Assets of U.S. foundation assets increased by $30 billion, or 2%, to nearly $1.6 trillion during the second quarter of 2024. Year-to-date assets are up nearly $120 billion, or 8%, marking a third consecutive quarterly record.  

Foundation assets have grown by about 60% during the past five years and have nearly doubled during the past decade. The asset growth has been fueled by a mix of investment returns and incoming contributions, accounting for about 70% and 30% of the increase respectively. 

Those are a few of the estimated figures from FoundationMark, which tracks the investment performance of 50,000 foundations representing roughly 98% of total foundation assets in the U.S.  

FoundationMark estimates that the median investment gain for foundations was 2.6% in the second quarter of 2024, and 9.4% for the first half. 

As giving amounts are tied to asset levels, it follows that giving is in record territory and is expected to reach close to $105 billion this year, surpassing the $100 billion mark for the first time, according to FoundationMark estimates. 

The firm projects that foundation giving in 2024 will increase 6.6% to $104.6 billion. The projection is based on historic giving rates and current asset levels. According to the report’s authors, foundation giving can be viewed as the output of two important variables: 1) payout rate, and 2) asset level. The first variable, the payout rate, has consistently been in a narrow range of 6.8% to 7.2% of the three-year average asset levels for more than 10 years. The second variable, asset level, is the estimated current value of foundations’ assets as of June 30, 2024, of $1.6 trillion.   

Combining the two variables yields the 2024 giving projection which assumes that foundations maintain their giving rate of just more than 7% of average assets and that assets remain close to the current level. Strong investment performance during the balance of the year would result in higher projected giving while weak performance would lower the giving forecast. Better investment performance means more money for grants.

The Grantmaker Investment Value (GIV) index returned to record territory in February this year, recovering past the previous high set in December 2021. Foundations performed slightly below the traditional balanced institutional portfolio consisting of 60% U.S. stocks and 40% U.S. bonds during the past year. Similarly, over longer periods, foundations have lagged the passive benchmark, according data from FoundationMark. In the 5-year period to June 2024, foundations gained 8.1% per year compared to the 60/40 portfolios gain of 9%, and the 10-year numbers were 6.8% for foundations and 8.4% for the 60/40 portfolio.

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Source From Non Profit Times