Foundation Endowments Drop as Giving Rose in 2008, Survey Finds

As U.S. foundations watched the value of their investments plummet by an average of 26 percent in 2008 due to the recession and stock market collapse, they awarded an average of 5.8 percent of their assets in 2008, compared with 5.5 percent in 2007, according to a new survey from Commonfund Institute, the Associated Press reports.


The Wilton, Connecticut-based institute surveyed 290 private and community foundations and found that while nearly half the foundations reported increasing their spending, by an average of 20.4 percent, 31 percent decreased spending by nearly a third. However, because the value of their assets continued to fall, many foundations announced at the end of last year that they would cut their donations to charitable causes in 2009.


According to the Chronicle of Philanthropy, declines were reported across all types of investment categories except for fixed income, which grew by less than 1 percent. Investments in international equities reported the sharpest drop (down 41 percent), followed by domestic equities (down 36.3 percent). As a whole, alternative strategies posted losses of 16.4 percent; venture capital and private equity performed the best, with losses of 6.2 percent and 7.8 percent, respectively.


Although the endowments of the group of Broad foundations decreased in year-over-year value to $2.1 billion from $2.5 billion, they have rebounded by 10 percent during the first five months of 2009. Spokesperson Karen Denne told the AP that foundation officials are optimistic the markets will continue to improve, but it will likely take several years for the endowments to recover what they lost in 2008.


Commonfund Institute managing director William F. Jarvis told the AP that some foundations surveyed are selling assets and opening lines of credit with financial institutions to ensure that they can meet their 2009 commitments, but foundation endowment managers aren't ready to give up on the stock market. Javis noted: "Our chief investment officer is fond of saying, 'if you want to have no risk, you also have to accept that you'll get no return.'"


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