If we are to satisfy our organizational mission, this total return investment strategy must be complemented by what is commonly known as a spending policy. A spending policy determines the percentage of the fund balance available for grantmaking and other fund expenses in the coming year. The spending policy rate is set each year by the Board of Directors and is aimed at satisfying two complementary goals:
- To maximize grant dollars to address community needs. The practical application of the spending policy results in a grantmaking budget for each fund.
- To ensure, over time, that the growth of each fund’s principal assets meets or exceeds the annual advance in the Consumer Price Index. As a result, grant distributions from each fund to charity ten years from now will have the same purchasing power as today’s grants.
How is the spending policy applied?
Depending on the fund type, the spending policy rate ranges from 4 to 5 percent of a rolling 12 quarter average of the principal market value of each fund. Each Sept. 30, the grant-making budget for every fund is calculated for the following year.
Accordingly, donors can, but are not required to suggest grants out of this amount in the following year, plus any unspent dollars from the current year. Additionally, donors whose funds allow for invasion of principal are not limited to the spending policy amount.
Generally, funds managed by the Foundation are charged an annual administrative fee (listed on the Fund Statement as an Administrative Grant), which varies depending on the type of fund established. These fees are calculated on an annual basis, using the rates listed below applied to a rolling 12-quarter average of the total market value of each fund, and deducted from the fund’s principal balance quarterly. A minimum $250 fee applies to all funds.
|FUND TYPE||ADMINISTRATIVE FEE / GRANT||COMMENT|
|Agency Endowment||0.85%||Fund minimum: $50,000|
|Donor Advised||0.50 to 1.0%||See schedule below|
|Field of Interest||1.10%||--|
|Medical Research||1.50%||Fund minimum: $25,000|
|Scholarship||1.50%||Fund minimum: $25,000|
donor-advised fund FEE SCHEDULE
|$ -- 1,000,000||1%|
|$1,000,000 - 2,000,000||0.85%|
|$2,000,000 - 5,000,000||0.70%|
|$5,000,000 - 10,000,000||0.60%|
|$ > 10,000,001||0.50%|
Still have question about spending policy?
Contact our staff to discuss by calling our office at 412-394-2630, or contact us via email: