Perspectives
Resilience, Recalibration & Intentionality: Key Takeaways from the COF Study
Sep 23, 2026
Back to all posts.The 2025 Council on Foundations-Commonfund Study highlights a community foundation sector marked by better returns, stronger donor flows, and more targeted mission-aligned investing. Community foundations have emerged from the 2022 downturn with strong investment results, simpler implementation, and greater reliance on external investment expertise while retaining internal governance accountability. Following are our key takeaways:
#1. Strong returns have restored optionality
Community foundations delivered three consecutive years of double-digit returns following the lowest average returns on the Study’s record in 2022. The three-year annualized return was 13.2%, while the 10-year annualized return reached 8.6%.
Optionality is especially valuable for community foundations. Stronger markets may provide an opportunity to replenish liquidity, rebalance exposures that have drifted from policy targets, or consider whether incremental resources can be directed toward near-term community needs while seeking to preserve the long-term purchasing power of the endowment.
#2. Complexity has to earn its place
Community foundations’ dollar-weighted allocation to alternatives fell from roughly 27% in 2022 to less than 21% in 2025. U.S. equities rose from roughly 34% to 39%. As noted in the Study, this change is notable relative to the historically gradual nature of asset-allocation changes. Private markets remain relevant, with 30% expecting higher private-equity exposure over the next three years. There has also been a shift in implementation with passive U.S. equity increasing to 62%, up from 51% in 2024. Community foundations appear to be increasingly deciding that complexity must justify itself.
This does not necessarily mean portfolios are becoming less sophisticated. Rather, it may reflect greater differentiation between exposures that can be obtained efficiently and inexpensively in public markets and those where active management, illiquidity, or specialized access can offer a potentially meaningful advantage. For community foundations, the relevant question is not whether alternatives or active strategies are inherently better, but whether the expected benefit is sufficient to justify their fees, liquidity constraints, and governance demands.
#3. Fundraising has regained momentum
The share reporting higher gifts rose from 46% in 2024 to 51% in 2025. Among foundations reporting growth, the median increase was 79%. Yet fundraising and donor development remain important strategic concerns. DAFs continue to account for a substantial share of community-foundation gifts, but DAF fundraising declined for a second consecutive year. More than half of reporting community foundations granted more from DAFs than they received in new contributions.
For community foundations, stronger donor activity also reinforces the importance of connecting investment strategy with the different purposes and time horizons of the assets they oversee. Permanent endowments, donor-advised funds, and other pools can have very different liquidity profiles, even when they ultimately support the same community. Growth therefore creates an investment challenge as well as a development opportunity: foundations need structures that can accommodate both long-term compounding and the possibility that donors or communities will want capital put to work sooner.
#4. Mission-aligned investing appears to be more targeted
Impact investing increased slightly from 23% in 2023 to 25% in 2024 and 26% in 2025, reaching parity with ESG adoption. Investment committee discussion of impact fell from 50% to 43% to 32%. The emphasis may be shifting from whether impact belongs in the portfolio toward where it can be implemented with a clear thesis, measurable outcomes, and fiduciary discipline. Affordable housing, community development finance and other place-based strategies provide tangible avenues for putting this capital to work.
#5. Delegation may be reshaping investment governance
OCIO use ticked up from 46% in 2024 to 47% in 2025, while investment consultant use increased from 56% to 61%. Yet 82% reported investment committee oversight, up from 77%. Outsourcing is increasingly an operating model for implementation and capacity – not a transfer of strategic ownership or fiduciary accountability. Investment committees may be spending less time choosing individual managers and more time on other topics such as liquidity, spending, mission alignment, and asset allocation.
The result can be a different definition of effective governance. A committee does not need to make every investment decision to remain accountable for the investment program. Its highest-value responsibilities may instead be setting objectives, defining acceptable risk, establishing appropriate liquidity and spending parameters, and holding its investment partner accountable for results. In that sense, greater delegation can allow the committee to move from managing the portfolio toward governing the investment program.
Final Thoughts
Taken together, the 2025 Study suggests that community foundations are becoming more deliberate about where they deploy capital, complexity, and governance resources. Strong investment returns may have restored flexibility, but the more important question is how foundations use that flexibility. At the same time, greater use of passive strategies and more selective allocations to alternatives suggest that complexity is increasingly being reserved for areas where it can provide a meaningful benefit.
For community foundations, these decisions extend beyond investment performance. Portfolios must support permanent capital, evolving donor needs, and an enduring commitment to the communities they serve. The most effective investment programs will not necessarily be the most complex, but those in which each element of the portfolio has a clear purpose and governance remains focused on the decisions that matter most.
Please reach out to us with any questions: valerie.berezin@primebuchholz.com and brian.pimentel@primebuchholz.com