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Endowments, Charitable Foundations Focused on Rebuilding Following Recession-Driven Declines
Alternative Investments and Liquidity Also Top Priorities
| Source: Spectrem Group
CHICAGO, IL--(Marketwire - December 9, 2009) - Impacted by recession and declines in asset
values, endowments and charitable foundations are focused today on
rebuilding their funds and evaluating both alternative investments and
their own liquidity.
Nearly two-thirds (62%) of endowments and foundations polled cited
rebuilding and growing their funds as a priority over the next year to 18
months, according to a new report, "The Endowment & Foundation Market
2009," released today by Spectrem Group (www.spectrem.com). For endowments
and foundations with assets of $50 million to $199 million, 69% plan to
focus on rebuilding.
Total endowment assets fell 24% in 2008 to $768 billion, from $1 trillion
the prior year. Since 2008, assets appear to have rebounded only slightly.
"The recession has severely impacted endowments and charitable foundations,
erasing a considerable portion of their assets and putting pressure on
their ability to fulfill their missions. Some have had to reduce
scholarships, while others have had to cut back grants. With traditional
sources of financial support impacted as well, these organizations must
focus on supplementing their fundraising with new strategies designed first
to generate growth and additionally to ensure they have the liquidity to
meet their spending needs," said Gerald O'Connor, a Director at Spectrem
Group.
Given these needs, alternative investments, which include hedge funds,
private equity and venture capital, are a priority in the post-recession
environment. Alternatives were cited as an area of focus for more than
one-third (36%) of the smallest endowments and foundations, those with
assets of $25 million to $49 million, and 29% of the largest organizations,
with assets of more than $200 million.
The largest endowments and foundations are also the most concerned with
liquidity, with 41% citing it as a priority over the next year to 18
months. Liquidity concerns fall as asset size decreases, with zero percent
of organizations with assets in the $25-$49 million range considering it a
priority.
The Spectrem report, "The Endowment & Foundation Market 2009," is based on
interviews with chief investment officers at 81 organizations with assets
ranging from $25 million to more than $1 billion. Interviews were
conducted in August and September of 2009.