NBER

Sandeep Dahiya

McDonough School of Business
Georgetown University
Washington, DC 20057
Tel: 202-687-3808

E-Mail: EmailAddress: hidden: you can email any NBER-related person as first underscore last at nber dot org
Institutional Affiliation: Georgetown

NBER Working Papers and Publications

December 2018Investment Returns and Distribution Policies of Non-Profit Endowment Funds
with David Yermack: w25323
We present the first estimates of investment returns and distribution rates for U.S. non-profit endowment funds, based on a comprehensive sample of 29,762 organizations drawn from Internal Revenue Service filings for 2009-2017. Non-profit endowments badly underperform market benchmarks, with median annual returns 4.46 percentage points below a 60-40 mix of U.S. equity and Treasury bond indexes, and statistically significant alphas of -1.10% per year. Smaller endowments have less negative alphas than larger endowments, but all size classes significantly underperform. Higher education endowments, the majority of the $0.7 trillion asset class, do significantly worse than funds in other sectors. Distribution ratios are conservative, well below the funds’ long-run returns. Donors increase contr...

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