Secondaries lifted 2025 foundation returns, but it's mostly paper gains

In 2025, private foundations saw gains of up to 20.6% from investments in secondaries, though this may be a paper gain rather than actual cash flow, according to new research by Commonfund and the Council on Foundations. Mark Hoeing, president and CEO of CF Private Equity, explained that this performance is due to investors purchasing assets at a discount and later marking them to par, a strategy employed amidst record secondary transaction volumes.

The total secondary deal volume surpassed $120 billion in the first half of 2026, a 20% increase from the previous record. This performance comes as private and community foundations have struggled with depressed trailing three-year returns since 2022. The study, based on reporting by 285 private and community foundations with $126.9 billion in combined assets, also found that rebalancing asset mixes played a role in the improved performance.