During 2012, the value of Houston Endowment’s investments increased from $1.454 to $1.543 billion. The $89 million net increase includes investment income and the increase in the market value of the investments less grant payments and investment and operating expenses. Total investment return (income plus capital appreciation), after investment fees, for the year was 12.5 percent. The average annual compound return for the past five years, net of fees, was 3.1 percent and for the past 10 years was 8.3 percent.
At year-end, the foundation’s endowment was invested as follows:
In 2012, Houston Endowment’s target allocation for grants was $98 million. Each year’s allocation is based on five percent of a three-year average of the endowment’s market value. The goals of this spending policy are to provide a relatively stable pattern of spending on grants, despite fluctuations in security markets, and to preserve the inflation-adjusted value of the endowment in perpetuity.
Grant allocations for any given year will differ from the total grants approved and total grants paid during that year. In 2012, the board of directors approved 252 grants totaling $86 million, some of which will be paid in future years. Also, $77 million was paid on 420 grants, some of which were approved in prior years.
In addition to its regular grantmaking program, Houston Endowment matches, on a two-for-one basis, personal gifts made to charitable organizations by the foundation’s directors and staff. In 2012, $399,805 in grants was paid under the matching gift program. Under a directed grant program that allows directors and other program participants designated by the board to assign certain amounts in grants to charitable organizations of their choosing, $600,000 in grants was paid in 2012. The foundation also made grants of $94,500 to organizations that support philanthropy and the charitable sector.
Since Houston Endowment was founded in 1937, the foundation has paid almost $1.7 billion ($3 billion in constant dollars) in grants.
The foundation prepares financial statements on a modified basis of cash receipts and disbursements that generally follows accounting principles used for federal excise tax purposes.
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