Health-Care Endowments Saw Modest Signs of Improvement in 2009, Report Says

Nonprofit health-care organizations recovered some of their investment losses last year, according to a study by the Commonfund Institute, in Wilton, Conn. But their endowments did not perform as well as those of some other types of nonprofits.

The endowments of the 85 nonprofit health-care groups in the study rose by an average of 18.8 percent, a vast improvement over the steep 21.1-percent drop recorded in 2008.

The organizations posted a small loss over a three-year period, of 0.2 percent. Their endowments rose slightly over a five-year period, by 3.5 percent.

“Fiscal year 2009’s results represented welcome and much-needed relief after the dismal fiscal year 2008,” John S. Griswold, executive director of the Commonfund Institute, said in a statement. “Still, the fact remains that the average return of 18.8 percent was not enough to move trailing three-year returns into positive territory.”

He added: “The average 3.5 percent return for the five-year period is well short of covering health-care organizations’ spending and investment and costs, plus the added impact of inflation.”

The returns that health-care groups posted last year were smaller than those recorded by foundations (20.9 percent) and by operating charities (21.5 percent), as measured by two Commonfund studies.

Health groups’ investments in international equities performed the best, posting average returns of 37.3 percent. By contrast, investments in private-equity real estate fared the worst, posting average losses of 25.8 percent.

Nonprofit groups in the study saw their debt grow in 2009, to an average of $903-million from $681-million the previous year. Capital budgets, meanwhile, grew modestly, rising to an average of $116-million this year compared with $109-million in 2008.

More information is available on the Web site of Commonfund, which manages endowments of nonprofit groups. The Commonfund Institute is its research arm.