Foundation investments saw double digit returns in 2017

Average investment returns for private and community foundations last year reached their highest levels in four years, buoyed by a strong equities market both domestically and abroad. Average investment returns soared to 15% for 2017, roughly twice as high as 2016 and significantly better than the flat returns experienced two years ago.

The 2017 Council on Foundations-Commonfund Study of Investment of Endowments for Private and Community Foundations (CCSF) covers the 2017 calendar year. The 224 foundations in the study (143 private and 81 community) accounted for endowment assets of $104.4 billion.

Private foundations grabbed 2017 returns of 15% after 6.4% in 2016 and 0.0% in 2015. Community foundations reported returns of 15.1%, up from 7.3% in 2016 and a decline of 1.8% in 2015. All return data are reported net of fees.

The 2017 averages were the highest since 2013 when private foundations reported an average 15.6% and community foundations an average 15.2%.

Private foundations returned:

• One-year, 15%
• Three-year, 7%
• Five-year, 8.6%
• 10-year, 5.5%

Community foundations returned:

• One-year, 15.1%
• Three-year, 6.8%
• Five-year, 7.9%
• 10-year, 5.3%

The effective spending rate in 2017 rose to 4.8%, up from 4.7% the previous year, for community foundations. Private foundations also had a 0.1% change in effective spending rate but in the other direction: down from 5.8% in 2016 to 5.7% in 2017.

Approximately 57% of private foundations and 56% of community foundations increased spending in dollar terms, by 6.8% and 8.7%, respectively.

Almost half of participating community foundations (49%) reported that gifts and donations rose last year, up from about one-third (34%) reporting greater gifts in 2016. More than one in five community foundations (22%) reported a decline in gifts, about half as many that reported a decline in 2016 (40%).