Forty-one percent of community foundations responding to a new survey revised their investment policies during the past year with an eye to encouraging long-term growth in principal and preservation of purchasing power.
More of these foundations - especially those with more than $5 million - are moving toward a total return investment strategy rather than investing to meet specific income goals, the survey said.
Community foundations turned in an average 12.34% return on their investments during the four years ended Dec. 31, according to the survey from the Council on Foundations, Washington. The survey covered 158 community foundations, with total assets of $6 billion.
Foundations are becoming increasingly eager to measure their investment performance against both industry benchmarks and other foundations, according to the survey.
Only the investment performance of funds with more than $5 million - 91 respondents - was measured. The survey included 18 foundations with more than $100 million in assets.
"This survey is significant because it provides a quantitative demonstration that community foundations increase the impact of their donors' generosity," said James A. Joseph, president of the council.
The report showed the larger the assets, the more a foundation will invest in stocks. On average, community foundations hold roughly 40% in equities; 46% in fixed income; 13% in cash; and 1% in other investments.
Also, according to the survey, foundations with more than $100 million in assets consistently produced the highest returns of the group.
- Marlene Givant Star
