2006 Portfolio by Cultural Alliance

2006 Portfolio

Greater Philadelphia Cultural Alliance 2006 Portfolio

Endowments Endowments are used to provide economic stability. They are pools of assets that are invested in stocks, bonds, real estate, and other areas, and they are typically managed by financial professionals whose activities are overseen by an organization’s Board of Directors. Even if the total value of an endowment’s assets is high, the amount of revenue that an organization realizes from its endowment at any given time is comparatively small—usually between 4% and 5% of the average value of the endowment during the previous three years12. Except in times of great need, distribution levels are set to allow the endowment to exist in perpetuity and provide a consistent stream of income to an organization. Endowments can provide a significant measure of financial security for an organization and often reflect the concerted efforts of generations of supporters.

More than $1.05 billion is held in the endowments of the 218 organizations included in this report. The use of the majority of this money (70%) is permanently restricted. One-third (33%) of the 218 organizations have endowments—two thirds do not. While every one of the Very Large organizations has an endowment, only 58% of Large Organizations, 32% of Medium Organizations, and 4% of Small Organizations have endowments. Not surprisingly, 9% of the total revenue of Very Large organizations comes from investment and interest income (which is primarily from endowment funds) while less than 1% of the total revenue of Small organizations comes from investments and interest income. Five types of organizations—Education & Instruction, Museums, Science & Nature, History and Music organizations—account for 95% of the sector’s total endowments. Other types, including Community Arts, Media Arts, Service, Dance and Theater organizations, have little to no endowment support.

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