2022 Community Foundation Survey Results
FEG Investment Advisors (FEG) announced the release of results from the eighth annual FEG 2022 Community Foundation Survey, a survey of nearly 100 U.S. community foundations representing approximately $38 billion in assets under advisement. Notably, the 2022 survey saw that community foundations continue to place a growing emphasis on hiring diverse asset managers, with the figure doubling since 2021, and that, stemming from an industry trend toward OCIO, more than 30% of those transitioning from a consulting model or service provider are now considering the OCIO model.
The 2022 survey again covered relevant perspectives on timely topics such as asset allocation, spending policy, cryptocurrency, diverse asset managers, responsive investing and investment committee composition.
“This year’s survey provides foundations with more key insights into enterprise-level trends in asset allocation and performance, especially as organizations are seeking to respond to both rising inflation and interest rates, as well as rumors of recession,” said consultant Jeff Weisker, senior VP at FEG. “Many community foundations are adjusting their asset allocation and looking to increase exposure to private investments, while decreasing exposure to global fixed income.”
“The number of community foundations who have hired diverse asset managers this year nearly doubled from last year’s survey,” said consultant Quincy Brown, senior VP and director of client service at FEG. “Even more community foundations are taking initiative and putting a focus on diverse asset managers and based on survey responses, we expect the number to continue to increase.”
Key findings on various investment topics analyzed are provided below:
- Investment Model: Despite an industry trending toward OCIO, the majority of respondents currently use a traditional consulting model. However, of those who plan to change their consulting model or service provider, more than 30% are considering the OCIO model.
- Asset Allocation and Performance: Community foundations have a strong home country bias, especially among smaller organizations. Further, larger foundations are more diversified across alternative investments, while smaller organizations tend to have less exposure. The median private investments allocation for community foundations larger than $500 million is just over 12%, while foundations with less than $50 million allocate 4.7% to private investments.
- Spending Policy and Rebalancing: The spending rate has been leveling off in the past two years, staying consistent at an average of 4.4%. Few respondents are planning to change their spending rate (only 6%), and of those that are, the majority plan to decrease their spending rate.
- Cryptocurrency: A majority of respondents (over 60%) do not see cryptocurrency as an investable asset class.
- Diverse Managers: The number of community foundations who have hired diverse asset managers nearly doubled from last year’s survey (28% in 2022 compared to 16% in 2021). Similarly, the number of community foundations who have a target for assets dedicated to diverse asset managers doubled from last year’s survey (10% in 2022 compared to 5% in 2021).
- Responsive Investing (RI): With interest in RI increasing annually since 2017, over half of respondents have RI strategies within their portfolio. Approximately 70% of respondents that invest in ESG have a separate ESG pool.
- Investment Committees (IC): More than half of respondents have between seven and nine investment committee members, though approximately ¼ of respondents have 10 or more. The top industry trends being discussed continue to be increased community needs and donor giving attitudes. IC members are permitted to make motions and vote on topics by 86% of respondents.
The proprietary FEG Community Foundation survey collects data on a variety of financial and enterprise topics to provide insights on issues affecting the community foundation field. The survey is open to all U.S. community foundations and was completed primarily by senior-level investment decision makers. FEG received 98 responses across 33 states, representing approximately $38 billion in assets. Asset sizes ranged from less than $25 million to greater than $1 billion.
FEG first issued its community foundation survey in 2015 to clients with the explicit goal of providing a peer comparison for spending policy and asset allocation. Based on client feedback that current surveys available to community foundations often are too narrow in scope, FEG expanded their survey to include perspectives on enterprise topics such as externally managed and donor advised funds, investment board governance, and responsive / mission-based investing.
The preceding press release was provided by a company unaffiliated with Nonprofit PRO. The views expressed within do not directly reflect the thoughts or opinions of NonProfit PRO.