Foundations, nonprofits see boost in investment returns; other economic indicators still bleak

By Donna Gordon Blankinship, AP
Wednesday, June 30, 2010

Nonprofits see investment returns jump in 2009

SEATTLE — Charitable foundations and nonprofit organizations are seeing signs of an economic recovery, with double-digit returns on their investments last year, but an organization that studies charities says there are indications nonprofits still face tough times.

Demand for services continues to rise, government contracts are decreasing, donations were down at many nonprofits during the past two years, and some organizations took out loans to meet their commitments in 2009.

A pair of reports being released Thursday by Commonfund of Wilton, Conn., offers some positive news, but not enough to erase the losses of the past few years.

Commonfund says private and community foundations as well as charities are all reporting the highest investment returns they’ve seen in years — averaging 21 percent for the year ending Dec. 31, 2009, after declining 26 percent in fiscal 2008.

But the investments of both charities and foundation are still about 10 percent below their peak at the beginning of 2008.

It would take several years of strong market returns to bring these organizations back to the financial health they had in 2008, said Bill Jarvis, director of the research arm of the investment company that advises nonprofits.

One year of positive returns is good, but total recovery could take as long as a decade, he added.

Average three-year returns for the 173 foundations participating in the study was minus 1.1 percent. The average three years return for operating charities was minus .7 percent.

“It’s hard to see how they’re going to maintain their mission-based spending,” Jarvis said.

Among the nonprofit organizations, investment returns reported by cultural and religious organizations averaged 22.3 percent, while social services averaged 17.1 percent.




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