Hi
Are all foundation spending needs non-contractual or is there an exception? I have seen several questions stating that the risk tolerance is high because the spending requirements are non contractual.
Does this apply to ALL foundations?
I think they are all non-contractual but if they don’t meet the requirements they lose their tax-exempt status.
They are non-contractual nature. Otherwise ALM would apply rather than favorable Asset only approach. Then it would be similar by risk and return characteristics as DB Plans, Insurers and Banks but it isn’t.
That is what I thought. Thank you!
They are non-contractual but as per US regulations some foundations must spend like 5% of assets per year.
Does that make it contractual? I think it means that the foundations should spend 5% if they wish to remain tax exempt. It is not contractual.
Someone please confirm this.
^its not contractual. Its a spending requirement. Not sure what course of action is taken if foundation doesn’t follow that but its not contractual.