Fidelity's survey of small and mid-size endowments, foundations, and nonprofits

The forces reshaping the future of endowments, foundations, and nonprofits

Small and midsize nonprofits, which are the focus of our survey, are being asked to do more as funding uncertainty, rising costs, and increased spending demands put greater pressure on investment portfolios. As organizations consider how best to balance near-term needs with long-term financial sustainability, understanding how peers are responding can provide valuable perspective.

Fidelity’s latest survey of endowments, foundations, and nonprofits offers a timely look at the challenges, priorities, and investment trends shaping the sector. The findings can help organizations benchmark their approach and inform important conversations around spending, investment strategy, and governance.

Funding and spending pressures are growing

Investment portfolios are playing an increasingly important role in supporting operations. Over the past five years, surveyed organizations typically funded about 15% of their operating budgets. In the last 12 months, that increased 16% to 18%, with many respondents expecting contributions to reach 20% over the next year.

At the same time, concerns about funding adequacy are rising. More than one-third of surveyed organizations expect a funding shortfall in the year ahead. Among operating public charities, 37% anticipate a funding shortfall within the next 12 months, with concerns directionally more pronounced among organizations that do not use an OCIO provider and those with $50 million to $250 million in assets.

Spending expectations are rising as well. Average spending rates have remained near 4.7% over the past three years, but respondents expect spending to approach 6% over the next 12 months. Looking further ahead, 40% expect spending to rise materially over the next three years, underscoring the potential for continued pressure on portfolios.

What could this mean for your organization?

As financial demands intensify, organizations face an important balancing act: supporting today’s mission while preserving tomorrow’s financial sustainability. For some, that is also prompting a closer look at how investment portfolios are managed. Nearly half of surveyed organizations already partner with an outsourced chief investment officer (OCIO), while one-third of non-users are considering adoption within the next year.

These findings can help inform the questions that matter most: Is our spending approach sustainable? Are we prepared for potential funding gaps? Does our investment strategy reflect changing demands? And do we have the right governance and oversight in place?

Use the survey insights to see how your organization compares and help guide the spending, investment, and governance conversations in support of your long-term mission.