A Better Way To Compare And Lead

Community foundation portfolios delivered positive but measured performance in Q4 2025. Across all participants, portfolios generated a 2.4% median return for the quarter, bringing year-to-date performance to 15.7%.

Performance was relatively consistent across asset-size cohorts, with modest dispersion driven primarily by allocation mix rather than scale. Larger foundations ($500 million and over) posted slightly lower year-to-date returns (14.1%), while mid-sized and smaller foundations generally clustered near the overall median. ESG pools tracked closely with aggregate participant performance, while balanced pools lagged modestly, reflecting their more conservative positioning during the quarter.

Median Performance by Strategy

The median foundation delivered 2.4% in Q4, capping a strong calendar year despite equity volatility in the final weeks of 2025. Year-to-date returns ranged from 13.4% to 16.5% across strategies, with high-equity and with an approximate 1% difference in high-equity and high-alternatives portfolios a result of their meaningfully different investment paths.

The quarter's modest absolute returns reflect the straightforward impact of static policy allocations amid mixed asset class performance. High-equity allocators (≥65%) posted 2.4% versus 1.9% for balanced portfolios, a spread entirely consistent with their differential public equity exposure during a period of muted but positive equity returns. Notably, strategies with 20%+ alternatives exposure (2.3%) tracked closely with no-alternatives peers (2.1%), likely reflecting offsetting dynamics: stable private market valuations supporting the quarter while liquid alternative strategies struggled in choppy conditions.

Looking at trailing periods, the case for patient capital allocation becomes evident. High-equity strategies led over one and three years but converged with alternatives-heavy approaches over longer horizons, validating the risk-adjusted rationale for illiquidity exposure. For smaller foundations without private market access, this quarter underscores a persistent reality: straightforward equity-heavy portfolios continue to deliver competitive long-term returns with materially lower operational complexity.

Understanding the Allocation Gap Between Top and Bottom Performers

In Q4 2025, asset allocation differences across community foundations were pronounced, with top-performing peers maintaining materially higher exposure to total equities relative to lower deciles. Foundations in the top decile reported significantly greater allocations to equities, particularly US large-cap stocks, while bottom-decile peers held comparatively higher exposure to fixed income and other defensive asset classes. For portfolios of this scale, the Q4 results indicate that equity beta, especially US large-cap exposure, was the primary driver of relative performance in a favorable, risk-on market environment.

Differences in alternative investment allocations were also evident. Top-performing foundations maintained more concentrated exposure to private equity, while bottom-decile peers held a broader mix of hedge funds and other non-core alternative strategies. While these allocation differences reflect varying approaches to alternatives implementation, the data suggest that equity positioning, rather than defensive allocation or alternatives mix, was the dominant contributor to relative performance during the period surveyed.