executive summary - council on foundations · institutions with assets between $101-500 million...

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Executive Summary – Community Foundations Report FY2013

Demographic Profile

The fifty Community Foundations participating in this year’s Commonfund Benchmarks Study® Community Foundations

Report represent just over $17.0 billion in total endowment assets, with 62 percent of the population having participated in last

year’s Study. Institutions with assets between $101-500 Million comprised fifty-six percent of this year’s total institutions,

followed by institutions with assets Over $500 Million (24 percent) and those with assets Under $101 Million (20 percent). This

Report covers the 2013 fiscal year (January 1–December 31, 2013).

Returns

Among all Community Foundations, FY2013 returns, as of December 31, 2013, averaged 15.2 percent (all returns reported net of

fees), building on the strong 12.2 percent return from FY2012. Average FY2013 returns among institutions with assets Under

$101 Million (16.1 percent) outperformed those reported by both institutions with assets Over $500 Million and between $101-

500 Million (15.0 and 14.9 percent, respectively). (When viewing FY2013 returns in this year’s Council on Foundations–

Commonfund Study of Investments for Private Foundations, the inverse was true – institutions with assets Over $500 Million

reported an average return of 16.5 percent, outperforming both other size cohorts, 15.5 and 15.2 percent, respectively.)

Returns for the trailing three-year period averaged 8.5 percent among all participating Community Foundations, compared to last

year’s 7.7 percent. Trailing five-year returns increased markedly to 12.0 percent from 2.3 percent last year, as the poor returns

of FY2008 dropped out of the five-year calculation. Trailing 10-year returns gained an average 6.7 percent.

Of the major asset classes reported among all Community Foundations, domestic equities produced the strongest average

FY2013 return (30.9 percent), more than doubling last year’s return (14.8 percent), followed by international equities

(15.1 percent) and alternative strategies (10.2 percent – up from 6.4 percent in FY2012). Short-term securities/cash/other

produced an average return of 1.9 percent, while fixed income was the only major asset class to generate a negative return

(-0.7 percent) – a marked reversal from last year’s 8.0 percent gain.

Of the sub-asset classes of alternative strategies, venture capital, distressed debt and marketable alternative strategies produced

the strongest FY2013 returns (15.4, 12.7 and 11.0 percent, respectively), followed by energy and natural resources (9.6 percent).

Commodities and managed futures generated the weakest FY2013 return, at -6.1 percent.

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Returns (continued)

Eighty percent of all Community Foundations reported having long-term return objectives, predominantly in the ranges of 8.0-8.9

percent (more common among large and mid-size institutions) and 7.0-7.9 percent (more common among institutions with assets

Under $101 Million).

Asset Allocations

As of December 31, 2013, participating Community Foundations’ average dollar-weighted asset allocation was: 28 percent to

domestic equities, 27 percent to alternative strategies, 23 percent to international equities (up from 19 percent in FY2012), 13 percent

to fixed income (down from 18 percent in FY2012) and 9 percent to short-term securities/cash/other (up from 6 percent in FY2012).

Community Foundations with assets Over $500 Million reported the highest average allocation to alternative strategies (29 percent)

and double the allocation of both other size cohorts to short-term securities/cash/other (10 percent), while domestic and international

equities and fixed income allocations (27, 21 and 13 percent, respectively) were lowest.

Community Foundations with assets Under $101 Million showed the greatest propensity to allocate toward domestic and international

equities (33 and 25 percent, respectively) and fixed income (17 percent) during FY2013, collectively higher than both other size

cohorts – albeit moderately in comparison to the mid-size institutions group.

Spending and Fund Flows

The average effective spending rate for Community Foundations participating in this year’s Study – calculated by dividing

endowment dollars spent by the beginning endowment value – was 4.8 percent, down modestly from 4.9 percent in FY2012. The

highest FY2013 effective spending rate, 5.2 percent, was found among institutions with assets Over $500 Million. The lowest

effective spending rate, 3.8 percent, occurred among institutions with assets Under $101 Million, down from 4.4 percent last year,

while mid-size institutions reported an average effective spending rate of 5.0 percent. (When viewing this year’s Council on

Foundations–Commonfund Study of Investments for Private Foundations, FY2013 effective spending rates reported among mid-size

and smaller institutions were notably higher, at 5.7 and 5.3 percent, respectively.)

Among all Community Foundations, 45 percent reported a decreased effective spending rate during FY2013, with an average

percentage decrease of -0.5 percent, while 13 percent reported an increase in effective spending rate, with an average percentage

increase of 0.8 percent. Thirty-six percent reported no change.

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Spending and Fund Flows (continued)

Over half (56 percent) of all Community Foundations reported increased spending dollars during FY2013, consistent across all

size cohorts, with the average percentage increase ranging from 7.4 percent among institutions with assets Over $500 Million to

17.3 percent among institutions with assets between $101-500 Million.

The predominant FY2013 spending policy across all size cohorts was to spend a percentage of a moving average (ranging from a

reported 86 percent of institutions with assets between $101-500 Million to 67 percent of institutions with assets Over $500

Million), with the average percentage ranging from 4.4-4.9 percent.

Thirty-eight percent of all Community Foundations reported increased gifts and donations during FY2013, with the median

percentage increase being 29.0 percent, while only 10 percent reported decreased gifts (with the median percentage decrease being

14.0 percent) and just over one-quarter (26 percent) reported no change.

Resources, Management and Governance

Among participating Community Foundations, an average 5.9 separate individual managers were reported being utilized for direct

investments in alternative strategies during FY2013, followed by domestic and international equities (4.8 and 4.4, respectively).

Institutions with assets Over $500 Million reported using the greatest average number of managers for all mandates listed,

predominantly for direct investments in alternative strategies (13.1), domestic and international equities (6.4 and 6.3, respectively)

– the latter being up notably from an average 4.7 in FY2012.

Eighty-eight percent of all Community Foundations reported using consultants during FY2013; primarily for performance

measurement, manager selection, policy review and asset allocation/rebalancing.

Among all Community Foundations, an average 0.9 full-time equivalent (FTE) was reported being staffed in the investment

function during FY2013, while the median number of FTEs was 0.5.

**Reading this Report**

Some of the data in this Executive Summary refer to a supplemental set of data tables provided in the Appendix of this Report. In

addition, we include a demographic table of data highlighting endowment fund flows during FY2013.

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The Benchmarks Leaders Top Quartile Performers

Unless otherwise indicated, all performance information reflects net total returns.

† Dollar-weighted

28%

13%

23%

27%

9%

Total Institutions

Domestic equities Fixed income

International equities Alternative strategies

Short-term securities/cash/other

Asset Allocation Comparison†

Fiscal Year 2013

38%

15%

22%

23%

2%

Top Quartile

15.2%

8.5%

12.0%

6.7%

18.1%

9.6%

13.2%

7.3%

Pe

rce

nt (%

)

Total Institutions

Top Quartile

Average Reported Returns

FY2013 net annual

total return

3-year net return 5-year net return 10-year net return

One-, Three-, Five- and 10-Year

Demographics | Fiscal Year 2013

Total Institutions Top Quartile

Total Institutions (50) (12)

Over $500 Million 12 3

$101-500 Million 28 6

Under $101 Million 10 3

Note: Top quartile is defined as the top 25 percent of 48 institutions that provided return data.

7 7 7 7

Average One-, Three-, Five- and 10-Year Net Returns

Among the Total Community Foundations group, FY2013 returns averaged 15.2%, while three-year returns averaged 8.5%. For the

trailing five-year period, returns gained an average 12.0%, while 10-year returns averaged 6.7%.

Among Institutions with assets Under $101 Million, FY2013 returns averaged 16.1%, while returns for the trailing five-year period

averaged 12.2%, both outperforming that of Institutions with assets Over $500 Million (15.0% and 11.9%, respectively) and

Institutions with assets between $101-500 Million (14.9% and 12.0%, respectively).

Among Institutions with assets Over $500 Million, three-year returns averaged 8.6%, modestly outperforming both other size cohorts

(both 8.4%, respectively).

For the trailing 10-year period, Institutions with assets between $101-500 Million reported an average return of 6.6%, moderately

underperforming that of both other size cohorts (both 6.9%, respectively).

Note: Ninety six percent of participating institutions (48 of the 50 participants) provided return data for the most recent fiscal year, 88% (44 institutions) provided three-year return

data, 86% (43 institutions) provided five-year return data and 70% (35 institutions) provided 10-year return data. Return data cited in this report represent the average returns for

institutions providing data for each period.

numbers in percent (%)

Total Institutions Over $500 Million $101-500 Million Under $101 Million

50 12 28 10

FY2013 net annual total return 15.2 15.0 14.9 16.1

3-year net return 8.5 8.6 8.4 8.4

5-year net return 12.0 11.9 12.0 12.2

10-year net return 6.7 6.9 6.6 6.9

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Average Returns by Asset Class for Fiscal Year 2013

8 8

Of the major asset classes reported among all Community Foundations, domestic equities produced the strongest average

FY2013 return (30.9%), more than doubling last year’s return (14.8%), followed by international equities (15.1%) and

alternative strategies (10.2% – up from 6.4% in FY2012). Short-term securities/cash/other produced an average return of

1.9%, while fixed income was the only major asset class to generate a negative return (-0.7%) – a marked reversal from last

year’s 8.0% gain.

Among the sub-asset classes of alternatives reported by all Community Foundations, venture capital, distressed debt and

marketable alternative strategies produced the strongest FY2013 returns (15.4%, 12.7% and 11.0%, respectively), followed by

energy and natural resources (9.6%). Commodities and managed futures generated the weakest FY2013 return, at -6.1%.


Average FY2013 total return 15.2

Domestic equities 30.9

Fixed income -0.7

International equities 15.1

Alternative strategies 10.2

Private equity (LBOs, mezzanine, M&A funds and international private equity) 8.3

Marketable alternative strategies (hedge funds, absolute return, market neutral, long/short, 130/30, event-driven and derivatives) 11.0

Venture capital 15.4

Private equity real estate (non-campus) 8.0

Energy & natural resources 9.6

Commodities and managed futures -6.1

Distressed debt 12.7

Short-term securities/cash/other 1.9

Short-term securities/cash 0.1

Other 13.6

Total

Institutions

9 9 9

Asset Allocations† for Fiscal Year 2013

† Dollar-weighted

Average FY2013 asset allocation among the Total Community Foundations group was 28% to domestic equities, 27% to

alternative strategies, 23% to international equities, 13% to fixed income and 9% to short-term securities/cash/other.

Institutions with assets Over $500 Million reported the highest average allocation to alternative strategies (29%) during

FY2013 than both other size cohorts (25% and 20%, respectively), while short-term securities/cash/other allocation (10%) was

double that of both other size cohorts (both 5%, respectively).

Institutions with assets Under $101 Million and with assets between $101-500 Million showed a greater propensity to allocate

toward domestic equities (33% and 31%, respectively), international equities (25% and 24%, respectively) and fixed income

(17% and 15%, respectively), than Institutions with assets Over $500 Million (27%, 21% and 13%, respectively) during

FY2013.



50 12 28 10

Domestic equities 28 27 31 33

Fixed income 13 13 15 17

International equities 23 21 24 25

Alternative strategies 27 29 25 20

Short-term securities/cash/other 9 10 5 5

10 10 10

Alternative Strategies Asset Mix† for Fiscal Year 2013

† Dollar-weighted

The predominant FY2013 alternative strategies allocation among all size cohorts was to marketable alternative strategies, highest

among Community Foundations with assets Under $101 Million (67%), moderately lower among Community Foundations with

assets Over $500 Million (63%) and those with assets between $101-500 Million (59%).

Institutions with assets Under $101 Million reported the highest average allocation to energy and natural resources (19%), notably

higher than both other size cohorts (12% and 13%, respectively), while private equity allocation (3%) was conversely markedly

lower than both other cohorts (both 13%, respectively).

Institutions with assets between $101-500 Million showed a greater propensity to allocate toward venture capital (7%) than both

other size cohorts (2% and 1%, respectively), and a lesser propensity to allocate toward distressed debt (2%) than both other

cohorts (4% and 6%, respectively).



Responding institutions 34 7 20 7

Private equity (LBOs, mezzanine, M&A funds and international

private equity) 13 13 13 3

Marketable alternative strategies (hedge funds, absolute return,

market neutral, long/short, 130/30, event-driven and derivatives) 61 63 59 67

Venture capital 4 2 7 1

Private equity real estate (non-campus) 6 6 6 4

Energy and natural resources (oil, gas, timber, commodities and

managed futures) 13 12 13 19

Distressed debt 3 4 2 6

11 11

Portfolio Rebalancing for Fiscal Year 2013

Eighty-four percent of the Total Community Foundations group reported rebalancing their portfolios during FY2013.

Ninety percent of Institutions with assets Under $101 Million reported rebalancing during FY2013, highest among the size

cohorts, followed closely by Institutions with assets between $101-500 Million (86%).

Three-quarters (75%) of Institutions with assets Over $500 Million reported rebalancing during FY2013, lowest among

constituencies.



50 12 28 10

Rebalanced portfolio 84 75 86 90

12 12

Portfolio Rebalancing Frequency♦♦ for Fiscal Year 2013

♦♦ multiple responses allowed

Among the Total Community Foundations group using a calendar-based approach to portfolio rebalancing during FY2013, 27%

reported they rebalanced quarterly (half of Institutions with assets Under $101 Million – highest among constituencies), while an

average 13% reported they rebalance annually and/or monthly, respectively. (No Institutions with assets Under $101 Million reported

rebalancing annually.)

Among those utilizing a market value-based methodology, an average 87% predominantly used a target- and range-based approach,

while 53% rebalanced in response to major gifts or other cash flows, both mostly consistent across all size cohorts.




Calendar-based

Annually 13 20 16 0

Semi-annually 2 0 4 0

Quarterly 27 20 20 50

Monthly 13 20 12 10

Other 4 0 4 10

Market value-based

Target- and range-based 87 90 84 90

Response to major gifts or other cash flows 53 50 52 60

Other 0 0 0 0

13 13

Average Annual Effective Spending Rates for Fiscal Year 2013

Among the Total Community Foundations group, the average FY2013 effective spending rate was 4.8%.

Institutions with assets Over $500 Million reported the highest average FY2013 effective spending rate (5.2%) among all size

cohorts, followed closely by Institutions with assets between $101-500 Million (5.0%).

Among Institutions with assets Under $101 Million, the average FY2013 effective spending rate was 3.8%, significantly lower

than both other size cohorts.



50 12 28 10

FY2013 effective spending rate 4.8 5.2 5.0 3.8

14 14

Changes to Effective Spending Rates for Fiscal Year 2013

Among the Total Community Foundations group, 45% reported a decreased effective spending rate during FY2013, with an

average percentage decrease of -0.5%, while 13% reported an increase in effective spending rate, with an average percentage

increase of 0.8%. Thirty-six percent reported no change.

Among Institutions with assets Over $500 Million, 62% reported a decreased effective spending rate, consistent with 60% of

Institutions with assets Under $101 Million, with average percentage decreases of -0.6% and -0.4%, respectively. One-third (33%)

of Institutions with assets between $101-500 Million reported a decreased effective spending rate, lowest among constituencies,

with an average percentage decrease of -0.4%.

Among Institutions with assets between $101-500 Million, 17% reported an increase in effective spending rate, with an average

percentage increase of 0.9%, both moderately higher than that of Institutions with assets Over $500 Million – 13% of whom

reported an increased effective spending rate, with an average percentage increase of 0.5%. No Institutions with assets Under

$101 Million reported an increase in effective spending rate during FY2013.



50 12 28 10

Increased spending rate 13 13 17 0

Average percentage increase 0.8 0.5 0.9 0

Decreased spending rate 45 62 33 60

Average percentage decrease -0.5 -0.6 -0.4 -0.4

No change 36 25 39 40

No answer/uncertain 6 0 11 0

15 15

Spending Policy♦♦ for Fiscal Year 2013


The predominant FY2013 spending policy across all constituencies was to spend a percentage of a moving average (ranging from an

average 86% among Institutions with assets between $101-500 Million to 67% of Institutions with assets Over $500 Million), with the

average percentage ranging from 4.4-4.9%.

Seventeen percent of Institutions with assets Over $500 Million reported spending a pre-specified percentage of beginning market

value, followed by 7% of Institutions with assets between $101-500 Million, while both cohorts reported the average percentage

being 5.0%.

Twenty percent of Institutions with assets Under $101 Million reported they decide on an appropriate rate each year, followed by 8% of

Institutions with assets Over $500 Million and 4% of Institutions with assets between $101-500 Million.



50 12 28 10

Spent all current income 0 0 0 0

Percentage of a moving average 80 67 86 80

Average percentage 4.8 4.9 4.8 4.4

Decide on an appropriate rate each year 8 8 4 20

Grow distribution at predetermined inflation rate 0 0 0 0

Spend a pre-specified percentage of beginning market value 8 17 7 0

Average pre-specified percentage spent 5.0 5.0 5.0 0.0

Last year's spending plus inflation with upper and lower bands 4 8 4 0

Weighted average or hybrid method (Yale/Stanford Rule) 2 8 0 0

Other 8 0 7 20

16 16

Changes to Spending Dollars for Fiscal Year 2013

Among the Total Community Foundations group, 56% reported increased spending dollars during FY2013, with the average

percentage increase being 14.6% (median increase, 10.6%). Eighteen percent reported decreased spending dollars, with the average

percentage decrease being 6.0% (median decrease, 5.0%), while 16% reported no change.

Among Institutions with assets Over $500 Million, 58% reported increased spending dollars, with an average percentage increase of

7.4% and a median increase of 6.4% – both lowest among the size cohorts. Seventeen percent reported decreased spending dollars,

with an average percentage decrease of 9.2% (highest among constituencies), while 8% reported no change (lowest among

constituencies).

Among Institutions with assets between $101-500 Million, 54% reported increased spending dollars, with an average percentage

increase of 17.3% (highest among constituencies) and a median increase of 11.5%. Twenty-one percent reported decreased spending

dollars, highest among constituencies, with an average percentage decrease of 5.8%, while 14% reported no change.

Among Institutions with assets Under $101 Million, 60% reported increased spending dollars, with an average percentage increase of

12.7% and a median increase of 14.8%, the latter being highest among constituencies. Ten percent reported decreased spending

dollars, with an average percentage decrease of 0.5% (lowest among constituencies), while 30% reported no change (highest among

constituencies).



50 12 28 10

Increased spending dollars 56 58 54 60

Average percentage increase 14.6 7.4 17.3 12.7

Median percentage increase 10.6 6.4 11.5 14.8

Decreased spending dollars 18 17 21 10

Average percentage decrease 6.0 9.2 5.8 0.5

Median percentage decrease 5.0 9.2 5.3 0.5

No change 16 8 14 30


17 17

Professional Staffing of Investment Function for Fiscal Year 2013

Among the Total Community Foundations group, an average 0.9 full-time equivalent (FTE) was reported being staffed in the

investment function during FY2013, while the median number of FTEs was 0.5 (which can be more indicative of true

employment levels).

Among Institutions with assets Over $500 Million, an average and median 1.5 FTEs were reported being staffed in the

investment function, both notably higher than all other size cohorts.

Among Institutions with assets between $101-500 Million, an average 0.6 FTE was reported being staffed in the investment

function, while the median number of FTEs was 0.4, both lowest among constituencies.

Among Institutions with assets Under $101 Million, an average 0.8 FTE was reported being staffed in the investment function,

while the median number of FTEs was 0.5.

Number of Full-Time Equivalents (FTEs)


50 12 28 10

Average number of FTEs 0.9 1.5 0.6 0.8

Median number of FTEs 0.5 1.5 0.4 0.5

18 18

Outsourcing of Investment Function for Fiscal Year 2013

Among the Total Community Foundations group, more than half (60%) reported they have neither outsourced the investment

management function, nor are considering it, while an average 34% have substantially outsourced and only 4% are considering

outsourcing.

Among Institutions with assets Over $500 Million, nearly all (92%) reported they have neither outsourced the investment

management function, nor are considering it, significantly higher than both other size cohorts, while only 8% have substantially

outsourced (notably lower than both other size cohorts) and none are considering outsourcing.

Among Institutions with assets between $101-500 Million, just over half (54%) reported they have neither outsourced the

investment management function, nor are considering it, while 36% have substantially outsourced and 7% are considering

outsourcing.

Among Institutions with assets Under $101 Million, 60% reported they have substantially outsourced the investment function,

notably higher than both other size cohorts, while the remaining 40% have neither outsourced, nor are considering it, and none

are considering outsourcing.



50 12 28 10

Have substantially outsourced 34 8 36 60

Considering substantially outsourcing 4 0 7 0

Neither 60 92 54 40


19 19

Number of Managers Used by Asset Class in Fiscal Year 2013

Among the Total Community Foundations group, an average 5.9 separate individual managers were reported being utilized for

direct investments in alternative strategies during FY2013, followed by domestic equities (4.8), international equities (4.4) and

fund-of-funds investments in alternatives (3.7).

Institutions with assets Over $500 Million reported utilizing the highest average number of separate managers for all mandates

listed – most notably direct investments in alternatives (13.1), domestic and international equities (6.4 and 6.3, respectively) and

fund-of-funds investments in alternatives (5.7).

Among Institutions with assets between $101-500 Million, an average 4.6 separate individual managers were reported being

used for domestic equities, followed by direct investments in alternatives (4.5) and international equities (4.3). An average 2.9

managers were reported being used for fund-of-funds investments in alternatives, lowest among the size cohorts.

Among Institutions with assets Under $101 Million, an average 3.5 separate individual managers were reported being used for

fund-of-funds investments in alternative strategies, followed by domestic equities (3.4) and fixed income (2.9) – both lowest

among the size cohorts. Average manager use for international equities and direct investments in alternatives (2.3 and 2.0,

respectively) was considerably lower than both other size cohorts.

average number


50 12 28 10

Domestic equities 4.8 6.4 4.6 3.4

Fixed income 3.5 4.4 3.3 2.9

International equities 4.4 6.3 4.3 2.3

Alternative strategies (direct) 5.9 13.1 4.5 2.0

Alternative strategies (fund of funds) 3.7 5.7 2.9 3.5

20 20

Responsible for Ongoing Due Diligence ♦♦

Among the Total Community Foundations group, investment or finance committee was the most commonly cited entity that

performed ongoing due diligence on investment managers hired (62%) – the predominant entity cited among Institutions with

assets between $101-500 Million (68%) and Institutions with assets Under $101 Million (50%).

Institutions with assets Over $500 Million more often have dedicated internal staff (67%), or utilize a consultant that is not an

outsourced investment manager (83%) – both significantly higher than the other size cohorts.

Half (50%) of Institutions with assets between $101-500 Million cited using a consultant that is not an outsourced investment

manager, while only 20% of Institutions with assets Under $101 Million reported doing so.



50 12 28 10

Board 6 0 11 0

Investment or finance committee 62 58 68 50

Dedicated internal staff 32 67 25 10

Consultant (is not an outsourced investment manager) 52 83 50 20

Consultant (is an outsourced investment manager) 14 0 18 20

Outsourced investment manager (is not a consultant) 10 0 11 20

Other 0 0 0 0



21 21

Ongoing Due Diligence Procedures Employed♦♦ in Fiscal Year 2013

The most commonly reported due diligence procedures employed during FY2013 across all size cohorts were: quantitative

attribution analysis of manager performance (62% among Total – more common among large and mid-size institutions);

telephone conference calls with managers (60% among Total – most common among Institutions with assets Over $500 Million,

83%); peer group comparisons (58% among Total); on-site manager visits at my institution (56% among Total) and on-site visits

with managers at their offices (46% among Total).

Half (50%) of Institutions with assets Under $101 Million reported employing third-party evaluations of managers during

FY2013, highest among constituencies.



50 12 28 10

On-site manager visits at my institution 56 67 57 40

On-site visits with managers at their offices 46 67 46 20

Telephone conference calls with managers 60 83 57 40

Quantitative attribution analysis of manager performance 62 67 68 40

Position-based risk analysis 38 42 39 30

Peer group comparisons 58 67 57 50

Annual due diligence questionnaire updates 16 17 14 20

Third-party evaluations of managers 36 33 32 50

Other 14 8 14 20

No answer/uncertain 6 8 7 0♦♦ multiple responses allowed

22 22

Conflict of Interest Policies♦♦

Nearly all (96%) Community Foundations reported having a conflict of interest policy, predominantly for the board and investment

committee (82%) or solely for the board (14%).

Nearly all (92%) Community Foundations reported their policy applies to senior staff.

Institutions with assets Under $101 Million showed a greater propensity to allow board members to conduct business with the

organization (50%) than both other size cohorts (33% and 32%, respectively).

All (100%) have a process for resolution of potential conflicts, primarily recusal and disclosure (83% among total).




50 12 28 10

Have conflict of interest policy 96 92 96 100

For board 14 8 18 10

For investment committee 0 0 0 0

For board and investment committee 82 83 79 90

Stricter standard applies to investment committee 4 8 4 0

Policy applies to senior staff 92 92 89 100

Allow board members to conduct business with organization 36 33 32 50

Have process for resolution of potential conflicts 100 100 100 100

Recusal and disclosure 83 100 67 100

Recusal only 6 0 11 0

Disclosure only 11 0 22 0

Other 0 0 0 0

23 23

Voting Members on Investment Committee for Fiscal Year 2013

Among the Total Community Foundations group, the average number of voting members on the investment committee was 8.2

during FY2013, mostly consistent across all size cohorts – modestly higher among Community Foundations with assets between

$101-500 Million (8.3), slightly lower among Community Foundations with assets Under $101 Million (8.0).

average number


50 12 28 10

Voting investment committee members 8.2 8.2 8.3 8.0

24 24

Investment Committee Credentials for Fiscal Year 2013

Among the Total Community Foundations group, the average reported number of FY2013 investment committee members that are

investment professionals was 5.2 (consistent across all size cohorts), while the average number with alternative strategies experience

was 3.5. Non-trustee voting members averaged 3.9 during FY2013.

Institutions with assets Over $500 Million reported having the highest average number of FY2013 investment committee members

with alternative strategies experience (4.4), while this number was lowest among Institutions with assets Under $101 Million (2.0).

Institutions with assets Under $101 Million reported having an average 4.8 non-trustee voting members on the investment

committee during FY2013, highest among constituencies.

average number


50 12 28 10

Investment committee members who are investment professionals 5.2 5.0 5.3 5.2

Investment committee members with alternative strategies experience 3.5 4.4 3.6 2.0

Non-trustee voting members 3.9 3.7 3.7 4.8

25 25 25 25

APPENDIX I

SUPPLEMENTAL TABLES

26 26

Investable Assets Not Part of Endowment

Long-Term Return Objectives for Fiscal Year 2013

numbers in percent (%) Total Institutions Over $500 Million $101-500 Million Under $101 Million

50 12 28 10

Investable assets not part of endowment 10.0 16.2 6.7 17.0


50 12 28 10

Have return objectives 80 75 78 90

Less than 5% 0 0 0 0

5.0 - 5.9% 10 8 11 10

6.0 - 6.9% 4 0 7 0

7.0 - 7.9% 20 17 14 40

8.0 - 8.9% 38 42 43 20

9.0% and over 8 8 3 20

Do not have return objectives 8 0 11 10


Average 9.2 14.3 7.6 7.9

Median 8.0 8.0 8.0 7.8

27

EW Asset Allocations† for Fiscal Year 2013

† Dollar-weighted

† Equal-weighted

Domestic Equity Asset Mix† for Fiscal Year 2013


50 12 28 10








Active 63 53 72 76

Indexed (passive/enhanced) 37 47 28 24

28

Fixed Income Asset Mix† for Fiscal Year 2013

† Dollar-weighted

† Dollar-weighted

International Equity Asset Mix† for Fiscal Year 2013



Domestic investment-grade (active) 77 85 66 81

Domestic investment-grade (passive) 7 3 12 5

Domestic non-investment grade (active or passive) 4 2 8 3

International bonds (active or passive) 9 7 11 10

Emerging markets (active or passive) 3 3 3 1



Active MSCI EAFE 62 59 66 60

Passive/index MSCI EAFE 10 13 6 13

Emerging markets 28 28 28 27

29

EW Alternative Strategies Asset Mix† for Fiscal Year 2013

† Equal-weighted









Energy and natural resources (oil, gas, timber, commodities and

managed futures) 14 12 13 19


30 30

Detailed Asset Allocations† for Fiscal Year 2013

† Dollar-weighted


50 12 28 10











Energy & natural resources 2 2 1 2

Commodities and managed futures 1 0 2 0


Alternatives not broken out 10 14 4 7


Short-term securities/cash 3 1 4 3

Other 6 9 1 2

31 31

EW Asset Allocations† for Fiscal Year 2013

† Equal-weighted


50 12 28 10











Energy & natural resources 2 2 1 2

Commodities and managed futures 1 0 2 0


Alternatives not broken out 6 11 4 7


Short-term securities/cash 4 2 4 5

Other 3 8 2 1

32 32

Percent Allocated to Liquidity Categories in Fiscal Year 2013


33

Daily 52

Monthly 13

Quarterly 12

Semi-annually 1

Annually 5

Illiquid 16

Other 1

Responding

Institutions

33 33

Classifications Used in Constructing Portfolio♦♦



50

Classifications used

Growth assets 70

Risk reduction 68

Inflation protection (real asset, TIPS) 72

Opportunistic 36

Liquidity 36

Duration 24

Other 6

18

Total

Institutions

No answer/uncertain

34 34

Employs Risk Limits and Guidelines Within Portfolio

Types of Risk Metrics Used♦♦



50 12 28 10

Employs limits or guidelines 42 17 50 50

Employs hard limits 19 0 21 20

Employs soft limits 52 50 58 40




Volatility calculations (standard deviation, etc.) 81 * 86 *

Greek letter measures of return (alpha, beta, etc.) 52 * 50 *

VaR calculations based on returns (top down) 29 * 36 *

VaR calculations based on positions (bottom up) 33 * 43 *

Other 5 * 7 *

*Sample size too small to analyze

35 35

Applies Stress or Scenario Tests to Portfolio

Uses Environmental, Social, Governance (ESG) Criteria for Portfolio♦♦



50 12 28 10

Yes 38 33 36 50

No 30 25 36 20



50 12 28 10

Environmental 6 0 11 0

Social 14 17 14 10

Governance 6 0 11 0

Other 4 0 4 10

None 72 75 75 60


36 36

Percentage of Operating Budget Funded by Endowment

Cost of Managing Investment Programs for Fiscal Year 2013


50 12 28 10

Average percentage of operating budget funded by endowment 55.0 68.8 50.3 54.6

Median percentage of operating budget funded by endowment 83.4 93.3 31.7 57.5

Increased 20 25 17 25

Decreased 18 0 22 25

No change 59 62 61 50




Average cost ($ in thousands) 1,592 3,516 1,451 277

Average cost (basis points) 79 79 85 64

Median cost (basis points) 78 76 78 68

37 37

Included in Cost Calculations♦♦

Percentage of Endowment Under Water for Fiscal Year 2013



50 12 28 10

Asset management fees and mutual fund expenses 62 58 61 70

Direct expenses 46 50 43 50

Incentive/performance fees paid to asset managers 16 25 11 20

Internal staff 16 17 18 10

Consultant fees/outsourcing fees 44 50 43 40

Other 4 8 4 0



Percentage of endowment under water 1.6 * 1.9 *

*Sample size too small to analyze

38 38

Changes in Gifts and Donations for Fiscal Year 2013

Organization has a Chief Investment Officer


50 12 28 10

Increase in gifts 38 42 39 30

Median percent increase 29.0 31.6 18.7 112.0

Decrease in gifts 10 16 11 0

Median percent decrease 14.0 0.0 14.0 0.0

No change 26 0 36 30



50 12 28 10

Yes 10 33 4 0

No 86 58 92 100


39 39

Responsible for Investment Oversight♦♦

Consultant Use


50 12 28 10

Board 32 25 32 40

Investment committee 92 83 93 100

Executive leadership//staff 26 25 25 30

Other 0 0 0 0


50 12 28 10

Used consultant 88 100 93 60

Services used♦♦

Asset allocation/rebalancing 70 67 69 83

Manager selection 84 83 81 100

Policy review 80 75 81 83

Performance attribution and measurement 84 75 85 100

Outsourced investment management 34 17 38 50

ESG review 14 25 4 33

Other 7 17 4 0



40 40 40 40 40

APPENDIX II

DEMOGRAPHIC TABLE

41 41

D.1 Endowment Fund Flows for Fiscal Year 2013

dollars ($) in thousands

Total

Institutions

Over $500

Million

$101-500

Million

Under $101

Million

50 12 28 10

Total beginning period endowment value 14,500,199 8,818,525 5,157,307 524,367

Total additions to investment pool 1,633,596 932,002 591,829 109,765

Total withdrawals from investment pool -1,147,065 -605,053 -453,754 -88,258

Adjustment to account for non-responding institutions 2,018,421 1,371,766 592,209 54,446

Total ending period endowment value 17,005,151 10,517,240 5,887,591 600,320

42

APPENDIX III

PARTICIPATING INSTITUTIONS

43

Participating Public (Community) Foundations

A G

Amarillo Area Foundation, TX Grand Rapids Community Foundation, MI

Aspen Community Foundation, CO Greater Cincinnati Foundation, OH

Greater Milwaukee Foundation, WI

B Greater New Orleans Foundation, LA

Baton Rouge Area Foundation, LA Greater Texas Foundation, TX

Boston Foundation, MA Gulf Coast Community Foundation, FL

C H

Central Indiana Community Foundation, IN Hampton Roads Community Foundation, VA

Chester County Community Foundation, PA Hawaii Community Foundation, HI

The Cleveland Foundation, OH Health Foundation of South Florida, Inc. & Affiliates, FL

Columbus Jewish Foundation, OH

Community Foundation for Muskegon County, MI J

Community Foundation for Southeast Michigan, MI Jewish Community Foundation of Greater Hartford, CT

Community Foundation of Abilene, TX Jewish Community Foundation of Greater Kansas City, KS

Community Foundation of Collier County, FL Jewish Community Foundation of San Diego, CA

The Community Foundation of Greater Atlanta, GA

Community Foundation of Greater Chattanooga, TN K

Community Foundation of Lorain County, OH Kalamazoo Community Foundation, MI

Community Foundation of St. Joseph County, IN

The Community Foundation Serving Richmond and Central Virginia, VA M

Community Funds, Inc. - Affiliated with New York Community Trust, NY Madison Community Foundation, WI

Maine Community Foundation, ME

D McPherson County Community Foundation, KS

Dallas Jewish Community Foundation, TX The Miami Foundation, FL

Music Center Foundation, CA

E

Endeavor Foundation, AR

43

44

Participating Public (Community) Foundations

O S

The Oregon Community Foundation, OR The Saint Paul Foundation, MN

Silicon Valley Community Foundation, CA

P Sioux Falls Area Community Foundation, SD

The Pittsburgh Foundation, PA St. Luke's Health Initiatives, AZ

R V

The REACH Healthcare Foundation , KS Valley Baptist Legacy Foundation, TX

Rochester Area Community Foundation, NY Vermont Community Foundation, VT

Rose Community Foundation, CO

Y

York County Community Foundation, PA

44

executive summary - council on foundations · institutions with assets between $101-500 million...

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