Charity Endowments Up, Spending Down

The Chronicle of Philanthropy reports that charity endowments grew by an average of 21 percent in 2009, according to two studies by the Commonfund Institute, the research arm of Commonfund, a company in Wilton, Connecticut, that manages the investments of some 1,600 universities, foundations, and other nonprofits.  Says the story:

More than 170 grant makers in one survey saw their investments increase by an average of 20.9 percent, compared with a 26-percent drop in 2008.   In a separate study, 66 cultural, religious, and social-service groups recorded very similar returns in their endowments. 

Endowment spending was apparently conservative, however:

Although assets began to rebound last year, many foundations and charities cut back further on giving and spending.

Fifty-five percent of community foundations, for example, said they gave less in 2009, while only 16 percent said they gave more. Among operating charities, 38 percent spent less and 20 percent spent more.

Other findings of the studies include the following:

Organizations saw very modest growth over a five-year period, an average of 3.6 percent for foundations and 4 percent for charities. Those returns were not enough to cover spending, inflation, and other costs, according to John S. Griswold, executive director of the Commonfund Institute.

Grant makers gave away an average of 5.9 percent of their assets last year, while operating charities spent an average of 4.9 percent.

One should not conclude from this study that all private foundation giving is down to the bare minimum required to avoid excise taxes, however.  In a separate story, the Chronicle of Philanthropy reports that more than eight out of 10 small and midsize foundations spent more than the minimum distribution required by Code section 4942, according to a study by Foundation Source.  See Small and Midsize Foundations Exceed Payout Requirements in 2009, Study Finds. 

JRB