Nonprofit Investment Returns Slightly Negative in FY 2011

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% compared with 12.5% in FY 2010 and 20.9% in FY 2009 (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% compared with 11.6% in FY 2010 and 21.5% in FY 2009.  

The 2011 results mark the first time since FY 2008 that foundations and operating charities have reported negative returns.  

“Two thousand eleven was a frustrating year for foundations and operating charities,” said John S. Griswold, Executive Director of Commonfund Institute, which sponsors the studies. “On top of the negative investment returns, the addition of inflation and investment management costs means that these institutions fell a little farther behind financially, even before spending for mission support.”  

Independent/private foundations reported average net investment returns of -0.7%, while community foundations reported average returns of -1.4%.    

When viewed by asset class, returns were mixed. The highest return, 5.7%, came from fixed income; the lowest, -12.2%, came from international equities. Domestic equities returned -0.1%, alternative strategies gained 2.0%, and the return for short-term securities/cash/other was -0.1%.   

At December 31, 2011, participating institutions’ asset allocations were:  

• Domestic equities:  24%; 
• Fixed income:  13%; 
• International equities:  12%; 
• Alternative strategies:  43%; and  
• Short-term securities/cash/other:  8%.