I’m confused: Interpreting some content here and having a look at s2000’s boilertemplate for IPS statements, anticipated donations actually not only lower the liquidity requirement of an endownment but also its return requirment (vs. foundations where donations have to be spent in the same period). According to Mock6 of MM, donations/contribtutions cannot be reflected in return requirements of an endowment but only for liquidity needs. What is true? Should regular contributions also be reflected in the return requirements of an endowment?
In the 2023 Level III CFA curriculum, volume 5, reading 24, §14.1, the first paragraph contains this sentence: “The effective spending rate will, however, be reduced after accounting for gifts and donations.”
As the effective spending rate decreases, the return requirement decreases.
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