PE outperforms other alternatives for foundations – report

The study found that private equity investments, including LBOs, mezzanine, M&A funds and non-US private equity funds, generated an average return of 10% for private foundations, and 11% for community foundations.

Alternative strategies in general generated 11% returns for private foundations and 8% for community foundations over the same period. Across all asset classes the average total return for 2017 was 15% for private and 15.1% for community institutions.

Private foundations tend to allocate more to private equity compared to their community counterparts, especially if they hold assets over $100m. Private organisations, with assets between $100-500m, have allocated 5% to private equity in 2017, compared with 3% from community organisations.

However, both private and community foundations tend to invest more in private equity, if they have assets over $500m. Private organisations have allocated 6%, while the community organisations had a 5% exposure to this asset class for the same period.

More than 220 foundations participated in this study, representing around $104bn in assets. All the foundations are US-based but have significant exposure to European private equity. 

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• Topics
• LPs
• Performance
• United States