August 4, 2005 | Read Time: 5 minutes
Database: How endowment investments fared at 210 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 August 2005 and May 2004
More than $277-billion is held in the endowments of 210 of the nation’s major foundations, universities, and other nonprofit organizations, according to the second annual study of endowments conducted by The Chronicle of Higher Education and The Chronicle of Philanthropy.
Of the 136 groups that provided data for the past two years, investment returns grew by a median 11.5 percent for organizations whose fiscal years ended on June 30. Returns for organizations whose fiscal years ended on December 31 showed far less rosy results: They lost 8.9 percent on their investments.
The amount held in endowments shows the financial power of the nation’s big nonprofit organizations. The assets of the endowments on this year’s list exceed the gross domestic product of Argentina and Malaysia combined.
Among the organizations with the biggest percentage returns or whose endowments grew by the largest dollar amounts:
- KCET/Community Television of Southern California, in Los Angeles, grew by 504.7 percent, primarily through gifts. The endowment, which was created in 1998, is worth $321,712, up from $53,203 in 2003.
- The United Way of Greater Rochester, in New York, achieved a 37.4-percent investment return, an increase of 53.8 percent from the previous year, swelling its endowment by $27.5-million, to $112.8-million. Laurie Ganon, vice president and controller of the United Way of Greater Rochester, said one reason for the gain in 2004 was that the endowment’s value dropped sharply in March 2003. Nearly 70 percent of the endowment is in stocks, so as the market started improving, the organization regained what it had lost and made some money. The size of the organization’s endowment was helped not just by the market but also by a $3-million bequest from an anonymous donor.
- The Minneapolis Foundation’s endowment gained 35.2 percent through investment returns, helping its assets grow from $368.7-million in 2003 to $449.8-million last year.
The biggest endowment on the list was the Bill & Melinda Gates Foundation, with $28.7-billion in assets, followed by Harvard University, with $22.6-billion, Yale University ($12.7-billion), the Ford Foundation ($10.5-billion), and the University of Texas System ($10.3-billion).
When groups were ranked by their charitable missions, the wealthiest endowment at an arts group was that of the Metropolitan Museum of Art, in New York, at $1.9-billion. The Kamehameha Schools, in Honolulu, had the largest endowment in the education category (excluding colleges and universities), at $6.2-billion, and Shriners Hospitals for Children, in Tampa, Fla., had the biggest endowment of any hospital or medical center, worth $7.6-billion last year.
Some endowments did not fare well last year. Among those that faced steep losses:
- The David and Lucile Packard Foundation, in Los Altos, Calif., lost 31.3 percent of its value last year, dropping in size to $5.2-billion from $5.9-billion in 2003. The foundation was created mainly with Hewlett-Packard stock and has a heavy investment in Agilent, a spinoff of Hewlett-Packard. George Vera, chief financial officer of the foundation, said the institution was working to diversify its portfolio but had not yet been able to sell enough stock to avoid losses suffered by Hewlett-Packard and Agilent.
- The Robert W. Woodruff Foundation, in Atlanta, suffered a 16.8-percent drop in its endowment’s value, from $2.5-billion in 2003 to $2.1-billion last year.
- Compassion International, an international relief group in Colorado Springs, made a deliberate effort to shrink its endowment, which was worth $15.1-million in 2003 but only $10.9-million last year. Dawn Rowley, the organization’s vice president of finance, said the group’s board shifted money from the endowment into the operating budget to pay for a new building. Although the building was completed in 2001, she said, the board did not move the money to pay for it out of the endowment until last year.
The experiences of the groups in the survey demonstrated the important role that endowments can play for organizations of all sizes.
The Sabre Foundation, a Cambridge, Mass., group that has donated $200-million worth of books and other educational materials to schools and other institutions in about 80 countries since it was created in 1986, said it was able to raise less than $500 in donations last year. So it tapped nearly all of its endowment, which was worth $126,564 in 2003, to cover the salaries of its nine staff members, and freight expenses and warehouse rental for the books and other materials it donates. It had just $1,400 in its endowment by the end of 2004.
To determine the size of nonprofit endowments and learn more about how nonprofit groups manage their money, The Chronicle sent questionnaires to 483 American nonprofit organizations. Most of the groups either participated in the survey last year or were included in the Philanthropy 400, The Chronicle of Philanthropy’s annual list of nonprofit organizations that raise the most money.
The 25 colleges included in the survey were those with the largest endowments according to the National Association of College and University Business Officers. Foundations included in the survey were those that had the biggest endowments according to The Chronicle of Philanthropy’s annual survey of the nation’s largest foundations.
Nonprofit organizations are not required by law to disclose information about their endowments, and many do not.
Some groups said they could not fill out the survey because they were making transitions in top staff members. In one prominent case, structural changes led an organization to drop off the list.
The Pew Charitable Trusts, in Philadelphia, which was included in last year’s survey with an endowment of $4.1-billion, said that its change in status from a foundation to a charity meant that it no longer has control over an endowment or its assets. It is now the sole beneficiary of seven Pew family trusts and receives a set amount from those trusts annually.
The endowment survey was compiled by Maria Di Mento, with assistance from Anne Chabel, Leah Kerkman, Caroline Preston, and Erin Strout.
http://philanthropy.com
Section: Endowments
Volume 17, Issue 20, Page B4
