Spending policies clarify whether the foundation plans to spend the minimum legally required (5% per year of its market value) or more. Foundations that plan to exist in perpetuity and those planning to spend down will approach spending policies differently.
The sustainability of a spending policy is a function of four variables: the rate of spending, the return on the investment portfolio, the volatility of the portfolio’s returns, and the rate of inflation.
Spending Tips for a Volatile Market, Updated by SunTrust Bank
Designing A Spending Policy that Works, Updated by SunTrust Bank