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Foundation and operating charity investment returns turn slightly negative in 2011


Two companion studies of the non-profit sector show that investment returns were slightly negative in FY2011 after rising in the range of 12 per cent in FY2010 and 21 per cent in FY2009.

The average FY2011 total net return reported by the 179 independent/private foundations and community foundations participating in the 2012 Commonfund Benchmarks Study of Foundations was -0.9 per cent compared with 12.5 per cent in FY2010 and 20.9 per cent in FY2009 (all returns are net of fees). Meanwhile, for FY2011 the 68 operating charities — comprising cultural, religious and social service institutions — participating in the 2012 Commonfund Benchmarks Study® of Operating Charities reported an average net return on investment funds of -1.8 per cent compared with 11.6 per cent in FY2010 and 21.5 per cent in FY2009.

The 2011 results mark the first time since FY2008 that foundations and operating charities have reported negative returns. Return and all other data in the Studies were for calendar 2011 (January 1, 2011 to December 31, 2011).

The average three-year return for participating foundations was 10.5 per cent, a significant improvement from last year’s -0.3 per cent, reflecting the fact that the -26.0 per cent return for FY2008 was no longer part of the calculation. The FY2008 return did enter the five-year calculation, however, with the result that the five-year net return fell to 1.5 per cent from 4.2 per cent in last year’s Study. For the last 10 years, participating foundations reported an average annual return of 5.2 per cent, little changed from the average of 5.1 per cent reported last year. For operating charities, three-year returns averaged 10.0 per cent, up from 0.1 per cent the year before; five-year returns averaged 1.8 per cent, down from 4.7 per cent last year; and the 10-year returns averaged 5.5 per cent, up from 4.9 per cent last year.

Among operating charities, 26 per cent of participating institutions reported an increase in gifts received in FY2011, a marked improvement over the 10 per cent that reported an increase in gifts in FY2010. Just 12 per cent of participating institutions reported a decline in gifts received in FY2011, compared with 17 per cent in FY2010. Forty-nine per cent of operating charities reported no change.

Fifty per cent of participating foundations reported higher spending in dollars in FY2011 compared with 38 per cent in FY2010. Underscoring the improvement in spending, just 25 per cent of foundations reported decreasing their spending in dollars, down from 43 per cent in FY2010. Thirteen per cent reported no change in spending. Among operating charities, 30 per cent reported increasing their spending in dollars, up from 25 per cent the year before. While 35 per cent reported a decrease in spending in dollars, this was down sharply from 49 per cent in FY2010. Twenty-two per cent reported no change versus 19 per cent last year.

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