The FoundationMark 15
The FoundationMark 15, (“F-15”) is a selection of 15 of the largest and best-known private foundations in the United States. Most private foundations, like those in the F-15, rely on their investment returns as an important, often the only, source of income to support their philanthropic goals. To view their performance and full financial statements please visit FoundationMark 15.
Asset Allocation of The FoundationMark 15
‘Investments -Other’ is a distinct line in the tax filing. We have looked at the underlying investments represented in this line and they range from mutual funds to hedge funds, private equity holdings, privately held stock and more. Therefore, to ensure transparency and consistency, we include it as a distinct asset class just as the foundations reported.
Not Many are "Average"
By looking at the allocation chart above, one might draw the conclusions that foundations have widely adopted the “endowment model” favoring high allocations to private equity and hedge funds, which are typically included in “Investments – Other, this is only partly true. Looking at the foundations’ asset allocations individually, one sees that there are many different approaches.
As you can see from the chart below, some foundations, notably Gates and Lilly, had very high allocations to equities, while others reported little to none. It bears noting that some foundations “kitchen sink” their allocation disclosure into “Investments – Other” by wrapping them in an investment vehicle or other means of obfuscation.
Investments - Other Allocation
As noted above, the ‘Investment – Other’ line on the foundation’s balance sheet is usually alternative assets such as hedge funds and private equity. Ford is a good example, of this as they provided additional information on their holdings in 2017, documenting 80% in private equity, venture capital and alternative investment strategies.
Cash and Fixed Income Allocation
One thing that may surprise readers is the low levels of cash and bonds at the big foundations. One thing that may influence this calculation is that the balance sheet is only reported once a year when the foundation closes its books for the fiscal year. As foundations are mandated to distribute 5% of assets each year, there is likely some seasonality to holdings. That said, we want to make an observation, even with seasonality, this data shows that most foundations in the FoundationMark 15 keep less than 10% in cash and bonds, put another way 90% is invested in equities or other investments.
If the Big Ones Vary this Much, Imagine the Smaller Ones
One thing that we have learned from following foundations assets is that there is a wide variety approaches to investment strategy. The range can be cash to cryptocurrency, single stock to all in hedge funds and all manner of portfolio strategies in between. We follow them for a simple reason, we want to see who is doing well and see if other foundations can learn from their success.