Foundations returned an average of 15.6% net of fees in the year ended Dec. 31, said a report from the Commonfund Institute and Council on Foundations.
It is the second straight year of double-digit average returns, following 12% for the year ended Dec. 31, 2012. The report uses data from 153 private foundations with total assets of $94.1 billion.
The average annualized net return for the three years was 8.7%, while the five-year return was 12%.
John S. Griswold, executive director of Commonfund Institute, said the numbers are promising.
“You're starting to see a higher average return over longer periods,” Mr. Griswold said in a telephone interview. “Those are all quite healthy. The key there is then the derivative of that, foundations can spend 5%,” referring to the requirement that foundations give 5% of their assets annually.
“They are still not back to where they were in 2006 — around 90% to 95% of where they were,” Mr. Griswold, “but they're restoring their seed corn and that's an important element of the return series we're seeing now.”
The highest average returns came from foundations with more than $500 million in assets, with a 16.5% return, while foundations with assets between $101 million and $500 million had an average return of 15.5%. Foundations with less than $101 million in assets reported an average 15.2% return.