Foundations Reported Strong Returns in 2025
Private and community foundations saw double-digit growth after adjusting asset allocations.
Updated on Sept. 28, 2026 in Investing
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Private and community foundations achieved strong investment returns in 2025, marking three consecutive years of double-digit gains. The performance followed strategic shifts in asset allocations and the increased use of outsourced investment offices.
Why it matters
The consistent growth demonstrates the effectiveness of foundations shifting capital between alternative strategies and traditional equities to navigate market conditions. This recovery represents a significant turnaround from the poor performance recorded in 2022.
Private foundations earned 14.1% returns while community foundations saw 14.7% gains, based on a study of 285 organizations holding $126.9 billion. Foundations also utilized outsourced investment offices for 39% and 47% of portfolios respectively.
The details
Foundations adjusted their portfolios throughout 2025 by reallocating capital across alternative strategies, cash holdings, and equities. Private foundations notably allocated 45.8% of assets to alternative strategies while maintaining 16.3% in non-U.S. equities.
Timeline
Foundations experienced their worst recorded investment performance in 2022.
Data from 2024 served as the baseline for annual asset allocation comparisons.
Foundations reported strong investment returns throughout 2025.
Market Dynamics
The 2025 recovery marks a significant departure from the 2022 investment performance downturn. This rebound highlights how institutional portfolios have stabilized through diversified asset allocation strategies after the volatility experienced earlier in the decade.
The strong performance of these foundations highlights the potential benefits of rebalancing asset allocations to include alternative strategies. Retail investors can view this as a case study in the importance of outsourcing management or diversifying portfolios beyond traditional equities.
The takeaway
Foundations have successfully utilized alternative strategies to secure growth despite prior market volatility. Maintaining a diversified portfolio with exposure to non-U.S. equities and alternative assets remains a primary driver for long-term returns.
Further reading
For additional context on market trends, visit the Investing section.
Source note: This article includes information reported by Chief Investment Officer.
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