executive summary - council on foundations · institutions with assets between $101-500 million...
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Executive Summary – Community Foundations Report FY2013
Demographic Profile
The fifty Community Foundations participating in this year’s Commonfund Benchmarks Study® Community Foundations
Report represent just over $17.0 billion in total endowment assets, with 62 percent of the population having participated in last
year’s Study. Institutions with assets between $101-500 Million comprised fifty-six percent of this year’s total institutions,
followed by institutions with assets Over $500 Million (24 percent) and those with assets Under $101 Million (20 percent). This
Report covers the 2013 fiscal year (January 1–December 31, 2013).
Returns
Among all Community Foundations, FY2013 returns, as of December 31, 2013, averaged 15.2 percent (all returns reported net of
fees), building on the strong 12.2 percent return from FY2012. Average FY2013 returns among institutions with assets Under
$101 Million (16.1 percent) outperformed those reported by both institutions with assets Over $500 Million and between $101-
500 Million (15.0 and 14.9 percent, respectively). (When viewing FY2013 returns in this year’s Council on Foundations–
Commonfund Study of Investments for Private Foundations, the inverse was true – institutions with assets Over $500 Million
reported an average return of 16.5 percent, outperforming both other size cohorts, 15.5 and 15.2 percent, respectively.)
Returns for the trailing three-year period averaged 8.5 percent among all participating Community Foundations, compared to last
year’s 7.7 percent. Trailing five-year returns increased markedly to 12.0 percent from 2.3 percent last year, as the poor returns
of FY2008 dropped out of the five-year calculation. Trailing 10-year returns gained an average 6.7 percent.
Of the major asset classes reported among all Community Foundations, domestic equities produced the strongest average
FY2013 return (30.9 percent), more than doubling last year’s return (14.8 percent), followed by international equities
(15.1 percent) and alternative strategies (10.2 percent – up from 6.4 percent in FY2012). Short-term securities/cash/other
produced an average return of 1.9 percent, while fixed income was the only major asset class to generate a negative return
(-0.7 percent) – a marked reversal from last year’s 8.0 percent gain.
Of the sub-asset classes of alternative strategies, venture capital, distressed debt and marketable alternative strategies produced
the strongest FY2013 returns (15.4, 12.7 and 11.0 percent, respectively), followed by energy and natural resources (9.6 percent).
Commodities and managed futures generated the weakest FY2013 return, at -6.1 percent.
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Executive Summary – Community Foundations Report FY2013
Returns (continued)
Eighty percent of all Community Foundations reported having long-term return objectives, predominantly in the ranges of 8.0-8.9
percent (more common among large and mid-size institutions) and 7.0-7.9 percent (more common among institutions with assets
Under $101 Million).
Asset Allocations
As of December 31, 2013, participating Community Foundations’ average dollar-weighted asset allocation was: 28 percent to
domestic equities, 27 percent to alternative strategies, 23 percent to international equities (up from 19 percent in FY2012), 13 percent
to fixed income (down from 18 percent in FY2012) and 9 percent to short-term securities/cash/other (up from 6 percent in FY2012).
Community Foundations with assets Over $500 Million reported the highest average allocation to alternative strategies (29 percent)
and double the allocation of both other size cohorts to short-term securities/cash/other (10 percent), while domestic and international
equities and fixed income allocations (27, 21 and 13 percent, respectively) were lowest.
Community Foundations with assets Under $101 Million showed the greatest propensity to allocate toward domestic and international
equities (33 and 25 percent, respectively) and fixed income (17 percent) during FY2013, collectively higher than both other size
cohorts – albeit moderately in comparison to the mid-size institutions group.
Spending and Fund Flows
The average effective spending rate for Community Foundations participating in this year’s Study – calculated by dividing
endowment dollars spent by the beginning endowment value – was 4.8 percent, down modestly from 4.9 percent in FY2012. The
highest FY2013 effective spending rate, 5.2 percent, was found among institutions with assets Over $500 Million. The lowest
effective spending rate, 3.8 percent, occurred among institutions with assets Under $101 Million, down from 4.4 percent last year,
while mid-size institutions reported an average effective spending rate of 5.0 percent. (When viewing this year’s Council on
Foundations–Commonfund Study of Investments for Private Foundations, FY2013 effective spending rates reported among mid-size
and smaller institutions were notably higher, at 5.7 and 5.3 percent, respectively.)
Among all Community Foundations, 45 percent reported a decreased effective spending rate during FY2013, with an average
percentage decrease of -0.5 percent, while 13 percent reported an increase in effective spending rate, with an average percentage
increase of 0.8 percent. Thirty-six percent reported no change.
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Executive Summary – Community Foundations Report FY2013
Spending and Fund Flows (continued)
Over half (56 percent) of all Community Foundations reported increased spending dollars during FY2013, consistent across all
size cohorts, with the average percentage increase ranging from 7.4 percent among institutions with assets Over $500 Million to
17.3 percent among institutions with assets between $101-500 Million.
The predominant FY2013 spending policy across all size cohorts was to spend a percentage of a moving average (ranging from a
reported 86 percent of institutions with assets between $101-500 Million to 67 percent of institutions with assets Over $500
Million), with the average percentage ranging from 4.4-4.9 percent.
Thirty-eight percent of all Community Foundations reported increased gifts and donations during FY2013, with the median
percentage increase being 29.0 percent, while only 10 percent reported decreased gifts (with the median percentage decrease being
14.0 percent) and just over one-quarter (26 percent) reported no change.
Resources, Management and Governance
Among participating Community Foundations, an average 5.9 separate individual managers were reported being utilized for direct
investments in alternative strategies during FY2013, followed by domestic and international equities (4.8 and 4.4, respectively).
Institutions with assets Over $500 Million reported using the greatest average number of managers for all mandates listed,
predominantly for direct investments in alternative strategies (13.1), domestic and international equities (6.4 and 6.3, respectively)
– the latter being up notably from an average 4.7 in FY2012.
Eighty-eight percent of all Community Foundations reported using consultants during FY2013; primarily for performance
measurement, manager selection, policy review and asset allocation/rebalancing.
Among all Community Foundations, an average 0.9 full-time equivalent (FTE) was reported being staffed in the investment
function during FY2013, while the median number of FTEs was 0.5.
**Reading this Report**
Some of the data in this Executive Summary refer to a supplemental set of data tables provided in the Appendix of this Report. In
addition, we include a demographic table of data highlighting endowment fund flows during FY2013.
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The Benchmarks Leaders Top Quartile Performers
Unless otherwise indicated, all performance information reflects net total returns.
† Dollar-weighted
28%
13%
23%
27%
9%
Total Institutions
Domestic equities Fixed income
International equities Alternative strategies
Short-term securities/cash/other
Asset Allocation Comparison†
Fiscal Year 2013
38%
15%
22%
23%
2%
Top Quartile
15.2%
8.5%
12.0%
6.7%
18.1%
9.6%
13.2%
7.3%
Pe
rce
nt (%
)
Total Institutions
Top Quartile
Average Reported Returns
FY2013 net annual
total return
3-year net return 5-year net return 10-year net return
One-, Three-, Five- and 10-Year
Demographics | Fiscal Year 2013
Total Institutions Top Quartile
Total Institutions (50) (12)
Over $500 Million 12 3
$101-500 Million 28 6
Under $101 Million 10 3
Note: Top quartile is defined as the top 25 percent of 48 institutions that provided return data.
7 7 7 7
Average One-, Three-, Five- and 10-Year Net Returns
Among the Total Community Foundations group, FY2013 returns averaged 15.2%, while three-year returns averaged 8.5%. For the
trailing five-year period, returns gained an average 12.0%, while 10-year returns averaged 6.7%.
Among Institutions with assets Under $101 Million, FY2013 returns averaged 16.1%, while returns for the trailing five-year period
averaged 12.2%, both outperforming that of Institutions with assets Over $500 Million (15.0% and 11.9%, respectively) and
Institutions with assets between $101-500 Million (14.9% and 12.0%, respectively).
Among Institutions with assets Over $500 Million, three-year returns averaged 8.6%, modestly outperforming both other size cohorts
(both 8.4%, respectively).
For the trailing 10-year period, Institutions with assets between $101-500 Million reported an average return of 6.6%, moderately
underperforming that of both other size cohorts (both 6.9%, respectively).
Note: Ninety six percent of participating institutions (48 of the 50 participants) provided return data for the most recent fiscal year, 88% (44 institutions) provided three-year return
data, 86% (43 institutions) provided five-year return data and 70% (35 institutions) provided 10-year return data. Return data cited in this report represent the average returns for
institutions providing data for each period.
numbers in percent (%)
Total Institutions Over $500 Million $101-500 Million Under $101 Million
50 12 28 10
FY2013 net annual total return 15.2 15.0 14.9 16.1
3-year net return 8.5 8.6 8.4 8.4
5-year net return 12.0 11.9 12.0 12.2
10-year net return 6.7 6.9 6.6 6.9
8
Average Returns by Asset Class for Fiscal Year 2013
8 8
Of the major asset classes reported among all Community Foundations, domestic equities produced the strongest average
FY2013 return (30.9%), more than doubling last year’s return (14.8%), followed by international equities (15.1%) and
alternative strategies (10.2% – up from 6.4% in FY2012). Short-term securities/cash/other produced an average return of
1.9%, while fixed income was the only major asset class to generate a negative return (-0.7%) – a marked reversal from last
year’s 8.0% gain.
Among the sub-asset classes of alternatives reported by all Community Foundations, venture capital, distressed debt and
marketable alternative strategies produced the strongest FY2013 returns (15.4%, 12.7% and 11.0%, respectively), followed by
energy and natural resources (9.6%). Commodities and managed futures generated the weakest FY2013 return, at -6.1%.
numbers in percent (%)
Average FY2013 total return 15.2
Domestic equities 30.9
Fixed income -0.7
International equities 15.1
Alternative strategies 10.2
Private equity (LBOs, mezzanine, M&A funds and international private equity) 8.3
Marketable alternative strategies (hedge funds, absolute return, market neutral, long/short, 130/30, event-driven and derivatives) 11.0
Venture capital 15.4
Private equity real estate (non-campus) 8.0
Energy & natural resources 9.6
Commodities and managed futures -6.1
Distressed debt 12.7
Short-term securities/cash/other 1.9
Short-term securities/cash 0.1
Other 13.6
Total
Institutions
9 9 9
Asset Allocations† for Fiscal Year 2013
† Dollar-weighted
Average FY2013 asset allocation among the Total Community Foundations group was 28% to domestic equities, 27% to
alternative strategies, 23% to international equities, 13% to fixed income and 9% to short-term securities/cash/other.
Institutions with assets Over $500 Million reported the highest average allocation to alternative strategies (29%) during
FY2013 than both other size cohorts (25% and 20%, respectively), while short-term securities/cash/other allocation (10%) was
double that of both other size cohorts (both 5%, respectively).
Institutions with assets Under $101 Million and with assets between $101-500 Million showed a greater propensity to allocate
toward domestic equities (33% and 31%, respectively), international equities (25% and 24%, respectively) and fixed income
(17% and 15%, respectively), than Institutions with assets Over $500 Million (27%, 21% and 13%, respectively) during
FY2013.
numbers in percent (%)
Total Institutions Over $500 Million $101-500 Million Under $101 Million
50 12 28 10
Domestic equities 28 27 31 33
Fixed income 13 13 15 17
International equities 23 21 24 25
Alternative strategies 27 29 25 20
Short-term securities/cash/other 9 10 5 5
10 10 10
Alternative Strategies Asset Mix† for Fiscal Year 2013
† Dollar-weighted
The predominant FY2013 alternative strategies allocation among all size cohorts was to marketable alternative strategies, highest
among Community Foundations with assets Under $101 Million (67%), moderately lower among Community Foundations with
assets Over $500 Million (63%) and those with assets between $101-500 Million (59%).
Institutions with assets Under $101 Million reported the highest average allocation to energy and natural resources (19%), notably
higher than both other size cohorts (12% and 13%, respectively), while private equity allocation (3%) was conversely markedly
lower than both other cohorts (both 13%, respectively).
Institutions with assets between $101-500 Million showed a greater propensity to allocate toward venture capital (7%) than both
other size cohorts (2% and 1%, respectively), and a lesser propensity to allocate toward distressed debt (2%) than both other
cohorts (4% and 6%, respectively).
numbers in percent (%)
Total Institutions Over $500 Million $101-500 Million Under $101 Million
Responding institutions 34 7 20 7
Private equity (LBOs, mezzanine, M&A funds and international
private equity) 13 13 13 3
Marketable alternative strategies (hedge funds, absolute return,
market neutral, long/short, 130/30, event-driven and derivatives) 61 63 59 67
Venture capital 4 2 7 1
Private equity real estate (non-campus) 6 6 6 4
Energy and natural resources (oil, gas, timber, commodities and
managed futures) 13 12 13 19
Distressed debt 3 4 2 6
11 11
Portfolio Rebalancing for Fiscal Year 2013
Eighty-four percent of the Total Community Foundations group reported rebalancing their portfolios during FY2013.
Ninety percent of Institutions with assets Under $101 Million reported rebalancing during FY2013, highest among the size
cohorts, followed closely by Institutions with assets between $101-500 Million (86%).
Three-quarters (75%) of Institutions with assets Over $500 Million reported rebalancing during FY2013, lowest among
constituencies.
numbers in percent (%)
Total Institutions Over $500 Million $101-500 Million Under $101 Million
50 12 28 10
Rebalanced portfolio 84 75 86 90
12 12
Portfolio Rebalancing Frequency♦♦ for Fiscal Year 2013
♦♦ multiple responses allowed
Among the Total Community Foundations group using a calendar-based approach to portfolio rebalancing during FY2013, 27%
reported they rebalanced quarterly (half of Institutions with assets Under $101 Million – highest among constituencies), while an
average 13% reported they rebalance annually and/or monthly, respectively. (No Institutions with assets Under $101 Million reported
rebalancing annually.)
Among those utilizing a market value-based methodology, an average 87% predominantly used a target- and range-based approach,
while 53% rebalanced in response to major gifts or other cash flows, both mostly consistent across all size cohorts.
numbers in percent (%)
Total Institutions Over $500 Million $101-500 Million Under $101 Million
Responding institutions 45 10 25 10
Calendar-based
Annually 13 20 16 0
Semi-annually 2 0 4 0
Quarterly 27 20 20 50
Monthly 13 20 12 10
Other 4 0 4 10
Market value-based
Target- and range-based 87 90 84 90
Response to major gifts or other cash flows 53 50 52 60
Other 0 0 0 0
13 13
Average Annual Effective Spending Rates for Fiscal Year 2013
Among the Total Community Foundations group, the average FY2013 effective spending rate was 4.8%.
Institutions with assets Over $500 Million reported the highest average FY2013 effective spending rate (5.2%) among all size
cohorts, followed closely by Institutions with assets between $101-500 Million (5.0%).
Among Institutions with assets Under $101 Million, the average FY2013 effective spending rate was 3.8%, significantly lower
than both other size cohorts.
numbers in percent (%)
Total Institutions Over $500 Million $101-500 Million Under $101 Million
50 12 28 10
FY2013 effective spending rate 4.8 5.2 5.0 3.8
14 14
Changes to Effective Spending Rates for Fiscal Year 2013
Among the Total Community Foundations group, 45% reported a decreased effective spending rate during FY2013, with an
average percentage decrease of -0.5%, while 13% reported an increase in effective spending rate, with an average percentage
increase of 0.8%. Thirty-six percent reported no change.
Among Institutions with assets Over $500 Million, 62% reported a decreased effective spending rate, consistent with 60% of
Institutions with assets Under $101 Million, with average percentage decreases of -0.6% and -0.4%, respectively. One-third (33%)
of Institutions with assets between $101-500 Million reported a decreased effective spending rate, lowest among constituencies,
with an average percentage decrease of -0.4%.
Among Institutions with assets between $101-500 Million, 17% reported an increase in effective spending rate, with an average
percentage increase of 0.9%, both moderately higher than that of Institutions with assets Over $500 Million – 13% of whom
reported an increased effective spending rate, with an average percentage increase of 0.5%. No Institutions with assets Under
$101 Million reported an increase in effective spending rate during FY2013.
numbers in percent (%)
Total Institutions Over $500 Million $101-500 Million Under $101 Million
50 12 28 10
Increased spending rate 13 13 17 0
Average percentage increase 0.8 0.5 0.9 0
Decreased spending rate 45 62 33 60
Average percentage decrease -0.5 -0.6 -0.4 -0.4
No change 36 25 39 40
No answer/uncertain 6 0 11 0
15 15
Spending Policy♦♦ for Fiscal Year 2013
♦♦ multiple responses allowed
The predominant FY2013 spending policy across all constituencies was to spend a percentage of a moving average (ranging from an
average 86% among Institutions with assets between $101-500 Million to 67% of Institutions with assets Over $500 Million), with the
average percentage ranging from 4.4-4.9%.
Seventeen percent of Institutions with assets Over $500 Million reported spending a pre-specified percentage of beginning market
value, followed by 7% of Institutions with assets between $101-500 Million, while both cohorts reported the average percentage
being 5.0%.
Twenty percent of Institutions with assets Under $101 Million reported they decide on an appropriate rate each year, followed by 8% of
Institutions with assets Over $500 Million and 4% of Institutions with assets between $101-500 Million.
numbers in percent (%)
Total Institutions Over $500 Million $101-500 Million Under $101 Million
50 12 28 10
Spent all current income 0 0 0 0
Percentage of a moving average 80 67 86 80
Average percentage 4.8 4.9 4.8 4.4
Decide on an appropriate rate each year 8 8 4 20
Grow distribution at predetermined inflation rate 0 0 0 0
Spend a pre-specified percentage of beginning market value 8 17 7 0
Average pre-specified percentage spent 5.0 5.0 5.0 0.0
Last year's spending plus inflation with upper and lower bands 4 8 4 0
Weighted average or hybrid method (Yale/Stanford Rule) 2 8 0 0
Other 8 0 7 20
16 16
Changes to Spending Dollars for Fiscal Year 2013
Among the Total Community Foundations group, 56% reported increased spending dollars during FY2013, with the average
percentage increase being 14.6% (median increase, 10.6%). Eighteen percent reported decreased spending dollars, with the average
percentage decrease being 6.0% (median decrease, 5.0%), while 16% reported no change.
Among Institutions with assets Over $500 Million, 58% reported increased spending dollars, with an average percentage increase of
7.4% and a median increase of 6.4% – both lowest among the size cohorts. Seventeen percent reported decreased spending dollars,
with an average percentage decrease of 9.2% (highest among constituencies), while 8% reported no change (lowest among
constituencies).
Among Institutions with assets between $101-500 Million, 54% reported increased spending dollars, with an average percentage
increase of 17.3% (highest among constituencies) and a median increase of 11.5%. Twenty-one percent reported decreased spending
dollars, highest among constituencies, with an average percentage decrease of 5.8%, while 14% reported no change.
Among Institutions with assets Under $101 Million, 60% reported increased spending dollars, with an average percentage increase of
12.7% and a median increase of 14.8%, the latter being highest among constituencies. Ten percent reported decreased spending
dollars, with an average percentage decrease of 0.5% (lowest among constituencies), while 30% reported no change (highest among
constituencies).
numbers in percent (%)
Total Institutions Over $500 Million $101-500 Million Under $101 Million
50 12 28 10
Increased spending dollars 56 58 54 60
Average percentage increase 14.6 7.4 17.3 12.7
Median percentage increase 10.6 6.4 11.5 14.8
Decreased spending dollars 18 17 21 10
Average percentage decrease 6.0 9.2 5.8 0.5
Median percentage decrease 5.0 9.2 5.3 0.5
No change 16 8 14 30
No answer/uncertain 10 17 11 0
17 17
Professional Staffing of Investment Function for Fiscal Year 2013
Among the Total Community Foundations group, an average 0.9 full-time equivalent (FTE) was reported being staffed in the
investment function during FY2013, while the median number of FTEs was 0.5 (which can be more indicative of true
employment levels).
Among Institutions with assets Over $500 Million, an average and median 1.5 FTEs were reported being staffed in the
investment function, both notably higher than all other size cohorts.
Among Institutions with assets between $101-500 Million, an average 0.6 FTE was reported being staffed in the investment
function, while the median number of FTEs was 0.4, both lowest among constituencies.
Among Institutions with assets Under $101 Million, an average 0.8 FTE was reported being staffed in the investment function,
while the median number of FTEs was 0.5.
Number of Full-Time Equivalents (FTEs)
Total Institutions Over $500 Million $101-500 Million Under $101 Million
50 12 28 10
Average number of FTEs 0.9 1.5 0.6 0.8
Median number of FTEs 0.5 1.5 0.4 0.5
18 18
Outsourcing of Investment Function for Fiscal Year 2013
Among the Total Community Foundations group, more than half (60%) reported they have neither outsourced the investment
management function, nor are considering it, while an average 34% have substantially outsourced and only 4% are considering
outsourcing.
Among Institutions with assets Over $500 Million, nearly all (92%) reported they have neither outsourced the investment
management function, nor are considering it, significantly higher than both other size cohorts, while only 8% have substantially
outsourced (notably lower than both other size cohorts) and none are considering outsourcing.
Among Institutions with assets between $101-500 Million, just over half (54%) reported they have neither outsourced the
investment management function, nor are considering it, while 36% have substantially outsourced and 7% are considering
outsourcing.
Among Institutions with assets Under $101 Million, 60% reported they have substantially outsourced the investment function,
notably higher than both other size cohorts, while the remaining 40% have neither outsourced, nor are considering it, and none
are considering outsourcing.
numbers in percent (%)
Total Institutions Over $500 Million $101-500 Million Under $101 Million
50 12 28 10
Have substantially outsourced 34 8 36 60
Considering substantially outsourcing 4 0 7 0
Neither 60 92 54 40
No answer/uncertain 2 0 3 0
19 19
Number of Managers Used by Asset Class in Fiscal Year 2013
Among the Total Community Foundations group, an average 5.9 separate individual managers were reported being utilized for
direct investments in alternative strategies during FY2013, followed by domestic equities (4.8), international equities (4.4) and
fund-of-funds investments in alternatives (3.7).
Institutions with assets Over $500 Million reported utilizing the highest average number of separate managers for all mandates
listed – most notably direct investments in alternatives (13.1), domestic and international equities (6.4 and 6.3, respectively) and
fund-of-funds investments in alternatives (5.7).
Among Institutions with assets between $101-500 Million, an average 4.6 separate individual managers were reported being
used for domestic equities, followed by direct investments in alternatives (4.5) and international equities (4.3). An average 2.9
managers were reported being used for fund-of-funds investments in alternatives, lowest among the size cohorts.
Among Institutions with assets Under $101 Million, an average 3.5 separate individual managers were reported being used for
fund-of-funds investments in alternative strategies, followed by domestic equities (3.4) and fixed income (2.9) – both lowest
among the size cohorts. Average manager use for international equities and direct investments in alternatives (2.3 and 2.0,
respectively) was considerably lower than both other size cohorts.
average number
Total Institutions Over $500 Million $101-500 Million Under $101 Million
50 12 28 10
Domestic equities 4.8 6.4 4.6 3.4
Fixed income 3.5 4.4 3.3 2.9
International equities 4.4 6.3 4.3 2.3
Alternative strategies (direct) 5.9 13.1 4.5 2.0
Alternative strategies (fund of funds) 3.7 5.7 2.9 3.5
20 20
Responsible for Ongoing Due Diligence ♦♦
Among the Total Community Foundations group, investment or finance committee was the most commonly cited entity that
performed ongoing due diligence on investment managers hired (62%) – the predominant entity cited among Institutions with
assets between $101-500 Million (68%) and Institutions with assets Under $101 Million (50%).
Institutions with assets Over $500 Million more often have dedicated internal staff (67%), or utilize a consultant that is not an
outsourced investment manager (83%) – both significantly higher than the other size cohorts.
Half (50%) of Institutions with assets between $101-500 Million cited using a consultant that is not an outsourced investment
manager, while only 20% of Institutions with assets Under $101 Million reported doing so.
numbers in percent (%)
Total Institutions Over $500 Million $101-500 Million Under $101 Million
50 12 28 10
Board 6 0 11 0
Investment or finance committee 62 58 68 50
Dedicated internal staff 32 67 25 10
Consultant (is not an outsourced investment manager) 52 83 50 20
Consultant (is an outsourced investment manager) 14 0 18 20
Outsourced investment manager (is not a consultant) 10 0 11 20
Other 0 0 0 0
No answer/uncertain 6 8 7 0
♦♦ multiple responses allowed
21 21
Ongoing Due Diligence Procedures Employed♦♦ in Fiscal Year 2013
The most commonly reported due diligence procedures employed during FY2013 across all size cohorts were: quantitative
attribution analysis of manager performance (62% among Total – more common among large and mid-size institutions);
telephone conference calls with managers (60% among Total – most common among Institutions with assets Over $500 Million,
83%); peer group comparisons (58% among Total); on-site manager visits at my institution (56% among Total) and on-site visits
with managers at their offices (46% among Total).
Half (50%) of Institutions with assets Under $101 Million reported employing third-party evaluations of managers during
FY2013, highest among constituencies.
numbers in percent (%)
Total Institutions Over $500 Million $101-500 Million Under $101 Million
50 12 28 10
On-site manager visits at my institution 56 67 57 40
On-site visits with managers at their offices 46 67 46 20
Telephone conference calls with managers 60 83 57 40
Quantitative attribution analysis of manager performance 62 67 68 40
Position-based risk analysis 38 42 39 30
Peer group comparisons 58 67 57 50
Annual due diligence questionnaire updates 16 17 14 20
Third-party evaluations of managers 36 33 32 50
Other 14 8 14 20
No answer/uncertain 6 8 7 0♦♦ multiple responses allowed
22 22
Conflict of Interest Policies♦♦
Nearly all (96%) Community Foundations reported having a conflict of interest policy, predominantly for the board and investment
committee (82%) or solely for the board (14%).
Nearly all (92%) Community Foundations reported their policy applies to senior staff.
Institutions with assets Under $101 Million showed a greater propensity to allow board members to conduct business with the
organization (50%) than both other size cohorts (33% and 32%, respectively).
All (100%) have a process for resolution of potential conflicts, primarily recusal and disclosure (83% among total).
♦♦ multiple responses allowed
numbers in percent (%)
Total Institutions Over $500 Million $101-500 Million Under $101 Million
50 12 28 10
Have conflict of interest policy 96 92 96 100
For board 14 8 18 10
For investment committee 0 0 0 0
For board and investment committee 82 83 79 90
Stricter standard applies to investment committee 4 8 4 0
Policy applies to senior staff 92 92 89 100
Allow board members to conduct business with organization 36 33 32 50
Have process for resolution of potential conflicts 100 100 100 100
Recusal and disclosure 83 100 67 100
Recusal only 6 0 11 0
Disclosure only 11 0 22 0
Other 0 0 0 0
23 23
Voting Members on Investment Committee for Fiscal Year 2013
Among the Total Community Foundations group, the average number of voting members on the investment committee was 8.2
during FY2013, mostly consistent across all size cohorts – modestly higher among Community Foundations with assets between
$101-500 Million (8.3), slightly lower among Community Foundations with assets Under $101 Million (8.0).
average number
Total Institutions Over $500 Million $101-500 Million Under $101 Million
50 12 28 10
Voting investment committee members 8.2 8.2 8.3 8.0
24 24
Investment Committee Credentials for Fiscal Year 2013
Among the Total Community Foundations group, the average reported number of FY2013 investment committee members that are
investment professionals was 5.2 (consistent across all size cohorts), while the average number with alternative strategies experience
was 3.5. Non-trustee voting members averaged 3.9 during FY2013.
Institutions with assets Over $500 Million reported having the highest average number of FY2013 investment committee members
with alternative strategies experience (4.4), while this number was lowest among Institutions with assets Under $101 Million (2.0).
Institutions with assets Under $101 Million reported having an average 4.8 non-trustee voting members on the investment
committee during FY2013, highest among constituencies.
average number
Total Institutions Over $500 Million $101-500 Million Under $101 Million
50 12 28 10
Investment committee members who are investment professionals 5.2 5.0 5.3 5.2
Investment committee members with alternative strategies experience 3.5 4.4 3.6 2.0
Non-trustee voting members 3.9 3.7 3.7 4.8
25 25 25 25
APPENDIX I
SUPPLEMENTAL TABLES
26 26
Investable Assets Not Part of Endowment
Long-Term Return Objectives for Fiscal Year 2013
numbers in percent (%) Total Institutions Over $500 Million $101-500 Million Under $101 Million
50 12 28 10
Investable assets not part of endowment 10.0 16.2 6.7 17.0
numbers in percent (%) Total Institutions Over $500 Million $101-500 Million Under $101 Million
50 12 28 10
Have return objectives 80 75 78 90
Less than 5% 0 0 0 0
5.0 - 5.9% 10 8 11 10
6.0 - 6.9% 4 0 7 0
7.0 - 7.9% 20 17 14 40
8.0 - 8.9% 38 42 43 20
9.0% and over 8 8 3 20
Do not have return objectives 8 0 11 10
No answer/uncertain 12 25 11 0
Average 9.2 14.3 7.6 7.9
Median 8.0 8.0 8.0 7.8
27
EW Asset Allocations† for Fiscal Year 2013
† Dollar-weighted
† Equal-weighted
Domestic Equity Asset Mix† for Fiscal Year 2013
numbers in percent (%) Total Institutions Over $500 Million $101-500 Million Under $101 Million
50 12 28 10
Domestic equities 29 25 30 31
Fixed income 15 14 15 18
International equities 24 21 25 25
Alternative strategies 25 30 24 20
Short-term securities/cash/other 7 10 6 6
numbers in percent (%) Total Institutions Over $500 Million $101-500 Million Under $101 Million
Responding institutions 34 7 21 6
Active 63 53 72 76
Indexed (passive/enhanced) 37 47 28 24
28
Fixed Income Asset Mix† for Fiscal Year 2013
† Dollar-weighted
† Dollar-weighted
International Equity Asset Mix† for Fiscal Year 2013
numbers in percent (%) Total Institutions Over $500 Million $101-500 Million Under $101 Million
Responding institutions 34 7 21 6
Domestic investment-grade (active) 77 85 66 81
Domestic investment-grade (passive) 7 3 12 5
Domestic non-investment grade (active or passive) 4 2 8 3
International bonds (active or passive) 9 7 11 10
Emerging markets (active or passive) 3 3 3 1
numbers in percent (%) Total Institutions Over $500 Million $101-500 Million Under $101 Million
Responding institutions 34 7 21 6
Active MSCI EAFE 62 59 66 60
Passive/index MSCI EAFE 10 13 6 13
Emerging markets 28 28 28 27
29
EW Alternative Strategies Asset Mix† for Fiscal Year 2013
† Equal-weighted
numbers in percent (%) Total Institutions Over $500 Million $101-500 Million Under $101 Million
Responding institutions 34 7 20 7
Private equity (LBOs, mezzanine, M&A funds and international
private equity) 12 12 14 5
Marketable alternative strategies (hedge funds, absolute return,
market neutral, long/short, 130/30, event-driven and derivatives) 62 63 60 67
Venture capital 3 2 5 1
Private equity real estate (non-campus) 6 6 6 3
Energy and natural resources (oil, gas, timber, commodities and
managed futures) 14 12 13 19
Distressed debt 3 5 2 5
30 30
Detailed Asset Allocations† for Fiscal Year 2013
† Dollar-weighted
numbers in percent (%) Total Institutions Over $500 Million $101-500 Million Under $101 Million
50 12 28 10
Domestic equities 28 27 31 33
Fixed income 13 13 15 17
International equities 23 21 24 25
Alternative strategies 27 29 25 20
Private equity (LBOs, mezzanine, M&A funds and international
private equity) 2 2 3 0
Marketable alternative strategies (hedge funds, absolute return,
market neutral, long/short, 130/30, event-driven and derivatives) 9 10 12 9
Venture capital 1 0 1 0
Private equity real estate (non-campus) 1 1 1 1
Energy & natural resources 2 2 1 2
Commodities and managed futures 1 0 2 0
Distressed debt 1 0 1 1
Alternatives not broken out 10 14 4 7
Short-term securities/cash/other 9 10 5 5
Short-term securities/cash 3 1 4 3
Other 6 9 1 2
31 31
EW Asset Allocations† for Fiscal Year 2013
† Equal-weighted
numbers in percent (%) Total Institutions Over $500 Million $101-500 Million Under $101 Million
50 12 28 10
Domestic equities 29 26 30 31
Fixed income 15 14 15 18
International equities 24 21 25 25
Alternative strategies 25 29 24 20
Private equity (LBOs, mezzanine, M&A funds and international
private equity) 2 2 3 1
Marketable alternative strategies (hedge funds, absolute return,
market neutral, long/short, 130/30, event-driven and derivatives) 11 12 12 9
Venture capital 1 0 1 0
Private equity real estate (non-campus) 1 1 1 0
Energy & natural resources 2 2 1 2
Commodities and managed futures 1 0 2 0
Distressed debt 1 1 0 1
Alternatives not broken out 6 11 4 7
Short-term securities/cash/other 7 10 6 6
Short-term securities/cash 4 2 4 5
Other 3 8 2 1
32 32
Percent Allocated to Liquidity Categories in Fiscal Year 2013
numbers in percent (%)
33
Daily 52
Monthly 13
Quarterly 12
Semi-annually 1
Annually 5
Illiquid 16
Other 1
Responding
Institutions
33 33
Classifications Used in Constructing Portfolio♦♦
♦♦ multiple responses allowed
numbers in percent (%)
50
Classifications used
Growth assets 70
Risk reduction 68
Inflation protection (real asset, TIPS) 72
Opportunistic 36
Liquidity 36
Duration 24
Other 6
18
Total
Institutions
No answer/uncertain
34 34
Employs Risk Limits and Guidelines Within Portfolio
Types of Risk Metrics Used♦♦
♦♦ multiple responses allowed
numbers in percent (%) Total Institutions Over $500 Million $101-500 Million Under $101 Million
50 12 28 10
Employs limits or guidelines 42 17 50 50
Employs hard limits 19 0 21 20
Employs soft limits 52 50 58 40
No answer/uncertain 29 50 21 40
numbers in percent (%) Total Institutions Over $500 Million $101-500 Million Under $101 Million
Responding institutions 21 2 14 5
Volatility calculations (standard deviation, etc.) 81 * 86 *
Greek letter measures of return (alpha, beta, etc.) 52 * 50 *
VaR calculations based on returns (top down) 29 * 36 *
VaR calculations based on positions (bottom up) 33 * 43 *
Other 5 * 7 *
*Sample size too small to analyze
35 35
Applies Stress or Scenario Tests to Portfolio
Uses Environmental, Social, Governance (ESG) Criteria for Portfolio♦♦
♦♦ multiple responses allowed
numbers in percent (%) Total Institutions Over $500 Million $101-500 Million Under $101 Million
50 12 28 10
Yes 38 33 36 50
No 30 25 36 20
No answer/uncertain 32 42 28 30
numbers in percent (%) Total Institutions Over $500 Million $101-500 Million Under $101 Million
50 12 28 10
Environmental 6 0 11 0
Social 14 17 14 10
Governance 6 0 11 0
Other 4 0 4 10
None 72 75 75 60
No answer/uncertain 12 8 11 20
36 36
Percentage of Operating Budget Funded by Endowment
Cost of Managing Investment Programs for Fiscal Year 2013
numbers in percent (%) Total Institutions Over $500 Million $101-500 Million Under $101 Million
50 12 28 10
Average percentage of operating budget funded by endowment 55.0 68.8 50.3 54.6
Median percentage of operating budget funded by endowment 83.4 93.3 31.7 57.5
Increased 20 25 17 25
Decreased 18 0 22 25
No change 59 62 61 50
No answer/uncertain 3 13 0 0
Total Institutions Over $500 Million $101-500 Million Under $101 Million
Responding institutions 42 8 24 10
Average cost ($ in thousands) 1,592 3,516 1,451 277
Average cost (basis points) 79 79 85 64
Median cost (basis points) 78 76 78 68
37 37
Included in Cost Calculations♦♦
Percentage of Endowment Under Water for Fiscal Year 2013
♦♦ multiple responses allowed
numbers in percent (%) Total Institutions Over $500 Million $101-500 Million Under $101 Million
50 12 28 10
Asset management fees and mutual fund expenses 62 58 61 70
Direct expenses 46 50 43 50
Incentive/performance fees paid to asset managers 16 25 11 20
Internal staff 16 17 18 10
Consultant fees/outsourcing fees 44 50 43 40
Other 4 8 4 0
numbers in percent (%) Total Institutions Over $500 Million $101-500 Million Under $101 Million
Responding institutions 28 1 23 4
Percentage of endowment under water 1.6 * 1.9 *
*Sample size too small to analyze
38 38
Changes in Gifts and Donations for Fiscal Year 2013
Organization has a Chief Investment Officer
numbers in percent (%) Total Institutions Over $500 Million $101-500 Million Under $101 Million
50 12 28 10
Increase in gifts 38 42 39 30
Median percent increase 29.0 31.6 18.7 112.0
Decrease in gifts 10 16 11 0
Median percent decrease 14.0 0.0 14.0 0.0
No change 26 0 36 30
No answer/uncertain 26 42 14 40
numbers in percent (%) Total Institutions Over $500 Million $101-500 Million Under $101 Million
50 12 28 10
Yes 10 33 4 0
No 86 58 92 100
No answer/uncertain 4 9 4 0
39 39
Responsible for Investment Oversight♦♦
Consultant Use
numbers in percent (%) Total Institutions Over $500 Million $101-500 Million Under $101 Million
50 12 28 10
Board 32 25 32 40
Investment committee 92 83 93 100
Executive leadership//staff 26 25 25 30
Other 0 0 0 0
numbers in percent (%) Total Institutions Over $500 Million $101-500 Million Under $101 Million
50 12 28 10
Used consultant 88 100 93 60
Services used♦♦
Asset allocation/rebalancing 70 67 69 83
Manager selection 84 83 81 100
Policy review 80 75 81 83
Performance attribution and measurement 84 75 85 100
Outsourced investment management 34 17 38 50
ESG review 14 25 4 33
Other 7 17 4 0
♦♦ multiple responses allowed
♦♦ multiple responses allowed
40 40 40 40 40
APPENDIX II
DEMOGRAPHIC TABLE
41 41
D.1 Endowment Fund Flows for Fiscal Year 2013
dollars ($) in thousands
Total
Institutions
Over $500
Million
$101-500
Million
Under $101
Million
50 12 28 10
Total beginning period endowment value 14,500,199 8,818,525 5,157,307 524,367
Total additions to investment pool 1,633,596 932,002 591,829 109,765
Total withdrawals from investment pool -1,147,065 -605,053 -453,754 -88,258
Adjustment to account for non-responding institutions 2,018,421 1,371,766 592,209 54,446
Total ending period endowment value 17,005,151 10,517,240 5,887,591 600,320
42
APPENDIX III
PARTICIPATING INSTITUTIONS
43
Participating Public (Community) Foundations
A G
Amarillo Area Foundation, TX Grand Rapids Community Foundation, MI
Aspen Community Foundation, CO Greater Cincinnati Foundation, OH
Greater Milwaukee Foundation, WI
B Greater New Orleans Foundation, LA
Baton Rouge Area Foundation, LA Greater Texas Foundation, TX
Boston Foundation, MA Gulf Coast Community Foundation, FL
C H
Central Indiana Community Foundation, IN Hampton Roads Community Foundation, VA
Chester County Community Foundation, PA Hawaii Community Foundation, HI
The Cleveland Foundation, OH Health Foundation of South Florida, Inc. & Affiliates, FL
Columbus Jewish Foundation, OH
Community Foundation for Muskegon County, MI J
Community Foundation for Southeast Michigan, MI Jewish Community Foundation of Greater Hartford, CT
Community Foundation of Abilene, TX Jewish Community Foundation of Greater Kansas City, KS
Community Foundation of Collier County, FL Jewish Community Foundation of San Diego, CA
The Community Foundation of Greater Atlanta, GA
Community Foundation of Greater Chattanooga, TN K
Community Foundation of Lorain County, OH Kalamazoo Community Foundation, MI
Community Foundation of St. Joseph County, IN
The Community Foundation Serving Richmond and Central Virginia, VA M
Community Funds, Inc. - Affiliated with New York Community Trust, NY Madison Community Foundation, WI
Maine Community Foundation, ME
D McPherson County Community Foundation, KS
Dallas Jewish Community Foundation, TX The Miami Foundation, FL
Music Center Foundation, CA
E
Endeavor Foundation, AR
43
44
Participating Public (Community) Foundations
O S
The Oregon Community Foundation, OR The Saint Paul Foundation, MN
Silicon Valley Community Foundation, CA
P Sioux Falls Area Community Foundation, SD
The Pittsburgh Foundation, PA St. Luke's Health Initiatives, AZ
R V
The REACH Healthcare Foundation , KS Valley Baptist Legacy Foundation, TX
Rochester Area Community Foundation, NY Vermont Community Foundation, VT
Rose Community Foundation, CO
Y
York County Community Foundation, PA
44
45