Spending Rate for Distribution
A recent study conducted by DeMarche Associates for the Council on Foundations illustrated the impact of different spending policies over time on the assets of a foundation. The study compared the performance of three hypothetical foundations with different payout percentages (5%, 6%, 7%) covering the period from 1950 - 1994.Each foundation starts with a million dollars and has the identical portfolio that is typical of foundations. The findings showed that by the end of 1994, the charitable payout of the 5% foundation would be 27.4% more than the 6% foundation and 67.2% more than the 7% foundation. The 5% payout foundation had increased its assets thereby preserving its purchasing power and had paid out more in grants than the other two foundations who had paid less in grants and significantly reduced its purchasing power.
Asset Base Calculation
The amount to be spent in the coming year is calculated each December 31st or the month preceding the end of the agency