Distribution rate from 4% to 6%

BrittanyKennedy
BrittanyKennedy Posts: 5 ✭✭
Conversation Starter Third Compass Anniversary Grant Lifecycle Manager (GLM) Regional Training
in Finance & Operations

Staff at our foundation are recommending that the Board consider increasing our 2026 distribution rate from the traditional 4% to 6%. This recommendation is based on two key factors: stronger-than-anticipated investment returns in 2025 and the expectation that nonprofits in our region will face increased demand and financial pressure in the coming year.

We’re interested in learning how other foundations are approaching 2026. Are you planning to maintain your current distribution rate, increase it, or take a different approach?

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Answers

  • MeghanWarrick
    MeghanWarrick Posts: 24 ✭✭✭
    Groundbreaker Certified Public Accountant Third Compass Anniversary 10 Comments

    Our investment committee met earlier this week and reaffirmed our spending rate at 4%. We looked at our spending rate, Foundation admin fee, expected inflation, calculation period, and expected returns to make that determination. Positive returns in 2025 are helping improve the average from a few negative years in our calculation period.

  • PaulTomkins
    PaulTomkins Posts: 8 ✭
    Conversation Starter Certified Public Accountant 5 Likes First Comment

    We are planning to stay the course at 4.5% of a trailing 20 quarter average.

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