Endowment Pool - Spending Policy

• Spending Policy – To provide ongoing support to endowed programs in perpetuity, the spending policy must be managed in conjunction with investment objectives and other factors in compliance with applicable law, such that the spending rate plus an inflationary assumption shall not exceed expected investment returns over time.  At minimum, the spending policy should be reviewed in conjunction with asset/liability studies performed by the Investment Consultant not less than once every three years.
  1. The formula used to determine the Endowment Pool spending distribution for each fiscal year shall apply a rate of 4.5% to a base equal to the 28-quarter trailing average of market values as of December 31st of the prior fiscal year.  Endowment spending distributions shall be paid on a monthly basis.
     
     The transition of the rate from 5.0% to 4.5% shall be accomplished in a methodical manner over a period not to exceed the seven years ended June 30, 2019.  In no case shall the transition from 5.0% to 4.5% cause the actual spending distribution to decrease from one year to the next during the transition phase.
  2. In addition to the spending distribution noted above, the President shall have the discretion to distribute from the Endowment Pool an administrative fee each fiscal year to be used for support of internal endowment administration and development functions.  Such administrative fee shall be calculated by applying a rate of up to 1% to a base equal to the 28-quarter trailing average of market values as of December 31st of the prior fiscal year.  The administrative fee shall be paid on a monthly basis.
  3. The spending policy, spending distribution formula and administrative fee may be adjusted over time by the Board to respond to general economic conditions and other factors as appropriate and in compliance with applicable law.
  4. Implementation of the spending policy is delegated to the Vice President for Finance and Administration or her/his designees.

Reviewed 2013-04-11.