Case Studies in Focus: Designing a Sustainable Spending Policy for a Permanently Endowed Local Foundation

Tatyana Mursalimov
Aug 13
3 min read

Updated: Sep 29

This post is the second in our series exploring real-life case studies from our work with charities across the UK. Each post highlights how investment advice tailored to a charity’s specific context can support better decisions - combining technical depth with clear, practical delivery.

In this case study, we share how we worked with a place-based grant-giving foundation to test the sustainability of its rising distributions, integrate funding plans across asset types, and put in place a durable governance framework for long-term stewardship.

Building a Framework for Long-Term Giving

The foundation in question holds a permanent endowment of a little above £100 million, split between a directly owned local property estate and a global listed portfolio. A period of strong capital gains had encouraged trustees to increase their grant distributions.

By 2024, however, familiar headwinds emerged: persistent inflation, lagging returns from local property, and increasing volatility in listed markets. The board sought an objective framework to understand whether current grant levels could safely be sustained - or even increased - while preserving the real value of the endowment.

A Holistic, Evidence-Based Approach

Our starting point was to bring the entire endowment into a single total-return framework. By modelling rental and dividend income, capital growth, and planned property sales together, we allowed trustees to weigh all funding options on equal footing. This also supported their long-term goal to reduce the portfolio’s reliance on property.

Return assumptions were rooted in evidence:

Listed assets: We drew on long-run real-return data from the Dimson, Marsh & Staunton Global Investment Returns Yearbook and consensus outlooks from major investment houses.
Direct property: We built a bottom-up model using more than fifty years of regional real-estate cycles, adjusted for modern-day conditions.

Returns were modelled over rolling five-year periods in monthly steps, capturing a broad range of outcomes that smoothed short-term noise and aligned with the foundation’s strategic planning rhythm.

Grant funding was scheduled in layers: rental and dividend income first, followed by a phased sale of designated legacy properties. This approach ensured that current grant levels were met while nudging the asset mix gradually towards greater liquidity and balance.

We then stress-tested the model at two standard deviations below the expected mean return for each asset class. Historical data confirmed that major drawdowns in property and listed equities rarely occurred simultaneously, reinforcing the diversification benefit of the current mix.

A bottom-up forecast of grant programme demand was embedded directly into the model. Joint workshops with finance and programme teams helped build shared understanding and confidence in the outputs.

Tangible Outcomes

The project delivered measurable improvements in governance and financial planning:

Sustainable rate confirmed: Trustees formally endorsed a distribution rate that maintains current grant levels without drawing down the unapplied-total-return (UTR) buffer.
Buffer protected: A formal policy was adopted to retain a prudent UTR reserve to absorb periods of weak returns.
Clear governance toolkit: A one-page dashboard now tracks grant affordability, investment returns, and liquidity - with a triennial review cycle, or sooner if pre-agreed triggers are met.
Diversification under way: The first property sales have completed, securing 18 months of grant liquidity and reducing concentration risk.
Shared language across teams: Finance and grant teams now work from the same model, enabling faster, clearer decision-making and strengthening the culture of stewardship.

How We Can Help

This case illustrates how rigorous modelling, clear communication, and collaborative planning can turn complexity into clarity - giving trustees the confidence to commit to long-term grant-making without compromising the endowment’s real value.

At PMCL, we help charities build the frameworks and tools needed to make sound investment decisions that stand the test of time.

Stay tuned for the next post in our Case Studies series, where we’ll explore how we helped adapt a multi-asset fund with a sustainability overlay for higher return and lower cost.