Data shows paltry returns for foundation endowments
DOI | http://doi.org/10.1002/nba.30237 |
Published date | 01 October 2016 |
Date | 01 October 2016 |
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(See STANDARDS on page 2)
Data shows paltry returns
for foundation endowments
Data gathered in the 2015 Council on Founda-
tions – Commonfund Study of Investment of En-
dowments for Private and Community Foundations
show that private foundations reported an average
return of 0.0 percent for the 2015 scal year, down
from the 6.1 percent return reported for FY2014,
while participating community foundations reported
an average annual return of –1.8 percent compared
with 4.8 percent for FY2014.
Despite this, however, the effective spending rate
remained unchanged at an average of 5.1 percent
for all participating foundations, the report showed.
According to Vikki Spruill, president and CEO
of the Council on Foundations, the study conrms
that foundations are continuing to invest in their
missions and maintain consistent spending. But if
the low rates of returns continue, that consistency
might be in jeopardy.
“Two years of low investment results have reduced
foundations’ trailing 10-year returns to the 5.1–5.9
percent range. Without higher long-term returns,
it will be difcult for foundations to maintain their
endowments once annual spending, ination, and in-
vestment management costs are taken into account,”
Spruill said in a joint statement with William Jarvis,
executive director of the Commonfund Institute.
To read the report in full, go to http://www.cof.org. ■
Updated accounting standards
issued for nonprots
statements as just a vehicle to report history.”
The ASU covers several key components of nonprot
nancial statements, including:
• Net asset classication. According to the FASB,
the updated standard:
• Replaces the existing three classes of net assets
(unrestricted, temporarily restricted and permanently
restricted) with two new classes of net assets—net assets
The Financial Accounting Standards Board has
nalized its Accounting Standards Update for nonprof-
its, incorporating a series of changes the organization
says will enable charities to provide greater clarity and
transparency in their nancial statements and allow for
better comparability from group to group—beneting
a whole host of end-users of those statements, includ-
ing creditors, donors, grantors, trade associations and
other industry groups.
According to Lee Klumpp, national assurance direc-
tor for the nonprot and education industry division at
accounting rm BDO and member of the FASB’s Not-
for-Prot Advisory Committee, the updated standards
are good for the nonprots affected by them, even if
they might not see it that way at rst.
“There’s often an initial resistance to change,”
Klumpp said. “But this is an opportunity for nonprof-
its to be catalysts for progress, taking their nancial
statements to a higher level and making them a better
resource for communicating accomplishments and
outcomes to stakeholders instead of using nancial
Vol. 325 October 2016
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