June 2, 2006 | Read Time: 5 minutes
Database: How endowment investments fared at 247 nonprofit groups
Articles: All of the advice and commentary from this special supplement on endowments
Supplement in print: Order print copies of the Endowments supplements from June 2006 and August 2005
More than $349-billion is held in the endowments of 247 of the nation’s major foundations, universities, and other nonprofit organizations, according to the third annual study of endowments conducted by The Chronicle of Higher Education and The Chronicle of Philanthropy.
The organizations in the survey achieved a median investment return of 9.6 percent in their 2005 fiscal year, meaning that the returns for half of the organizations were greater than that and half were lower.
Of the 234 groups that provided data for the past two years, investment returns grew by a median of 10 percent at organizations whose fiscal years ended on June 30. Returns grew by a median of 8 percent at organizations whose fiscal years ended on December 31.
The amount held in endowments shows the financial might of the nation’s big nonprofit organizations. The combined market value of all endowments on this year’s list exceeds the gross domestic product of Hong Kong and Thailand combined.
The Memorial Sloan-Kettering Cancer Center, in New York, whose endowment was worth $1.9-billion last year, achieved the biggest percentage increase in its investment performance of any organization in The Chronicle’s survey.
The center’s investment return was 15.7 percent in 2005, compared with 6 percent in 2004, or a gain of 162 percent.
Matthew Warshaw, the center’s associate director of financial accounting, attributed the gains to last year’s healthy stock market, and to a strong performance from alternative investments, like hedge funds, private equity, venture capital, and others. The center has 40 percent of its endowment assets directed toward alternative investments, and 40 percent invested in stocks.
Among the other organizations whose endowments grew the most was Save the Children, an international relief group in Westport, Conn., whose endowment grew to $34.1-million in 2005 from $10.2-million in 2004.
Fiona Hodgson, Save the Children’s vice president for leadership giving, said the primary reason for the gain in 2005 was several large donations that came from trustees and some longtime donors to the organization.
Those big gifts were part of the organization’s effort to raise $100-million for its endowment by 2007.
Save the Children, which previously directed almost all of its fund raising to meeting immediate needs, started the drive in 2003, setting a goal of $75-million. But when it raised that amount just two years after starting the campaign, it increased the goal to $100-million. Last year it collected $21.5-million for the endowment, so the organization needs to raise just $3.5-million this year to finish the campaign a year early.
Save the Children set such an ambitious goal because it wanted to have a reserve of money available so it could be prepared to deal with large-scale natural disasters, such as last year’s earthquake in Pakistan and Gulf Coast hurricanes, and the December 2004 tsunamis in South Asia.
As in 2004, the biggest endowment on the list was held by the Bill & Melinda Gates Foundation, with $29.1-billion in assets, followed by Harvard University, with $25.8-billion, and Yale University, at $15.2-billion in assets.
When organizations were ranked by their charitable missions, the Salvation Army, in Alexandria, Va., held the wealthiest endowment among social-services groups, worth $2.2-billion. Among arts groups, the Metropolitan Museum of Art, in New York, had the largest endowment, at $2.1-billion.
The Cleveland Foundation held the largest endowment of all community foundations on the list, with $1.7-billion in assets. Of the environmental groups that participated in the survey, the Nature Conservancy, in Arlington, Va., had the largest endowment, valued at $802.9-million.
While the endowments of most organizations on the list grew last year, some shrank. In several cases it was not investment returns that caused the endowments to tumble, but nonprofit groups’ decisions to spend more money on their programs.
The endowment of the Jewish Federation of Greater Atlanta dropped by 25 percent, to $165.2-million last year, largely because it made a larger-than-usual distribution of grants.
The endowment of the Planned Parenthood Federation of America, in New York, fell by nearly 18 percent, to $22.3-million last year.
Jankie Beharry, the organization’s controller, said the group withdrew money from its endowment last year to cover costs for its programs.
Nonprofit organizations are not required by law to disclose information about their endowments, so to determine the size of their holdings and learn more about how nonprofit groups manage their money, The Chronicle sent questionnaires to 419 nonprofit organizations.
Most of the groups either had participated in the endowment survey in previous years or were included in the Philanthropy 400, The Chronicle of Philanthropy’s annual list of nonprofit organizations that raise the most money.
The newspapers also sought information from the 19 foundations that had the most in assets in The Chronicle of Philanthropy’s annual survey of foundations (The Chronicle of Philanthropy, March 23). In addition, they asked for data from the 50 colleges and universities with the largest endowments, according to the National Association of College and University Business Officers.
The questionnaires drew responses from 365 nonprofit organizations, of which 80 groups declined to disclose any data. Twenty-nine of the charities said they did not have an endowment. Nine organizations were not included because they held endowments under $5-million, the minimum size to qualify for inclusion in the survey.
The endowment survey was compiled by Maria Di Mento, with assistance from Noelle Barton, Candie Jones, and Erin Strout.
http://philanthropy.com
Section: Endowments
Volume 18, Issue 16, Page B3
