U.S. foundations have been finding it more difficult to make money through investments, with returns averaging just 8.1% in 2005, according to the Commonfund Benchmarks Study Foundations and Operating Charities 2006. That figure represents more than a 50% drop-off from the 17.8% recorded in 2003 and the 11.4% in 2004. Annual returns correlated to the size of the foundation, with the larger organizations seeing the best gains. Average asset allocations last year showed significant changes, as 37% of assets went to domestic equities, down from 45%; 50% to large caps, down from 59%; and index equities at 24%,up from 17%. The survey found allocations to hedge funds and private equity funds dipped slightly, but those with higher allocations to alternatives and international equities produced better returns.