Practical Applications of Mission Impossible: Foundation Investment Policy in the Post-COVID World

In Mission Impossible: Foundation Investment Policy in the Post-COVID World, from the February 2023 issue of The Journal of Investing, Michael Crook of Mill Creek Capital Advisors warns that there are no riskless spending policies available to foundations that intend to operate in perpetuity. Crook suggests that foundations, apart from increasing their allocations to risky assets, also consider the obvious solution of lowering spending rates—though he acknowledges that the required 5% annual spending rate for private foundations can be a significant challenge. Additionally, he cautions against simply relying on the average outcomes of Monte Carlo simulations without considering the range and distribution of simulation results.