Suppose a donor will contribute 2 million to a foundation every year.
Do we need to consider this 2 million in the return requirement and liquidity requirement?
In CFAI Mock 2013 am Q5 Pearce’s case, they include it in the liquidity requirement but not in the return requirement (which consists only of spending rate, inflation rate, and management fees).
I am confused, with the 2 million contribution, we can afford to make 2 million less from the investment and yet still satisfy the spending/inflation/management fees requirement. So our return requirement from investment should be lower. (which seems to be the reason for lower liquidity requirement in the same question)
And for liquidity, I remember there was another mock question that does not subtract off the contribution from the liquidity requirement (i guess because it is a source to satisfy the liquidity requirement, but not the requirement itself?). This looks contradictory to the answer in 2013 Mock.