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How does the endowment spending policy relate to the 5-percent payout requirement for private foundations?

April 26, 2017endowment Foundations payout policy private relate requirement Spending

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How does the endowment spending policy relate to the 5-percent payout requirement for private foundations?

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A private foundation must meet the 5-percent payout requirement that is imposed by federal tax law even if distributions at that level would cause the endowment fund to lose value or not meet its target value.