Erie Community Foundation Finances
Erie Community Foundation holds $357mm in total assets, up from $259mm five years ago. Put another way, ECF grew its balance by 37% over the five years from 2017-2021. However, had the ECF just invested its balance sheet into a very cheap ETF such as SPY, its balance today would be $551,363,068.83. For the privilege of having likely over-compensated professional money managers handle the fund’s endowment, they grew assets a mere 37.8% over those five years, versus a fund growth of 112.9% over the same period if they had just opened a basic brokerage account and paid a staffer 5k a year to make sure any dividends were promptly reinvested into SPY. (SPY is an ETF that tracks the performance of the S&P 500, is one of the most liquid instruments in the world, and maintains a very small 0.095% fee). I would be willing to bet that managers overseeing the ECF endowment made a very handsome bundle of money, despite decidedly underperforming the market by a noticeable margin. Also, I can't tell how grants and gifts accrue to Total Assets, but there is fluctuation around their figures, some of which I suppose could be attributed to new gifts that year, or gifts pre-scheduled, or outflows pre-scheduled.
Breakdown of yearly returns for the last five years for the broader market: ECF: 37% return over five years. Money preserved, none lost. However, given macro conditions, the return is dismal.
What if they just bought SPY and paid no managers: 113% return, minus management costs and salaries or contractors paid for services, over the same period? In 2021, 26.89% return. In 2020, 16.26% return. In 2019, 28.88% return. In 2018, -6.24% loss. And in 2017, 19.42% return. (full disclosure, .095 expense ratio - but peanuts in the grand scheme of things on this one)
Professional money managers usually get some compensation for assets under management, say 1-3% of managed assets. Top-tier managers get a percentage of assets under management PLUS 20% of the total return. That’s called carried interest, and if you manage money, it’s the best part of your job.
I'm only writing this because I'm about to post something else, and it helped me figure out their exact funding situation, which helps me frame what I want to post next. When I realized their return during one of the strongest bull markets of my lifetime was somewhat underwhelming, I had to compare and show how easy it is to win big or miss out substantially, even when you have the best money managers and financial advisors money can buy.