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EVMS Foundation spending policy
Eastern Virginia Medical School (EVMS) Foundation approved a new spending policy for endowed funds. Implementation will affect spending after July 1, 2019.
What was the previous policy, and why change it?
The previous spending policy was the lesser of 4.5% of a three-year rolling market average value OR funds available. The funds available were equal to the accumulated interest, dividends, realized gain/losses less expenses and excluded unrealized gains/losses.
The EVMS Foundation changed the policy to better align with the foundation's investment strategy.
What is the new policy?
Through the new policy, spending is now based on the 4.5% of the seven-year market value average as of December 31 of the previous fiscal year.
This new policy stabilizes endowment spending year-to-year and is comparable to peers in the community, as well as similar-sized endowments. This longer term is now closer to market cycle, thus reducing volatility in spending.
How does this impact a newly established endowment?
Spending from the fund will occur the following fiscal year after the fund is fully realized. In years one and two, spending will be reduced to allow the fund to accumulate.