This time of year, we see many of our clients preparing their budgets for next fiscal year. During budget season, you most likely look to see what the available spend is from your endowment. Hopefully you had a great year attaining new gifts from donors and the financial markets blessed you with big returns! Here at Fundriver, we recently compiled data from over 400 current clients. Our analysis determined trends in spending policies among different sized endowments.
What we discovered was the “Percent Average” calculation is the most widely used in the Fundriver population. This spending method can be configured to calculate an average based on the individual fund value, overall pool value, or unit price. Users then determine a look back period and apply a distribution rate to the average value.
The “Proportional Distribution” method is the second most widely used calculation among our Fundriver clients. A “Proportional Distribution” rule can be used when spending impacts units or unit price, whereas Dollar Amount Per Unit needs to have spending impact unit price (not the number of units) and all funds need to take a distribution. Dollar Amount Per Unit is more commonly used in clients with an endowment value over $500 million.
Lastly, we looked at distribution rates among clients. The overwhelming majority of our clients distribute between 4.00 – 4.99%.
If you need help setting up distribution rules or running reports in Fundriver please reach out to us at firstname.lastname@example.org. To learn more about Spending Rules in Fundriver check out this helpful article. If you have additional feedback, please leave a comment. We would love to hear from you!