If a foundations return objective is to preserve the real value of their asset base, how does a decrease in contributions one day impact their return objective going forward (Inc/Dec/Remain unchanged)
Answer says it remains unchanged as they still need to preserve their real value.
I said it would increase as less donations decreases the asset base so they need to work harder to bring the asset base up.
Am I wrong because the question says preserve? A bit confused.
Rex
probably because those contributions would add to the asset base (capital/principal) instead of being considered as a form of return.
I thought foundations were typically closed to additional contributions?
Return objective for foundation is Spending rate + Admin cost + Inflation. Hence contribution will not impact Return.
To confirm,
Are we saying that contributions do not impact the return objective or requirement?
Objective does not change, as they are still required to provide real wealth preservation regardless of contributions
And requirement does not change because the formula is spending + inf + fees (therefore Contributions are not considered here?)
Yes correct.
Correct
Objectives of foundations dont have any correlation with the contribution.
Correct me if i am wrong.