Non-profit fiduciaries seek to balance the needs of their communities today with the desire to maintain and expand support for their communities in the future. The spending policy they select plays a key role in managing current distributions and planning for future ones.

An effective spending policy can provide a steady anchor for non-profit investors to guide their actions in today’s uncertain, volatile and evolving markets. We believe creating a clear and well-defined spending policy is critical, as it not only helps ensure strategic alignment with an organization’s mission, but also is an important means to creating fiscal discipline and consistency across volatile market environments.

In this paper, we unpack the spending policy by breaking it into two components: spending rate and spending methodology. We discuss how these components impact the sustainability of the asset pool and the balance between the interests of current and future beneficiaries.

Download research