Your not-for-profit likely follows a spending policy to determine how much of the value of your investments to tap each year for operating costs and capital projects. Although it’s usually a good idea to stick with an established spending policy, circumstances may warrant changes. There are several types of policies, including fixed rate, rolling average, inflation-based, geometric and hybrid, all with pros and cons. When selecting a model, you should consider how that method potentially could cause you to increase spending and undermine your investments’ long-term growth.
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