Study: Operating Charity Investment Returns Rise to an Average of 15.1 Percent in Fiscal Year 2013

Griswold pointed out that larger operating charities, which are generally the most diversified, have historically produced higher returns. In FY2013, however, smaller operating charities (those with assets under $101 million) generated an average return of 16.5 percent compared with 13.4 percent for the largest charities participating in the Study (those with assets over $500 million). Returns for operating charities with assets between $101 and $500 million fell in the middle, at an average of 15.1 percent. "Strong returns from domestic equities sparked good returns for participating charities of all sizes," Griswold noted, adding, "The largest operating charities actually secured the highest return from their domestic equities allocation but because the smaller charities had the largest allocation to this asset class they secured the highest overall portfolio performance in 2013."

The Study for FY2013 represented the 10^th consecutive year that Commonfund Institute has reported on operating charities' investment results and related policies and practices. Beginning in 2003, operating charity data were combined with those of community and public foundations. In 2007, separate Studies were published for operating charities and foundations, a practice that continues today. Two years ago, Commonfund began a partnership with the Council on Foundations to produce the annual Council on Foundations-Commonfund Study of Investments for Private Foundations^TM (CCSF).

Forty-five percent of participating operating charities reported higher spending in dollars compared with 48 percent in FY2012 (up from 30 percent in FY2011). Con­versely, this year just 18 percent of charities decreased spending in dollars versus 25 percent doing so a year ago (and a marked decline from 35 percent in FY2011). Twenty-seven percent reported no change year over year, up from last year's 17 percent.

Thirty-seven percent of participating operating charities reported receiving increased donations this year, up from 32 percent in last year's Study (26 percent in FY2011). The median increase this year was 30.0percent versus 50.0 percent in the FY2012 Study. Twenty percent reported a decrease in gifts compared with 30 percent a year ago (12 percent in FY2011), with the median decrease being 17.4 percent. Thirty-two percent reported no change in gift flow compared with last year's 25 percent.