U.S. community foundations' externally managed assets declined 2% to a combined $20.1 billion as of Dec. 31, despite positive median returns, according to a new survey by the Washington-based Council on Foundations. That compares with $20.6 billion at year-end 2004.
The median return for the 169 institutions surveyed was 7% for the year before fees; 13.2% for the three-year period; 4.4% for five years; and 8.6% for 10 years. The council found that in 1995, community foundations with $250 million to $499.9 million in assets had the best median return, 8.4%, while foundations with $5 million to $24.9 million had the worst median return, 6.3%.
The survey also shows that community foundations of all sizes have moved toward alternatives, international investments and narrower equity style sleeves over the last decade. As of Dec. 31, the average asset mix of all foundations responding to the survey was 64.3% equities, 24% fixed income 8.6% alternatives and 3.1% cash. In 2004, the average asset mix was 65.4% equities, 22.1% fixed income, 9.8% alternatives and 2.7% cash.
Many foundation executives plan to make changes to their money manager rosters to further diversify their portfolios. Half of all executives surveyed said they plan to increase the number of managers in the next year, while just 4.3% plan to cut managers. The remaining 45.3% said they intend to change their lineups but not cut the number of external managers used.
