Healthcare Nonprofits Post Strong ROI in 2010

The average return on investment for a sample group of nonprofit healthcare organizations in fiscal year 2010 was 10.9%, a study shows.

The 2011 Commonfund Benchmarks Study Healthcare Organizations Report found that the 90 nonprofit healthcare organizations examined continued "a welcome follow-on" to the average 18.8% return posted in FY2009. The returns for FY2009 and FY2010 represent the best back-to-back annual performance in the nine years that the study has been conducted, and a dramatic shift from the investment returns of FY2008 that plummeted by an average of -21.2% in the recession-wracked year, the study showed.

John Griswold, executive director at the Wilton, CT-based Commonfund Institute, said that two years of strong returns are a positive development for nonprofit healthcare organizations. But they barely moved trailing three-year returns into positive territory while leaving five-year returns in the 4% range.

"Continued strong performance will be needed to cover healthcare organizations' spending from endowment, investment management costs and inflation," Griswold said in a media release. "If we go back to the study for FY2007 ­before the losses of FY2008­ trailing returns for three- and five-year periods were 9% and 11.1%, respectively. Returns at levels such as these are essential to support the missions of the nonprofit healthcare organizations over the long term."

The 90 nonprofit healthcare organizations represented $102.6 billion in investable assets and $42.3 billion in defined benefit plan assets. Investable assets include endowment/foundation funds, funded depreciation, working capital and other separately treated assets.