Reconsidering the philanthropic foundation minimum payout policy under a “new normal”

Zvika Afik, Hagai Katz

Research output: Contribution to journalArticlepeer-review


With the increasing salience of foundations in many policy fields, and recent changes in market conditions, policies towards foundations designed decades ago seem outdated. In this article we suggest reassessing foundation payout minimums. To examine the impact of payout rates on grantmaking foundations lifespan and performance under “new normal” economics, we simulate multiple foundations lifecycles using Monte Carlo methods in diverse capital market conditions, with varied investment and payout strategies. We find that while under past market regime perpetuity seems to be a given, under more probable future scenarios, foundations might face increasingly early mortality and endowment depletion, limiting their potential impact. Furthermore, lower payout rates allow for higher lifetime grantmaking, higher mean annual grantmaking, and lower giving volatility. Accordingly, we suggest a tiered payout policy, in line with foundations’ missions and proper financial planning.

Original languageEnglish
Pages (from-to)219-233
Number of pages15
JournalJournal of Policy Modeling
Issue number2
StatePublished - 1 Mar 2019


  • Grantmaking foundations
  • Investment
  • Monte Carlo simulations
  • Payout
  • Policy

All Science Journal Classification (ASJC) codes

  • Economics and Econometrics


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