A Closer Look at Health Conversion Foundations

October 9, 2025 |
2 minute read
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A Closer Look at Health Conversion Foundations
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Commonfund, in partnership with the Council on Foundations (COF), recently released the 2024 Council on Foundations-Commonfund Study of Investment of Endowments for Private and Community Foundations (CCSF, or the “Study”). The Study examines investment performance, governance and management practices at hundreds of private and community foundations’ endowments over the 2024 calendar year period.

Following the release of the Study in August, Commonfund did a deep dive into results from the 23 participating health conversion foundations. Given that 22 out of the 23 participating health conversions are private foundations, the summary below offers a comparative analysis of these foundations and the 154 private foundation respondents from the full CCSF report. Note: Additional analysis of private and community foundation data aggregated by endowment size and region can be found in the full report.

Health conversion foundations accounted for $4.1 billion of the $104.9 billion in assets represented by total foundations. Health conversions reported a median endowment size of $149.3 million compared with $197.5 million for total private foundations.  

What is a health conversion foundation? Health conversion foundations, also known as health legacy foundations are philanthropic entities that can be born from the sale or merger of nonprofit hospitals, health systems, or the conversion of health plans to for-profit corporations. Their mission is typically to ensure that the charitable assets of the original nonprofit continue to serve the public good, often through targeted investments in health equity, access to care, and the social determinants of health. Learn more about these foundations. 

THE TOP-LINE RESULTS

Performance

Returns for all time horizons reported in the Study were positive across both groups for all institution sizes. The 23 health conversion foundations participating in this year’s Study reported a 10.4 percent average 1-year return vs. 10.3 percent for total private foundations. Three-, five- and 10-year average returns for health conversions were 3.2, 7.4 and 7.2 percent, respectively, vs. 3.1, 7.8 and 7.3 percent for total NCSE respondents over the same time periods. This year, the Study collected 15- and 20- year annualized return data for the first time. Health conversions reported 7.4 percent 15-year returns, compared with 7.5 percent for private foundations, on average. There were not enough responses to report on 20-year data for this cohort.  

Asset Allocation

The 23 health conversions participating in 2024 reported an overweight to U.S. equities compared with total private foundations (36 percent vs. 26 percent), and an underweight to alternatives strategies (25 percent vs. 45 percent). Within alternatives strategies, health conversions had the highest allocation to private equity (8 percent) followed by marketable alternatives (7 percent), which includes hedge funds, absolute return, market neutral, long/short, 130/30, event-driven, and derivatives. Health conversions were slightly overweight fixed income and non-U.S. equities when compared with total private foundations.

Spending

Health conversions reported an average stated policy spend rate of 5.1 percent, similar to the 5.2 percent reported by total private foundations. Looking at spending policy, the most frequently reported spending methodology used by health conversions and total private foundations was meeting the IRS minimum of 5 percent (61 percent and 62 percent of these groups did, respectively). The next most frequently used spending methodology followed by 30 percent of health conversions and 36 percent of total private foundations was a percentage of a moving average approach. (Note: multiple responses were allowed.)

Responsible Investing Practices

The adoption of various responsible investment practices has grown in recent years. In 2024, 26 percent of health conversions and private foundations overall reported that they require or permit investments ranking high on ESG criteria as well as those that further the institution’s mission, or impact investing. Further, 22 percent of health conversions implement negative screening and seek to include investments with diverse managers.

We hope these top-line insights will serve as a guidepost for your own analysis into these important topics and we encourage you to read the Study in its entirety to best evaluate your performance compared with your benchmark or peers. 

 

Source: 2024 Council on Foundations-Commonfund Study of Investment of Endowments for Private and Community Foundations

 

 

Commonfund Institute

Author

Commonfund Institute

Disclaimer

Certain information contained herein has been obtained from or is based on third-party sources and, although believed to be reliable, has not been independently verified. Such information is as of the date indicated, if indicated, may not be complete, is subject to change and has not necessarily been updated. No representation or warranty, express or implied, is or will be given by The Common Fund for Nonprofit Organizations, any of its affiliates or any of its or their affiliates, trustees, directors, officers, employees or advisers (collectively referred to herein as “Commonfund”) or any other person as to the accuracy or completeness of the information in any third-party materials. Accordingly, Commonfund shall not be liable for any direct, indirect or consequential loss or damage suffered by any person as a result of relying on any statement in, or omission from, such third-party materials, and any such liability is expressly disclaimed.

All rights to the trademarks, copyrights, logos and other intellectual property listed herein belong to their respective owners and the use of such logos hereof does not imply an affiliation with, or endorsement by, the owners of such trademarks, copyrights, logos and other intellectual property.

To the extent views presented forecast market activity, they may be based on many factors in addition to those explicitly stated herein. Forecasts of experts inevitably differ. Views attributed to third-parties are presented to demonstrate the existence of points of view, not as a basis for recommendations or as investment advice. Market and investment views of third-parties presented herein do not necessarily reflect the views of Commonfund, any manager retained by Commonfund to manage any investments for Commonfund (each, a “Manager”) or any fund managed by any Commonfund entity (each, a “Fund”). Accordingly, the views presented herein may not be relied upon as an indication of trading intent on behalf of Commonfund, any Manager or any Fund.

Statements concerning Commonfund’s views of possible future outcomes in any investment asset class or market, or of possible future economic developments, are not intended, and should not be construed, as forecasts or predictions of the future investment performance of any Fund. Such statements are also not intended as recommendations by any Commonfund entity or any Commonfund employee to the recipient of the presentation. It is Commonfund’s policy that investment recommendations to its clients must be based on the investment objectives and risk tolerances of each individual client. All market outlook and similar statements are based upon information reasonably available as of the date of this presentation (unless an earlier date is stated with regard to particular information), and reasonably believed to be accurate by Commonfund. Commonfund disclaims any responsibility to provide the recipient of this presentation with updated or corrected information or statements. Past performance is not indicative of future results. For more information please refer to Important Disclosures.

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Disclaimer

Certain information contained herein has been obtained from or is based on third-party sources and, although believed to be reliable, has not been independently verified. Such information is as of the date indicated, if indicated, may not be complete, is subject to change and has not necessarily been updated. No representation or warranty, express or implied, is or will be given by The Common Fund for Nonprofit Organizations, any of its affiliates or any of its or their affiliates, trustees, directors, officers, employees or advisers (collectively referred to herein as “Commonfund”) or any other person as to the accuracy or completeness of the information in any third-party materials. Accordingly, Commonfund shall not be liable for any direct, indirect or consequential loss or damage suffered by any person as a result of relying on any statement in, or omission from, such third-party materials, and any such liability is expressly disclaimed.

All rights to the trademarks, copyrights, logos and other intellectual property listed herein belong to their respective owners and the use of such logos hereof does not imply an affiliation with, or endorsement by, the owners of such trademarks, copyrights, logos and other intellectual property.

To the extent views presented forecast market activity, they may be based on many factors in addition to those explicitly stated herein. Forecasts of experts inevitably differ. Views attributed to third-parties are presented to demonstrate the existence of points of view, not as a basis for recommendations or as investment advice. Market and investment views of third-parties presented herein do not necessarily reflect the views of Commonfund, any manager retained by Commonfund to manage any investments for Commonfund (each, a “Manager”) or any fund managed by any Commonfund entity (each, a “Fund”). Accordingly, the views presented herein may not be relied upon as an indication of trading intent on behalf of Commonfund, any Manager or any Fund.

Statements concerning Commonfund’s views of possible future outcomes in any investment asset class or market, or of possible future economic developments, are not intended, and should not be construed, as forecasts or predictions of the future investment performance of any Fund. Such statements are also not intended as recommendations by any Commonfund entity or any Commonfund employee to the recipient of the presentation. It is Commonfund’s policy that investment recommendations to its clients must be based on the investment objectives and risk tolerances of each individual client. All market outlook and similar statements are based upon information reasonably available as of the date of this presentation (unless an earlier date is stated with regard to particular information), and reasonably believed to be accurate by Commonfund. Commonfund disclaims any responsibility to provide the recipient of this presentation with updated or corrected information or statements. Past performance is not indicative of future results. For more information please refer to Important Disclosures.