Image Credit: Jan Steen, “The Little Alms Collector” (ca. 1663-1665), Petit Palais Musee des Beaux-Arts de la Ville de Paris
By Jason Zweig | November 28, 2018
Charitable giving is on a lot of people’s minds this time of year. It’s worth noting that while many nonprofits promote great causes, few are great at managing money.
A new research paper looks at the investment returns of a huge sample of nonprofits and finds they’ve been abysmal. From 2009 through 2016, these endowment funds returned an arithmetic average of 6.7% annually, compared with arithmetic averages of 12.2% for U.S. stocks, 10.5% for a 60/40 mix of stocks and bonds, and 8% for U.S. Treasurys, as calculated by the paper’s authors....
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Note: This article required a clarification after it was published:
An earlier version of this article cited data in the second paragraph that was based on a simple average of annual returns, not a steady growth rate over time as is often used by investors. Measures of simple average annual returns cited for U.S. stocks, long-term U.S. Treasury bonds and a 60/40 mix of the two were compiled by the paper’s authors. The earlier version of this article didn’t specify this information.
For further reading:
Benjamin Graham, The Intelligent Investor
Jason Zweig, The Devil’s Financial Dictionary
Jason Zweig, Your Money and Your Brain
Jason Zweig, The Little Book of Safe Money
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