The financial performance of foundations in 2025 has shown a notable uptick, a trend largely attributed to increased activity within the secondary market. Secondary markets, which allow investors to buy and sell existing financial interests, have provided foundations with opportunities to rebalance portfolios and capture value from previously illiquid assets. This shift has been a primary driver in the improved return profiles reported by many institutional portfolios throughout the year.

Despite the positive headline figures, there is a clear distinction between these reported returns and actual liquidity. Much of the growth is classified as 'paper gains,' meaning the valuation of assets has increased on financial statements, but the underlying capital has not yet been converted into cash through a sale. This distinction is critical for foundations that rely on consistent cash flow to fund their operational mandates and grant-making activities.

While the secondary market has provided a mechanism for foundations to mark up their holdings, the reliance on these valuations introduces a level of uncertainty. If market conditions shift, these unrealized gains could be subject to significant volatility. Consequently, while the 2025 returns appear robust on the surface, the actual financial health of these foundations remains tied to the eventual ability to realize these gains in a real-world transaction environment.