This report, based on a survey that Cambridge Associates administers annually to our foundation clients, summarizes returns, asset allocation, and other investment-related data for 111 foundations for the year ended December 31, 2017. Included in this year’s report are commentary and exhibits across five sections:
- Although 2017 was one of the strongest years in recent history for foundation investment performance, most foundations have found it to be a challenging return environment over the long term. Our Investment Portfolio Returns section highlights performance results for select periods over the last decade, and investigates some of the factors that contributed to the variation of returns reported among participants. Also included in this section are analyses on asset class composite returns and policy portfolio benchmarks.
- Changes to asset allocations over the last ten years have been less drastic than those reported in prior decades. The Asset Allocation section looks back at these changes over the last decade and incorporates data on target asset allocations to lend insights into how foundations are altering their investment policies heading into the future.
- The number of managers that foundations use for their overall portfolio and within specific asset classes can vary widely. Our investment Manager Structures section explores data on this topic as well as implementation strategies for traditional assets and alternative assets.
- Meanwhile, the Payout from the Long-Term Investment Portfolio section contains analyses that examine spending objectives and policies of private non-operating foundations. These types of foundations are required under the federal tax code to distribute approximately 5% of their assets each year. Most of these foundations’ payout objectives are tied closely to this requirement, but some also employ smoothing-type spending rules like those used more commonly among endowments.
- Finally, a new set of questions around Investment Office Staffing and Governance was added to our survey this year. This section of the report takes a look at topics such as the number of personnel in the investment office, the use of external advisors and consultants, decision-making responsibilities for investment functions, and investment committee structure.