Spending Policy

A Spending Policy defines how to distribute money from an endowment fund. The goal of a spending policy is to provide a steady cash disbursement while protecting the endowment fund's principal. A spending policy links a nonprofit's endowment with the mission and long-term plan of the organization and gives donors an assurance that their contribution will have lasting impact.

FIMS offers Spending Policy calculations, or you can import and export policy procedures that you calculate via a spreadsheet. Other spending policy options are seen in the image below and covered in this section.

Usually, a spending policy is either an income-only policy or a total return policy, with total return being a more popular approach. A total return spending policy establishes value based on income, dividends, and capital appreciation (depreciation). An income only policy considers only the interest earned and dividends paid.

Cash Requirements, the per-Fund spending amount, can be derived and then booked to General Ledger. Remaining available dollars can be tracked as Grant expenditures are made.

Tip: See General Ledger Design and Available Balance for information about tracking the available balance in General Ledger.

You can create multiple General Ledger transactions with the Cash Requirement value. For example, if your organization transfers the available amount from an Investment Pool to an Available to Grant holding account, one General Ledger transaction can move the money to the holding account, and another can shift the sum from a non-available balance to an available balance. You can also make Grants expense budget entries to help your program staff track available dollars.

Spending Policy Codes

Calculate Spending Policy

Run Cash Requirements Report (Spending Policy)

Manually Adjust Spending Policy Amounts

Import Spending Policy Amounts

Create Recurring, General Ledger, or Budget Entries

Import Spending Policy Budgets

Comply with UMIFA in a Down Market

Spending Policy System Option