OCF makes distributions from permanent endowment partner funds based on the spending policy set forth in OCF’s investment policy, which calls for the OCF board to set an annual payout rate for permanent funds. Our current rate is 4.45 percent.
The annual distribution amount from each fund is calculated by applying the payout rate to the fund’s average market value over a 13-quarter period ending on September 30 of the previous year. For example, the 2018 distribution is calculated at 4.45 percent of the average of values for the 13 quarters ending September 30, 2017.
Typically, distributions from endowment partner funds are made semiannually. Half of the annual amount is paid in June and the other half in December.
It is OCF’s policy to invest new funds for six months before making distributions. In the first year, the amount available for distribution from a new fund is prorated, based on the date of the contribution.
- Example I: A fund established in December 2017 will receive a full-year, 2018 distribution based on the amount of the gift. Half of the distribution will be paid in June and the other half in December.
- Example II: A fund established in April 2018 will receive a prorated distribution for 2018. Because the fund will exist for eight months of the year, the distribution will be 8/12ths, or 67 percent, of a full-year distribution. It will be available for December 2018 distribution.
Fund Additions and Distributions
When a gift is made to an established fund, the average market value will be adjusted to incorporate the gift. This adjustment is intended to increase the next calendar year's distribution by the payout rate times the gift amount.
An endowment partner may elect to reinvest all or part of the annual distribution back into the fund. Reinvested distributions add to the fund balance and are not available for distributon in future years.
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