Foundations had flat returns in fiscal year 2015 ended Dec. 31, said a report from Commonfund Institute and the Council on Foundations.
According to the 2015 Study of Investment of Endowments for Private and Community Foundations, 130 private foundations that participated in a survey returned an average zero in fiscal year 2015. That was down from the reported 6.1% return the previous year. The 98 participating community foundations reported an average -1.8% return for the year, compared to 4.8% for the previous year.
It is the second straight year that foundations had lower investment returns. Returns in fiscal year 2013 were an average 15.6% for private foundations and 15.2% for community foundations.
“Two years of low investment results have reduced foundations' trailing 10-year returns to the 5.1% to 5.9% range,” said William F. Jarvis, executive director of Commonfund Institute, and Vikki Spruill, president and CEO of the Council of Foundations, in a joint news release on the study. “Without higher long-term returns, it will be difficult for foundations to maintain their endowments once annual spending, inflation and investment management costs are taken into account.”
For private foundations, the average returns for each asset class were all flat or negative. Short-term securities/cash/other returned zero in fiscal year 2015, down from 0.2% the previous year. Fixed income returned -0.3%, down from 3.8%; domestic equities returned -0.8%, down from 10.4%; alternative strategies, -2.2%, down from 4.4%; and international equities, -4.5%, down from -0.9%.
The average private foundations asset allocation as of the end of fiscal year 2015 was 45% alternative strategies, 24% domestic equities, 18% international equities, 9% fixed income and 4% short-term securities/cash/other.
For community foundations, the average returns for each asset class were also flat or negative. Short-term securities/cash/other returned zero in fiscal year 2015, down from 0.2% the previous year. Fixed income returned -0.7%, down from 3.2%; domestic equities also returned -0.7%, down from 9.8%; alternative strategies, -2.1%, down from 3.7%; and international equities, -5.1%, down from -2.1%.
The average community foundations asset allocation as of the end of fiscal year 2015 was 33% domestic equities, 25% alternative strategies, 22% international equities, 16% fixed income and 4% short-term securities/cash/other.
The report assumes a fiscal year 2015 end date of Dec. 31. Of the 228 foundations that participated in the survey, 36 had more than $500 million in assets, 97 had between $101 million and $500 million and 95 had less than $101 million.