PRIVATE AND FAMILY FOUNDATIONS REPORT STRONG ENDOWMENTS DESPITE 2020 VOLATILITY

Endowments experienced double-digit growth; equities were the largest portfolio allocation

News provided by

Dec 21, 2021, 08:30 ET

FAIRFIELD Conn., Dec. 21, 2021 /PRNewswire/ -- Foundation Source, the nation's largest provider of management solutions for private foundations, today released its 2021 Report on Private Foundations – Endowments, a quantitative study of more than 1,000 private and family foundations. The report examines changes in asset balances, portfolio performance, asset allocation, investment expenses and other financial transactions between 2019 and 2020 to provide insight into how foundations endure and support their charitable work.

Foundation Source 2021 Report on Private Foundations - Endowments

"Private foundation endowments ended 2020 in a strong position despite the year's immense challenges and market volatility. Fueled by solid investment growth and generous infusions of donor capital to the endowments, grant activity increased as funders responded to escalating need around the globe," said Sunil Garga, president and CEO of Foundation Source. "A sustained period of strong market performance has created a tailwind for committed philanthropists to effect change. We expect to see record grantmaking volume this giving season."

Key findings from the report include:

Endowments had double-digit net growth in both 2020 and 2019, which is consistent with strong market performance and contribution rates into foundations (donors contributed 57 cents for every 83 cents disbursed in grants and charitable expenses).
The foundations studied achieved average portfolio growth of 12.7% in 2020 and 20.0% in 2019 gross-of-fees. While absolute growth was down year-over-year, the trend is consistent with the performance of the US equity markets, and cumulative results were positive for the 24 months of the study.
Equities remained the largest portfolio allocation for endowments at approximately 55%, followed by fixed income at 16% and alternatives at 12%.

Smaller foundations (those with less than $1 million in assets) had the highest allocation to cash at 19%, likely to support their higher grantmaking volumes and associated liquidity needs.
Mid-size foundations (those with between $1 million and $10 million in assets) had the highest allocation to equities at 60%.
Larger foundations (those with between $10 million and $50 million in assets) had the highest allocation to alternative investments at 14%, far outpacing the exposure of smaller and mid-size foundations to similar asset types.

The average expenses associated with investment-related services across the foundations in the study decreased to 50 basis points in 2020 from 54 basis points in 2019.

The full Foundation Source endowments report may be viewed here. It is a companion to the firm's 2021 Report on Private Foundations – Grantmaking, issued earlier this year. Together, the reports provide a complete picture of the giving and funding activities at the heart of private foundation operations.

Report Methodology

Foundation Source's Report on Private Foundations – Endowments provides a year-over-year quantitative analysis of endowment activities for a sample of 1,157 US-based private, non-operating foundation clients. Data was drawn from transactions, returns and balances recorded by Foundation Source as it paid grants and expenses on behalf of its clients, prepared their tax returns, and recorded investment information provided by each foundation's financial institution(s). Each foundation in the sample was active in 2020 and 2019 and, at the time of the study, had been in existence for at least three years and had endowment assets of $50 million or less. Because foundations of this size represent 99% of all foundations in the United States, the findings offer a rare opportunity for private philanthropists and their closest advisors to benchmark their foundations against a universe of their peers.

About Foundation Source (www.foundationsource.com)

Foundation Source is the nation's largest provider of management solutions for private foundations. We empower people and companies to create a better world with their philanthropy through a configurable suite of administrative, compliance, and advisory services complemented by purpose-built foundation management technology and private foundation experts.

We work in concert with financial advisors, legal and accounting professionals, consultants and family offices, as well as directly with individuals, families and corporations to bring philanthropic visions to life. As we celebrate our 20^th year of service, Foundation Source supports nearly 2,000 family, corporate and professionally staffed foundations and has enabled more than $7 billion in charitable grants.

SOURCE Foundation Source