WASHINGTON — Community foundations in the U.S. are gradually shifting their asset mixes to favor alternatives, international investments and narrower equity styles, according to a new survey from the Council on Foundations.
The council surveyed 169 community foundations — 39% of all foundations — with total assets of $20.1 billion as of Dec. 31, 2005. The Washington-based council defines a community foundation as a tax-exempt, non-profit, publicly supported philanthropic institution made up of permanent funds established by separate donors to benefit a specific geographic area.
Overall, the average dollar-weighted asset mix of all foundations responding to the survey was 64.3% equities, 24% fixed income, 3.1%, cash and 8.6% alternatives as of Dec. 31. In 2004, the average asset mix was 65.4% equities, 22.1% fixed income, 2.7% cash and 9.8% alternatives.
By slicing the data more narrowly, researchers found strong progression by foundations toward less traditional asset classes over the last decade. For example, the average allocation to domestic large-cap equity dropped to 36.9% at the end of 2005, compared with 49.8% in 1996. Over the same time period, the average allocation to domestic midcap stocks rose to 4.3% from 2.6%. Domestic small-cap stocks doubled to 8.3% from 4.1%. International large-cap and midcap stock allocations rose to 11.4% from 5.5% while overall international equity increased to an average 14.2% from 6.1%.
Allocations to both domestic and international fixed income dropped during the period to 22.2% from 31.2% and to 0.5% from 1.1%, respectively.