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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