Endowments make double-digit gains in 2024

The average annual returns on foundation endowments during 2024 landed in double-digit positive territory from the previous year for the 255 foundations surveyed in the new annual Council on Foundations and Commonfund Study of Investment of Endowments for Private and Community Foundations. 

The average 2024 calendar year return on these endowed funds for the 154 private foundations participating in the study was 10.3%, down from 12.6% reported for the 2023 study. Similarly, for the 101 participating community foundations, the average 2024 return was 11%, from 14.1% in 2023. 

By comparison, the S&P 500 ended 2024 up more than 23%. It was fueled by both the Nasdaq (up nearly 29%) and the Nasdaq 100 (up nearly 25%). The so-called “Magnificent 7” group of tech stocks was up nearly 67%. 

It is the second consecutive year that both foundation segments reported double-digit returns, stabilizing from the dramatic year-over-year swings reported in the prior two studies, including double digit declines in 2022 (all return data reported net of fees). 

One-year returns bolstered longer-term returns, which reflect foundations’ ability to finance their missions and program commitments going forward, according to the study’s authors. The 10- year average annual returns increased for both segments: Private foundations reported 10-year returns of 7.3% (up from 7.1% in 2023 and matching the rate in 2022. Community foundations reported 10-year returns of 7%, up from 6.2% for 2023 and 6.4% in 2022. 

In a first for the study, foundations reported for the 15- and 20-year net annualized returns on their endowments. Private foundations reported 7.5% and 6.4% on average for the two time periods, respectively, and community foundations reported 7.2% and 6.3%. 

For the second year in a row, private foundations with assets more than $500 million reported the lowest one-year returns for the second year in a row, but the highest 5-year and 10-year returns – 8.5% and 7.8%, respectively, on average. 

All other size/type categories reported 5-year returns between 7.2% (community foundations with assets less than $101 million) and 7.7% (private foundations with assets between $101 million and $500 million). 

Data was reported by 255 private and community foundations representing $104.9 billion in combined assets. It is a small subset of the foundation community. There are 148,958 private foundations in the United States. Combined, the private foundations employ 31,224 people, earn more than $166 billion in revenue each year, and have assets of $1 trillion, according to data from data from Cause IQ. 

Private foundations with assets more than $500 million had an alternative strategies allocation of 52%, compared with those with assets less than $101 million reporting a 19% allocation (down one and two-percentage points, respectively, from 2023). For community foundations, alternative allocations for those with assets more than $500 million were 28% on average (unchanged) compared with 7% for those with assets less than $101 million (down from 11%). 

Within alternative strategies, the largest allocations for private foundations were to venture capital, private equity, and marketable alternatives. For community foundations, the largest alternative allocations went to private equity and marketable alternatives (which includes hedge funds, absolute return, market neutral, long/short, 130/30, event-driven, and derivatives).