October 18, 2007 | Read Time: 2 minutes
Nonprofit health-care organizations achieved strong growth in their investment assets last year, with an average gain of 10.6 percent, compared with 6.3 percent in 2005, according to a new report.
The improved performance, which came after a three-year downturn, was largely due to stock-market gains.
“The markets were very kind to the sector this year,” said John S. Griswold Jr., executive director of the Commonfund Institute, which conducted the study. “That helps the financial stability of these organizations, many of which are under some financial strain.”
The study was based on data from 184 hospitals, health-care systems, and other nonprofit health-care groups. The organizations held an average of $944-million in investment assets.
Organizations with more than $1-billion in investment funds tended to perform better, in large part because they were more heavily invested in international equities.
Among different types of assets, international equities posted the biggest returns, at 24.7 percent, followed by domestic equities, at 13.9 percent, and alternative strategies, at 11.7 percent.
Larger groups also reported bigger jumps in their fund raising.
Sixty-five percent of nonprofit groups with assets of $1-billion or more said they raised more last year than in 2005, compared with 10 percent of charities that held between $51-million and $100-million, according to the report.
Overall, 43 percent of organizations said they raised more money last year than in 2005, while 13 percent said they raised less.
Oversight of Assets
Nonprofit organizations that provided data for the study also reported slowing their hiring of full-time staff members who help manage investments.
Although some health-care organizations are probably turning to consultants or boards, Mr. Griswold said he found that trend troubling.
“When you see the amount of staff, you wonder who is doing the due diligence and risk management,” he said.
The report is conducted annually by the Commonfund Institute, the research arm of Commonfund, a Wilton, Conn., company that manages $43-billion in assets for approximately 1,800 educational institutions, foundations, health-care groups, and other nonprofit organizations.
Nonprofit groups can obtain a free copy of “2007 Commonfund Benchmarks Study of Healthcare Organizations” by sending an e-mail message to Mr. Griswold at jgriswol@cfund.org.
