Endowments, foundations worried about economic slowdown – NEPC survey


A slowdown in global economic growth is the biggest worry for endowments and foundations this year, survey findings show.Hazel Bradford

A slowdown in global economic growth is the biggest worry for endowments and foundations this year, according to NEPC’s Endowments & Foundations Survey released Tuesday.

Among those surveyed, 60% considered a global slowdown the biggest threat and 36% saw the economy in worse shape, compared with 21% and 13%, respectively, last year. Respondents saw waning threats from geopolitical uncertainty (18%), global inflation (2%) and interest rates (zero).

“As investment committees anticipate a potential global slowdown for the first time in a decade, it has never been more important to construct an investment portfolio balanced to withstand volatility,” said Cathy Konicki, NEPC partner who leads its endowments and foundations practice.

The survey also found impact investing gaining momentum, with 38% of respondents either having an impact investing program in place or plans to have one within two years.

An expected shift from regular cash donations to cryptocurrency did not materialize, with 60% not sure whether donors are using digital currency and the other 40% seeing no change.

Non-traditional giving strategies did gain ground, with 23% of respondents reporting that donor-advised funds are detracting from direct cash donations.

The strongest asset class performers expected this year are private equity at 31%, up from 15% in last year’s survey, and domestic equities at 29%, up from 6% last year. Expectations for emerging markets equities slipped to 29% from 45% last year. In 2019, 41% of respondents anticipate allocating more to private equity, 28% will allocate more to emerging markets and 23% will do so for real estate, while 32% expect to allocate less to hedge funds.

Tax reform concerned 36% of the endowments and foundations, with 13% launching campaigns to attract new donors and 4% eliciting larger gifts from businesses and high-wealth donors. Still, the survey found that “overall, charitable giving stayed strong in spite of the tax reform frenzy,” with organizations closing out annual fundraising with increased or constant levels of donations.

For 40% of the respondents, 2019 presents a positive outlook, with forecasts that annual fundraising will meet (for 13% of respondents) or exceed (27%) last year’s levels.

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