For decades, the stock market has been a reliable source of income for the nation's philanthropic foundations.
But as the bull market comes to an end, many are asking the same question: "What happens to philanthropic foundations in a bear market?" Bloomberg reports that an estimated $235 billion, or 17%, of US foundations' assets fell in the first half of 2022 thanks to hiring money managers instead of investing in low-cost, stock market index funds, and socking away hundreds of millions of dollars into hedge funds whose managers charge substantially more in fees.
And many of their grantees,from prestigious university professors to small soup kitchens, will soon feel the squeeze.
The long bull market has allowed foundations to engage in more risky investments, too, socking away hundreds of millions of dollars into hedge funds whose managers charge substantially more in fees.
Those decisions may also end up in significant losses to the endowment interest that foundations use to pay their grantees.
The Chronicle of Philanthropy reports that many liberal foundations, including the Ford, Omidyar, and Hewlett-Packard Foundations, are already supporting projects to undo what they see as capitalism's harmful effects.
For example, the Ford Foundation has been investing in affordable housing, financial inclusion, quality jobs, and health tech, according to...
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Caroline Diehl is a serial social entrepreneur in the impact media space. She is Executive Chair and Founder of the UK’s only charitable and co-operatively owned national broadcast television channel Together TV, the leading broadcaster for social change runs a national TV channel in the UK and digital platform which helps people find inspiration to do good in their lives and communities.