Foundation - IPS

If a portion of a portfolio has been designated to serve as a reserve of the foundation’s spending budget, why doesn’t that reduce the investable asset base? It is not really a reserve then if it’s subject to risk? (example - Hale Health Foundation IPS in 2004 exam)

I don’t have the exam details, but I’m guessing it is just a liquidy requirement.

my guess is it is still invested in liquid and sfest risk free asset, still part of investment.

Its just a reserve. You don’t plan on spending it anytime soon or there is any requirement for it. Its kind of like an individual having 3-6 months expense reserve in cash. It would still be included in the overall portfolio.

Don’t have exam details but this may pertain to 5% spending requirement… else the foundation loses tax exempt status…