Foundation Portfolios Fell Modestly in the Fourth Quarter
The Grantmaker Investment Value Index (“GIV”) was essentially flat in the fourth quarter, bringing year-to-date performance to 13.4%. Foundation investment performance annualized at 6.9% per year for the ten years ended December 31, 2024, ahead of the required 5% payout ratio, though well below the 60/40 mix (the traditional mix of 60% S&P 500 and 40% Bloomberg Aggregate Index) performance of 8.5%. While the difference of 1.6% per year might seem modest, over 10 years it accrues to about 20% of cumulative underperformance.
U.S. equity markets had a very strong 2024, up 25% from last year. International trailed the U.S. significantly, posting a 3.8% gain for the year, while emerging market equities were up 7.5% in 2024. Long term, international and emerging markets have trailed the U.S. by a large margin. Over the last decade, the S&P 500 has returned 13.1% annually compared to international and emerging markets, which were up 5.2% and 3.6% respectively.
U.S. high grade bonds made little progress in 2024, gaining 1.3%, while high yield bonds returned 8.2% for the year. Over the past ten years, high grade bonds have only returned 1.3% annually, less than cash at 1.8% per year.


Risk and Return
The chart below shows the relationship between risk and return. In the chart, risk is defined as volatility (shown on the x-axis) and return is plotted on the y-axis. Asset classes out to the right (International and Emerging Markets) are more volatile than those closer to the axis (High Grade Bonds). As one can see, over the 10-year period, U.S. Equities were the strongest performer, up 13.4% (y-axis). The dotted line shows an approximation of the average Sharpe ratio which is a measure of risk weighted return. Asset classes above the line delivered better risk/return than those below. U.S. Equity was the only significant outlier over the period (which also drove the 60/40), with Hedge Funds approaching the average line.
The GIV Index’s position, below and right of the 60/40 Portfolio indicates that foundations took more risk for less return than the passive 60/40 mix.
As one can see Emerging Markets and High Grade Bonds were the worst asset classes and poor asset allocation choices for the decade, with annualized returns of just 3.6% and 1.8% respectively. Adding insult to injury, Emerging Markets had the highest volatility among the asset classes.
Over the 10-year period to December 2024, U.S. Equities delivered more double the return of international stocks cumulatively with a similar risk profile.

The FoundationMark GIV Index is calculated using FoundationMark return estimates up to and including December 2022 thereafter monthly returns are estimated based on reported asset allocations and market returns. The GIV Index serves as a proxy for foundation performance. Actual performance may differ materially. The GIV Index is updated on a continuing basis and all data is subject to revision.
The 60/40 Balanced Portfolio represents the traditional institutional allocation to equities and fixed income with weightings of 60% in the S&P 500 and 40% in the Bloomberg U.S. Aggregate Index, rebalanced monthly.