Rex says
Money math without the spreadsheet headache. Plug in your numbers and I'll show you exactly where the dollars land.
Try a scenario
Click to load — tweak from there.Inputs
Result
Annual spending amount
$225,000
Sustainable spending rate
3.90%
Cushion (or deficit) vs proposed rate
-0.60%
Real dollar growth (or erosion) per year
-$30,000
Psst — share this and help Rex grow
One click, a permanent link with your numbers baked in.
How to use this
- 1Enter trailing average endowment balance ($).
- 2Enter proposed spending rate (%).
- 3Enter expected long-term nominal return (%).
- 4Enter expected inflation (%).
- 5Enter investment/admin fees (%).
- 6Read your annual spending amount on the right — it updates as you type.
- 7Hit Share to keep the scenario or send it to someone.
About this calculator
Most institutional endowments spend 4-5% annually, a rate designed to balance current program funding against preserving the endowment's real purchasing power for future generations. This calculator checks whether your proposed spending rate is sustainable given your expected long-term investment return and inflation assumption: if your spending rate exceeds expected return minus inflation minus fees, the endowment will erode in real terms even if the nominal balance grows. It applies the rate to a trailing average balance (commonly 12 or 20 quarter rolling average) rather than the current point-in-time balance, which is standard practice because it smooths spending through market volatility and avoids overspending after a single strong year or panicking after a single bad one.
Worked example
Using the values the calculator loads with:
Inputs
- Trailing average endowment balance: 5000000 $
- Proposed spending rate: 4.5 %
- Expected long-term nominal return: 7 %
- Expected inflation: 2.5 %
- Investment/admin fees: 0.6 %
Results
- Annual spending amount: $225,000
- Sustainable spending rate: 3.90%
- Cushion (or deficit) vs proposed rate: -0.60%
- Real dollar growth (or erosion) per year: -$30,000
What each field means
Inputs
- Trailing average endowment balance ($)
- The trailing average endowment balance used in the calculation, measured in $. Starts at 5000000 $ so you have a working example on load.
- Proposed spending rate (%)
- The proposed spending rate used in the calculation, measured in %. Starts at 4.5 % so you have a working example on load. Accepted range: 0–15 %.
- Expected long-term nominal return (%)
- The expected long-term nominal return used in the calculation, measured in %. Starts at 7 % so you have a working example on load. Accepted range: 0–20 %.
- Expected inflation (%)
- The expected inflation used in the calculation, measured in %. Starts at 2.5 % so you have a working example on load. Accepted range: 0–10 %.
- Investment/admin fees (%)
- The investment/admin fees used in the calculation, measured in %. Starts at 0.6 % so you have a working example on load. Accepted range: 0–5 %.
Results
- Annual spending amount
- Returned as a money amount in US dollars and shown as the headline result. It recalculates instantly whenever you change an input, so you can compare scenarios without reloading.
- Sustainable spending rate
- Returned as a percentage. It recalculates instantly whenever you change an input, so you can compare scenarios without reloading.
- Cushion (or deficit) vs proposed rate
- Returned as a percentage. It recalculates instantly whenever you change an input, so you can compare scenarios without reloading.
- Real dollar growth (or erosion) per year
- Returned as a money amount in US dollars. It recalculates instantly whenever you change an input, so you can compare scenarios without reloading.
FAQ
Why use a trailing average balance instead of today's balance?
A rolling 12- or 20-quarter average smooths out market swings so program spending doesn't spike after a great year and doesn't get slashed after a downturn. Most college and foundation endowment policies specify this explicitly in their spending policy documents.
Is 4-5% the right rate for every organization?
It's the common range (NACUBO surveys show average rates near 4.5-5% for institutional endowments), but a smaller endowment with a shorter time horizon, or one supporting a program that can flex spending down in bad years, might sustainably run higher. Perpetual endowments meant to fund an operation forever should stay conservative.
What happens if my gap is negative?
A negative gap means you're spending faster than the endowment can regenerate after inflation and fees, so real purchasing power shrinks every year even while the nominal dollar balance might still rise. That's sometimes an intentional decision (e.g., a term-limited endowment meant to spend down), but it should be a board decision, not an accident.
Does state UPMIFA law affect what I can spend?
Yes. Most states have adopted the Uniform Prudent Management of Institutional Funds Act, which generally prohibits spending below 'historic dollar value' preservation in most cases and requires a documented prudent process for setting the spending rate, not just picking a number.
Accuracy and limitations
- Results are estimates before tax, fees, and inflation unless an input explicitly covers them.
- Rates are treated as fixed for the whole period — variable-rate products will drift from this projection.
- This is educational maths, not financial advice. Check anything contractual with the lender or your accountant.
Related tools
Cite this calculator
Writing about this topic? Grab a citation — every link helps keep these tools free.
RevenueLab. (2026). Endowment Spending Rate Calculator. Retrieved from https://www.revenuelab.fyi/toolbox/endowment-spending-rate
<p>Source: <a href="https://www.revenuelab.fyi/toolbox/endowment-spending-rate" target="_blank" rel="noopener">Endowment Spending Rate Calculator — RevenueLab</a> (2026).</p>
Source: [Endowment Spending Rate Calculator — RevenueLab](https://www.revenuelab.fyi/toolbox/endowment-spending-rate) (2026).