[Foundation-l] Thinking for the Future

[Florence Devouard]

Robert Rohde wrote:
> On Wed, Mar 26, 2008 at 4:31 PM, Geoffrey Plourde <geo.plrd at yahoo.com>
> wrote:
> 
>> The Foundation really should start thinking for the future. I noticed that
>> a couple people were talking about an endowment. For the WMF, what would a
>> endowment require?
>>
>>
> 
> The Wikipedia endowment article says large endowments will usuallly realize
> a time averaged rate of return of ~10% (before inflation), so to generate 1
> million dollars per year towards the budget you'd need to set aside at least
> 10 million dollars for investment.  (In practice, endowments often reinvest
> 1/2 their gains, so the actual target income is often closer to 5%.)
> 
> While I don't think there is anything wrong with setting 10% or so of the
> budget towards an endowment or long-term contigency, accumulating enough
> capital to make it useful as an investment vehicle will take a long time.
> In addition, for growing organizations, it often makes more financial sense
> to spend money towards projects that will increase revenues.  For example,
> in the early going one would certainly expect to be able generate much more
> than a 6% return for each dollar spent on fundraising initiatives.
> 
> -Robert Rohde

I know of many investors who would like to see a 10% return on 
investment on their financial assets right now. To get such rates, one 
really need to hire a really good (and really expensive) financial 
advisor :-)

Ant