How can my foundation design a spending policy that works? - Exponent Philanthropy

How can my foundation design a spending policy that works?

Your organization’s spending policy should be carefully selected after the thorough evaluation of several key inputs. A qualitative review of the type of organization, time horizon, beneficiaries, purpose of the endowment, sources of funding, institutional resources, applicable donor restrictions, and the investment policy statement should lead to a quantitative analysis that addresses:

  • Annual operating expenses and income
  • Grantmaking obligations, if any
  • Capital expenditures
  • Risk tolerance
  • Expected total return from income or capital appreciation
  • Investment-related costs
  • Inflation/deflation
  • General economic conditions
  • Investment time horizon (i.e., perpetuity or a fixed period of time)

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