US Foundations Return More Than 14% in 2025 and Private Foundations Hold 45.8% in Alternatives

A study of 285 US foundations with $126.9 billion in combined assets found that private foundations returned an average of 14.1% in 2025 and community foundations 14.7%, the third consecutive year of double-digit returns for both groups. The sample covers 171 private foundations (60% by count) and 114 community foundations (40%).

Two foundation types, two different allocation paths

The headline returns are similar, but the two groups moved in opposite directions on alternatives. Private foundations raised their average allocation to alternative strategies to 45.8% from 45%, and cut fixed income to 10.3% from 13%. Community foundations went the other way, reducing alternatives to 20.5% from 25% and lifting fixed income to 17.4% from 16%. Both groups added to non-US equities, private foundations to 16.3% from 14% and community foundations to 20% from 18%.

Longer-term returns have recovered sharply. The three-year annualized return reached 12.4% for private foundations, up from 3.1% in the prior measurement, and 13.2% for community foundations, up from 2.8%. Five-year annualized returns were 8.0% and 8.5%, and ten-year returns were 9.0% and 8.6%.

What it means for GPs

For fund managers, the split is the useful part. Private foundations keep nearly half of their assets in alternatives and are the more natural audience for emerging managers and specialist strategies, although their individual ticket sizes are small compared with a pension's. Community foundations hold less than half as much in alternatives on average, so a pitch to them needs to fit a smaller, more liquidity-conscious sleeve.

The gap between the two groups is widening. Private foundations held 20 percentage points more in alternatives than community foundations a year earlier (45% against 25%) and now hold 25.3 points more (45.8% against 20.5%). The sample is an average, and the dataset does not show how much of each allocation went to private equity versus hedge funds or real assets. A sensible approach is to segment your foundation LP targets by type before writing to them, and to lead with distributions and liquidity for community foundations. The same logic applied in our look at how to follow LP staff moves into warm paths at the California Endowment, where the person in the seat shapes the conversation as much as the allocation target.

Strong returns at the endowment level are also lifting the broader picture, as in the case of the Penn endowment's 27.4% fiscal 2026 return. Our review of LP allocation trends in 2026 tracks how these shifts feed commitment pacing across US LP types.

FundLinx members can see which foundations are active in private markets.

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