Challenging Post-COVID Environment Could Continue Nonprofit Shift to Alts, OCIOs

A challenging operating environment has nonprofits reassessing their strategies and fundraising goals and could propel foundations and endowments to continue increasing allocations to alternative investment strategies and leveraging outsourced CIO capabilities to identify and manage these opportunities.

A new endowments and foundations trends update report from Wilmington Trust notes that with the loss of Coronavirus Aid, Relief, and Economic Security (CARES) Act and other government funds that helped support operating budgets in recent years, along with higher inflation, higher interest rates, and a tight labor market, many nonprofits are seeking to start or grow endowment programs to build financial strength and enhance revenues.

“In post-Covid times, many [nonprofits] are focused on their operating budgets and seeking ways to offset the loss of the Covid money from prior years,” report author Walter Dillingham Jr., CFA, writes. “Many nonprofits are seeking ways to diversify their revenues and have become more focused on building their endowment funds.”

At the same time, giving remains relatively strong. According to “Giving USA 2024: The Annual Report on Philanthropy for the Year 2023,” published in June by The Giving Institute and the Indiana University Lilly Family School of Philanthropy, charitable giving to foundations rose 15.4% in 2023, or an inflation-adjusted 10.8%, to $80B, the fastest-growing recipient category of the nine nonprofit categories the report tracks. …

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