The endowments of private and family foundations saw double-digit growth on a year-over-year basis in both 2019 and 2020, a report from Foundation Source finds.

Based on an analysis of the asset balances, portfolio performance, asset allocation, investment expenses, and other financial transactions of more than a thousand private and family foundations, the 2021 Report on Private Foundations – Endowments (18 pages, PDF) found thatgross-of-fees portfolio growth averaged 12.7 percent in 2020 and 20 percent in 2019. While absolute growth was down on a year-over-year basis, the trend is consistent with the performance of the U.S. equity markets, and cumulative performance over the two-year period is positive. The endowments of large foundations with assets of more than $10 million grew 21.1 percent in 2019 and 14.1 percent in 2020, those of midsize foundations with assets of between $1 million and $10 million grew 18.5 percent and 10.5 percent; and small foundations with assets under $1 million grew 15.1 percent and 8.9 percent.

In terms of asset growth, large foundations saw increases of 18.5 percent in 2019 and 11.4 percent in 2020 and midsize foundations saw growth of 16.2 percent and 8.9 percent, while small foundations saw growth of just 0.5 percent and negative 2.4 percent in 2020. Equities remained the largest portfolio allocation for endowments, at about 55 percent, followed by fixed income, at 16 percent, and alternatives, at 12 percent. Small foundations had the highest allocation to cash, at 19 percent, likely to support their higher grantmaking volumes and associated liquidity needs; midsize foundations had the highest allocation to equities, at 60 percent; and large foundations had the highest allocation to alternative investments, at 14 percent.

“Private foundation endowments ended 2020 in a strong position despite the year’s immense challenges and market volatility. Fueled by solid investment growth and generous infusions of donor capital to the endowments, grant activity increased as funders responded to escalating need around the globe,” said Foundation Source president and CEO Sunil Garga. “A sustained period of strong market performance has created a tailwind for committed philanthropists to effect change. We expect to see record grantmaking volume this giving season.”

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