I think it is the management fee paid to inhouse managers
internal investment management are internal staff of the foundation - seems strange to me that they can count internal staff and costs as part of their 5% spend - but I guess the total 5% spend includes not just running (or donating to) medical research or whatever, but also the associated costs of marketing, admin and internal financial management. But any external fees are added on top of the 5% when calculating the return requirement, liquidity. (ps the foundation I own/run has a legal requirement to spend 5% ON TOP of any internal or external costs - but cfai is built around US laws…)
No, cfai clearly states foundation granting and management whether internal or external count towards 5%, but asset mgmt whether internal or external do not.
black swan I knew I’ve seen it somewhere- it was the Schweser videos where they said usually just external you need to add to the 5%. So I guess it’s still undecided
^ yes the schweser videos say that and they actually emphasize it too as a catch Black swan can you provide a ref page in CFAI?
I am pretty sure the answer is The liquidity need is 7%, or 8% including mgt fee. But note that when we calculate the require rate of return, always include mgt fees, spending need, and inflation so I would not try to mix up require rate of return with the spending need. 2007 question 5 give you a simliar example and the guideline answer suggests we indicate both 7 and 8%. hope that helps
I’ll post the page later today
Bottom of cfai page 288, book 2. Very clearly points to no internal/external distinction but simply granting versus investment management