More than two in five endowment, foundation and charity investors are warning that investment returns have been below targets over the last three years, a survey has found.

This found that 42% of charitable investors say investment returns have either been under their often inflation linked targets, or below expectations in the cases where no formal target exists but there is an expected long-term return.

Targets are most commonly defined as a set figure above a relevant inflation metric but a “meaningful minority” have an “absolute return” target, found researchers.

For inflation related targets the average figure is inflation plus 3.8%, according to the survey, which took place in October this year involved the views of 61 senior investors across 16 countries.

Over the last three years 14% of investors have raised the required bar for their target, while 9% have lowered it.

One in five charitable investors have raised long term expected returns, while one in six have lowered it, according to the survey, which has been published by bfinance.

One investor said: “We increased spending but did not formally change the return target yet. This is under discussion.”

“The surge in developed market inflation has had serious implications for endowments and foundations whose return targets are either directly or indirectly tied to domestic CPI (consumer price index) and similar metrics,” said bfinance.

Research by bfinance, published last month, found that four in five not for profit investors see environmental, social and governance concerns as important to their investment strategy.

But it also found that 5% do not think ESG is important and 16% think it is of ‘minor importance’.

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