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Friday, June 26, 2009

Charities blew 26 cents of every $1 on bad investments: report

A survey of 290 private, independent and community charitable foundations by Commonfund Institute, Wilton, Conn., says the typical fund lost more than a quarter of every endowment dollar last year, after losing another dime in 2007.

No wonder charitable giving is down, when the foundations waste so much of it trying to turn lead into gold.

Last year's 26 percent loss is a result of foundations pouring donors' money into U.S. stocks (down 36 percent), foreign stocks (down 41 percent), private equity (down 8 percent, but who really knows, given the "reporting lags" in those assets' results), hedge funds (down 16 percent, but we're not completely sure of that, either), commodities (down 23 percent) and junk bonds (down 14 percent).

"As markets fell sharply in the last months of 2008, it became very difficult for foundations to rebalance their portfolios," said John Griswold, executive director of Commonfund Institute, whose affiliates manage $24 billion for small colleges and nonprofits.

The foundations in the survey lost a combined $44 billion, leaving them with $131 billion.

Why don't they just put it in government bonds and insured CDs?

 
Posted by Joseph N. DiStefano @ 11:43 AM  Permalink | 2 comments
Comments   
  • 0 like this / 0 don't   •   Posted 12:33 PM, 06/26/2009
    I'm sorry Mr. DiStefano but aren't you singling out the charity industry when the very things you pointed out happened to just about every person and company in the world that had investments? And your solution of bonds and CDs - hindsight is always 20/20; I'm sure that everyone that lost their shirt in this market collapse wished they had done that as well.
    — CTL
  • 0 like this / 0 don't   •   Posted 12:50 PM, 06/26/2009
    CTL, don't be sorry. It is unfair. All those foundations and universities were only doing what everybody else was doing. They're not bad people. Still, with hindsight, after losing a quarter of every dollar last year and a dime the year before, which it could take at least several years to make back, under the typical foundation's annual investment target, the whole idea of investing most of your endowment in anything more sophisticated than high-rated bonds does look kind of dumb, no?
    — distefj


2 comments
About Joseph N. DiStefano
Joseph N. DiStefano writes this blog to feed his PhillyDeals column in the Philadelphia Inquirer. Joe has been a member of Bloomberg LP’s New York Finance Team, wrote the book “Comcasted,” taught writing at St. Joseph’s University, and studied economics and history at Penn. Reach Joe at 215-854-5194 and JoeD@phillynews.com
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