Foundation Investments Grow Despite Economic Downturn

The Chronicle of Philanthropy has a story on a just-released study by the Commonfund Institute that shows that foundation investments grew at an annual rate of 9.9 percent in 2007, despite the difficult stock market conditions.  That is less than the 13.7% reported in 2006, but still a hefty positive number.  The average spending rate for foundations continues to be 5.5%, just a bit over the 5% required by I.R.C. Section 4942.  There has been much debate over the past couple of years regarding whether foundations should be forced to spend more on charitable programs than the currently-mandated 5% and whether public charities, particularly universities that carry very large endowments should be subject to a mandated expenditure rule (see prior blog posts here and here).  The ability of foundations and universities to garner substantial returns on their endowments even in times of economic distress is sure to add fuel to this debate.

JDC