What is the spending (distribution) policy of the LTF?
The LTF utilizes what is often called a constant growth spending policy in determining annual distributions. Under a constant growth spending policy, distributions in a year are equal to the distribution in the prior year (in dollars) plus an increase to offset actual inflation in that particular year. Thus, distributions grow at a steady rate equal to the rate of inflation, which provides a stable stream of real resources to the beneficiaries of the endowments in the LTF. The constant growth spending policy is particularly suited to endowments in which current distributions are large relative to the total budget for the program being served by the endowment, as is the case for many of the endowments in the LTF. An unfortunate effect of the constant growth spending policy is that the volatility of financial markets, which is typically much greater than the volatility of inflation, is transferred to the value of the endowment funds from which distributions are made. To moderate potentia
