A Closer Look at Long-term Returns

September 9, 2025 |
3 minute read
|

In the annual Council on Foundations-Commonfund Study of Investment of Endowments for Private and Community Foundations® (CCSF; the "Study") data was collected on longer-term returns for the first time—specifically 15- and 20-year net annualized returns—in addition to the standard time periods typically reported. The Study surveyed 255 foundations—154 private and 101 community—for the calendar year ending December 31, 2024.

Here are a few key takeaways from this new data:

  • 15-year net annualized returns for both private and community foundations overall meet, or nearly meet, the common long-term benchmark for achieving intergenerational equity of 7.5 percent, or CPI+5%.1
  • 20-year data is less positive, falling below that benchmark. It is important to note, however, that the average 20-year return reported for total institutions is based on fewer responses than 15-year data.2 For example, the Study does not report on 20-year data for the largest size cohorts because there were too few responses to analyze, meaning the data is based more on mid- and small-sized institutions, which often report relatively lower long-term returns, on average.
  • Where size cohort data is available, 15-year returns were 250 basis points higher for the largest private foundations compared with the smallest cohort’s returns, on average.
  • 15-year returns surpass 10-year returns for total private and community foundations, on average. Amid growing market complexity, this may contribute to the top concerns reported by this year’s respondents–not meeting target returns and long-term market volatility—each cited by one-third of all private foundations, and the latter cited by one-third of community foundations.

Long-term returns for private and community foundations

Long-term returns by size for private and community foundations

Return Objectives: Private foundations had an average long-term return target of 6.6 percent in 2024. This was down from 7.1 percent, perhaps indicating lower expectations or foundations adjusting for expectations of inflation (around half of private foundations incorporate inflation into their return objective). For community foundations, the average target return objective was 6.9 percent, unchanged from the prior year. Larger private foundations tend to have higher return objectives than smaller ones, while there was a narrower dispersion among community foundations.

Spend Rate: The 5 percent in “CPI plus 5” is the standard long-term objective assumes a spend rate of 5 percent. But Study data allows access to real spending data by foundations. In 2024, the average stated policy spend rate for private foundations was 5.2 percent and 4.6 percent for community foundations. To sustain these levels of spending for intergenerational equity, a commensurate investment return of 7.7 percent and 7.1 percent would be required (given 2.5 percent inflation).

What percentage of foundations met this goal? In this year’s Study, a private foundation would have to be in the 69th percentile or above to have 10-year returns that meet or exceed a 7.7 percent spend rate plus inflation (in other words, 31 percent of private foundations met or exceeded this target in 2024); a community foundation would have to be in the 59th percentile or above to meet 7.1 percent (41 percent of community foundations met or exceeded this in 2024). 

Maintaining Intergenerational Equity means foundations need to be at least in the median or upper percentile of returns in their peer group

Market Volatility and Meeting Returns: Top Concerns

In 2024, nearly one-third of private foundations reported not meeting target returns was one of their top two concerns. This is up from the 2023 Study, when 27 percent of private foundations reported the same. The most cited concern among both foundation types—and roughly one third of all participants—was long-term volatility in the financial markets. This sentiment is supported in part by an average return standard deviation of nearly 10 percent reported by participants in the Study, as well as a dramatic spike in the VIX index in the months leading into the survey period.3 Proposed regulations on DAFs are top of mind for community foundations, which could impact financial outcomes related to these increasingly common philanthropic vehicles.

Top Two Concerns for Private and Community Foundations

Both private and community foundations have reported strong long-term returns. However, there is growing concern around achieving the same level, or even higher returns to match potential increased spending needs, and preserving future purchasing power.

 

  1. Where CPI is commonly assumed to be a long-term rate of 2.5 percent.
  2. 15-year and 20-year returns were not required questions on the Study survey.
  3. The CBOE Volatility Index or VIX is a widely used indicator of volatility in financial markets that is defined by market expectations for the relative strength of near-term price changes of the S&P 500 Index.

 

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.