Asset Declines and Investment Strategy Changes by Family, Independent, and Public Foundations

February 2, 2009, Arlington, Va. — Survey results just released by the Council on Foundations at the Family Philanthropy Conference in Indianapolis showed that family, independent, and public foundations experienced a 28 percent decline in their asset values over the course of 2008. Many foundations have not made major changes to their investment strategies, but a substantial proportion are making changes in their investment managers, their diversification, and aggressiveness of their investment strategies.

Here are some other highlights from the survey:

* While nearly half of assets were held in equities at the end of 2008, more than two-fifths of respondents noted that the share of assets held in equities had dropped. Also, more than a third noted an increase in the proportion of assets held in fixed-income securities and cash.

* Of the two-thirds of foundations using investment consultants, a quarter had either already changed consultants or were considering a change.

* At least 60 percent of foundations noted that their target allocations have not changed since June 30, 2008, yet a quarter reduced their target allocations for equities and increased it for fixed-income securities and cash.

* While the use of investment managers is nearly universal, nearly half had already changed managers or were considering making a change – in fact more than half of larger foundations ($100 million or more in assets) had already made a change.

* Roughly three-quarters of foundations indicated that they would maintain their investment strategy, but those making changes generally are becoming more conservative in their investments.

* While 80 percent of foundation reported maintaining their level of diversification, those making changes have generally increased their diversification.

* About 20 percent said that they were pursuing actions to reduce the investment fees associated with the management of their portfolios.