Despite the turmoil of 2020, most private and community foundations rode a strong stock market to grow their investment returns, allowing many to maintain or increase their giving in 2020, according to a new survey.
Over all, private foundations reported an average 13.1 percent return on their investment assets. Community foundations reported an average return of 12.1 percent. These represented slight declines compared with what foundations reported last year. For comparison, the S&P 500 index gained about 15 percent in 2020.
The annual Council on Foundations-Commonfund study gathered data from 260 private and community foundations in the United States, which hold a combined $115.4 billion in assets.
Private foundations also spent more on their missions in 2020, the report found. Thirty-three percent reported an increase in their spending over 2019, up from the 26 percent of private foundations that reported increased spending in 2019. Only 10 percent of community foundations increased their mission-related spending in 2020. But that was also an improvement over 2019, when just 5 percent reported doing so.
Taken together, the private foundations in the survey spent 5.6 percent of their assets on their mission in 2020, up from 5.4 percent the year before. Community foundations spent 4.7 percent of their assets on their mission in 2020, down slightly from 4.8 percent the year before.
“Giving USA’s” 2020 report estimated giving from foundations grew by 15.6 percent to $88.5 billion in 2020. Those contributions represented nearly 19 percent of all charitable giving last year.
Several campaigns urged foundations to loosen grant-making requirements and increase payout in 2020 to help charities respond to the pandemic. And many foundations also targeted their spending to specifically address needs that arose during the pandemic. Forty-one percent of private foundations and 28 percent of community foundations reported incremental spending directed at addressing the Covid-19 crisis.
Among the other findings:
- Giving to community foundations was strong in 2020, according to the report. Of the 45 percent of community foundations that reported a rise in donations last year, the median increase was nearly 84 percent.
- Interest in responsible investing practices grew in 2020. Among private foundations, 19 percent said they had sought to invest in portfolios that ranked highly in environmental, social, and governance criteria, up from 14 percent in 2018. Of those, 20 percent said they wanted to screen out investments in their portfolios that don’t align with their mission, up from 12 percent two years ago.
- A growing share of foundations are outsourcing the management of their investment portfolios. Thirty-four percent of private foundations and 37 percent of community foundations said they’re outsourcing, up from 24 percent of private foundations and 31 percent of community foundations that said so two years ago. Additionally, 13 percent of community foundations said they wanted to invest with management firms with diverse staffs.
