SEI® and the Association of Governing Boards of Universities and Colleges (AGB) have introduced new research providing insight into the college- and university-affiliated foundation operational and investment landscape.
The study, which was unveiled at AGB’s Foundation Leadership Forum, found that nearly half of foundations anticipate a better rate of investment return in 2022. Additional key findings include:
Operations
- One-in-two (51%) foundations with $100m or less in assets have an approximate annual operating budget (excluding gifts/grants/endowment spent by institution) of $1 million or less.
- Over half (57%) of foundations noted that they manage “real estate acquisition, development and/ or management,” while just over half (51%) also are responsible for alumni relations.
- Foundations unanimously (100%) listed an endowment / administrative management fee as a revenue source for their annual operating budget, and six-in-ten (60%) included “gift fees” as well.
2022 investment outlook
- Nearly four-in-ten (38%) foundations expect inflation to increase by over 2% in 2022.
- Almost two thirds (64%) of foundations have an investment return objective between 7.0% and 8.25% in 2022, though roughly a third (27%) set their investment return objective below 7.0%.
Asset allocation
- Nearly a third (32%) of foundations said they plan to increase their use of alternatives this year, with private equity, private real estate, and venture capital being the most popular alternative asset classes.
- Only one-in-three foundations (34%) said they either invested in sustainable strategies last year or plan to do so in 2022.
- Sustainable investing integration (65%) was the most popular sustainable approach, significantly outpacing impact investing (14%), as well as positive and negative screening (14% and 7% respectively).
- Domestic equity and private equity were the primary asset classes in which sustainable investing approaches were implemented.
- Two-in-five (41%) foundations have experienced some level of pressure from students to increase sustainable investing consideration.
Investment management provider
- More than half of foundations (54%) utilize an outsourced chief investment officer (OCIO) partner, while roughly a third (34%) work with an investment consultant.
Mary Jane Bobyock, Managing Director, Nonprofit Advisory Team for SEI’s Institutional Group, said:
“Our research provides a valuable status report, with detailed, cross-referenceable data, on how foundations are addressing key industry priorities. It underscores their crucial need for a high-quality investment, governance, and operational infrastructure capable of supporting their complex and ever-evolving needs. We are thrilled to continue to partner with AGB to deliver this critical insight for college- and university-affiliated foundations and ultimately support their ability to drive improved investment outcomes amid a volatile market environment.”
SEI and AGB have been strategic partners since 2013. SEI provides investment management services to 447 institutional investors, including over 180 nonprofit organizations and representing more than $34 billion in assets.* SEI works with 42 higher-education institutions in managing their endowments.*
*As of Dec. 31, 2021
Read the full research report here.
About SEI®
SEI (NASDAQ:SEIC) delivers technology and investment solutions that connect the financial services industry. With capabilities across investment processing, operations, and asset management, SEI works with corporations, financial institutions and professionals, and ultra-high-net-worth families to solve problems, manage change and help protect assets—for growth today and in the future. As of Dec. 31, 2021, SEI manages, advises, or administers approximately $1.3 trillion in assets.
