Private Foundation Assets Up 48 Percent Since Recession, Report Finds

(Press release, Nov. 14, 2014) — Foundation Source, the nation's largest provider of comprehensive services for private foundations, released a new report looking exclusively at the investment behavior of private foundations with less than $50 million in assets. Foundations of this size constitute 98 percent of the 84,000 private foundations in the United States. Trends in Private Foundation Investment details how these foundations fared from 2008, the low point of the Great Recession, through the end of 2013.
The report findings are based on the actual investment holdings, asset balances and expenses of 238 Foundation Source clients (a sample of the company's more than 1,200 clients). Because there is scant publicly available information regarding the asset allocation and returns of private foundations of this size, this report fills an information gap for high-net-worth donors, financial advisors and private wealth managers. The complete report can be downloaded here.

Top findings from the 2014 report include:

1. Foundation assets have recovered strongly since 2008: Overall, the asset levels of foundations have increased by 48 percent since 2008. In the six-year span covered by this report, asset balances for these 238 foundations grew from $700 million to more than $1 billion, an increase of $334 million.

2. Despite nearly uniform investment portfolio performance for foundations of every size, the resulting endowment balances were surprisingly inconsistent: While midsized ($1M -$10M) and larger foundations ($10M-$50M) enjoyed steady and robust endowment gains, the endowments of smaller foundations (less than $1M) remained flat. This was likely because smaller foundations typically distribute a greater percentage of their assets than their larger counterparts.

3. As expected, equities played a leading role in asset growth: As the stock market rallied after 2008, foundations increased their equity holdings, while reducing their percentage of holdings in cash. In 2008, these foundations allocated 42.4 percent of their assets to equities; by 2013, that percentage had increased to 55.5 percent. Over the same period, cash holdings shrank from 20.5 percent to 12.8 percent.