It is a constant challenge for organizations to set spending policies that represent the goals of the organization without over-committing resources, while still seeking results that might stretch the potential of the entire entity. This is true for charities as well as for-profit entities. 

 

In the not-for-profit segment, much work has been done in the area of spending policy development. One noteworthy case is the Yale Plan developed for the Yale Endowment. Essentially, the plan, and many versions of it adopted by others, uses a smoothing process to weight multiple years of results and relate the payouts from the endowment with economic variables like inflation and bond yields. The combination of these factors yields annually scheduled payments that are not as volatile as the annual asset values, yet takes such variances into account. In the current volatile markets, this kind of plan can calm the nerves of those in charge of executing the day-to-day management tasks, while also forcing a discipline that keeps spending in check during the best of times. 

 

Company pension, profit-sharing, and other retirement plans are tied to specific contribution or payout structures. Hartline has worked with all types of plans and can offer insight regarding plan investing that matches the needs of the employees and the company. We welcome your questions.