Endowment Spending Calculator
Model endowment spending policy with distribution rates, inflation, and projected balance over time. Determine sustainability of spending rate.
Inputs
Results
Annual Distribution
$50,000.00
≈ 5 years of state college
Years to Depletion
999
How to Use This Calculator
- Enter Endowment Balance ($), Spending Rate (%), and Inflation Rate (%).
- Set Expected Return (%).
- Review Annual Distribution ($) and Years to Depletion.
- Use Real Return (%) and Net Growth Rate (%) to inform your decision.
- Use the chart to visualize the results and explore different scenarios by adjusting inputs.
How the result changes with Endowment Balance ($)
| Endowment Balance ($) | Annual Distribution | Years to Depletion |
|---|---|---|
| $1,000,000,000.00 | $50,000,000.00 | 999 |
| $3,500,000,000.00 | $175,000,000.00 | 999 |
| $6,500,000,000.00 | $325,000,000.00 | 999 |
| $9,000,000,000.00 | $450,000,000.00 | 999 |
What each input means
- Endowment Balance ($)
- Current market value of the endowment
- Spending Rate (%)
- Annual distribution as % of balance (4-5% is standard)
- Inflation Rate (%)
- Expected annual inflation rate
- Expected Return (%)
- Expected total annual investment return
How this is calculated
Worked example, using the default values
- Identify Input Parameters4 parametersEndowment Balance ($) = 1000000, Spending Rate (%) = 5, Inflation Rate (%) = 3, Expected Return (%) = 7 = 4 input(s) provided
- Calculate Annual DistributionAnnual Distribution50000 = $50,000
- Calculate Years to Depletion999 = 999
- Calculate Real ReturnReal Return4 = 4
- Calculate Net Growth RateNet Growth Rate2 = 2
Engine last updated .
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