Private foundations reported a 15% investment return for fiscal 2017 (ended Dec. 31), compared with 6.4% for fiscal 2016, according to the Council on Foundations and Commonfund’s annual study, released Thursday.
Community foundations that participated in the study reported an average return of 15.1% for 2017, up from 7.3% in 2016.
Last year’s performance was the best in four years, and a considerable improvement on 2015, when private foundations’ average return was 0%, and that of community foundations -1.8%.
With the economy and stock market performing well throughout 2017, 49% of participating community foundations reported an increase in gifts and donations last year, up from 34% reporting higher gifts the previous year.
Only 22% of community foundations experienced a decline in gifts, well down from the 40% reporting a decline in 2016.
A joint statement from the Council on Foundations and Commonfund noted concern that gifts and donations to nonprofit groups could be at risk following enactment of the tax overhaul, which places limits on itemized deductions. However, this concern did not affect 2017 as the legislation was not signed into law until Dec. 22.
“We are gratified with stronger investment performance in FY2017, but perhaps most reassuring is the increase in trailing 10-year average annual returns,” Gene Cochrane, interim president and chief executive of the Council on Foundations, and Mark Anson, chief executive and chief investment officer of Commonfund, said in the statement.
“For private foundations, the good return this year boosted trailing 10-year returns to an annual average of 5.5% compared to last year’s 4.7%. For community foundations, the 10-year average annual return rose to 5.3% from 4.6% in FY2016.”
The two leaders noted that private foundations’ effective spending rate was much higher than their annual 10-year return, while community foundations’ 10-year return and spending were more closely aligned.