Endowments Put Priority on Rebuilding
January 14, 2010 | Read Time: 2 minutes
Nearly two-thirds of charitable endowments and foundations report they are focused on rebuilding assets after suffering severe losses in the recession, according to a new survey of chief investment officers.
The survey, by the Spectrem Group, a wealth-management consulting firm in Chicago, found that 62 percent of the 81 respondents, interviewed in August and September, said they intend to focus on rebuilding assets over the next year to 18 months. Groups with assets of $50-million to $199-million were most likely to take this approach, with 69 percent intending to focus on rebuilding.
Spectrem estimates total endowment and foundation assets dropped 24 percent in 2008, down to $768-billion from $1-trillion in 2007. Among those groups surveyed by Spectrem, asset losses were less severe, averaging a 19-percent decrease between 2008 and 2007.
Diverse Plans
Plans for rebuilding varied. The smallest endowments and foundations surveyed — those with assets in the $25-million to $49-million range — were most likely to cite alternative investments, such as hedge funds, private equity, and venture capital, with 36 percent of those groups saying alternatives would be an area of focus. (By contrast, of the next largest group of organizations — those with assets of $50-million to $199-million — only 10 percent said they would focus on alternatives.)
The largest groups in the survey were most likely to give priority to maintaining the liquidity of their assets, with 41 percent of groups with assets of $200-million and up citing that goal over the next year to 18 months. Interest in liquidity fell with asset size, with zero percent of organizations with assets in the $25-million to $49-million range citing it as a priority.
About 40 percent of all groups surveyed said they expect to replace their investment managers within the next two years.
Copies of the report, “The Endowment & Foundation Market 2009,” are available from the Spectrem Group. Go to: http://www.spectremcom/ProductInfo.aspx?productid=EANDF.
