Office of the Treasurer
Endowment Funds
Balanced Pool Spending Policy
- The spending policy, also known as the distribution policy, governs the calculation of how much money will be distributed each year from the endowment principal into the endowment spending account.
- To preserve the purchasing power of the endowment principal while providing income for expenditure, the following spending formula is used:
- 5% x (12 quarter average market value of the endowment pool)
- To achieve some uniformity in amounts to spend from one year to the next, the actual amount distributed from the endowment principal into the spending account in any given year will not exceed 106% of the prior year's distribution, or be less than 96% of the prior year's distribution.
- A distribution, based on this formula, is made from the endowment principal into the endowment spending account every July/August.
- Historically, at spending rates higher than 5%, the purchasing power of the fund would likely erode.
