LACF Spending
Policy

Understanding LACF’s Spending Policy

When you set up an endowed fund at La Crosse Area Community Foundation, you’re supporting your community not just today, but for generations to come. A key part of that promise is our spending policy.

This page explains what a spending policy is, how ours works, and why it matters to donors and the nonprofits they support.

What Is a Spending Policy?

A spending policy is the method used to determine how much money an endowment distributes each year.

The goal is balance:

  • Providing reliable annual support to charities and community programs
  • Protecting the long-term value of the endowment so it can last in perpetuity

Rather than reacting to short-term market changes, a spending policy creates stability—for both donors and the organizations they care about.

How LACF’s Spending Policy Works

Each year, the LACF Board of Directors reviews and sets a single annual distribution percentage that applies to all endowed funds administered by the foundation.

Key features of LACF’s approach:

  • The distribution rate typically ranges between 4% and 5%
  • In 2024, the rate was 4.75%
  • The percentage is applied to the average market value of each fund, calculated over the prior 12 quarters (or fewer quarters for newer funds)

Using a multi-year average helps smooth out market highs and lows, creating more consistent annual distributions.

What Is a Total-Return Spending Policy?

LACF uses a total-return spending policy, which is considered best practice among community foundations.

Under a total-return model:

  • Annual distributions are based on both investment income and long-term growth
  • Funds are not limited to paying out only interest or dividends
  • Investments can focus on long-term performance rather than short-term income

This approach allows endowments to grow over time while still providing meaningful annual support.

Why LACF Uses a Total-Return Model

A total-return spending policy helps LACF meet three essential goals:

  1. Protect endowment assets so they can support the community in perpetuity
  2. Grow funds over time to keep pace with inflation and future needs
  3. Provide predictable annual support to nonprofits, even during market volatility

For donors, this means confidence that your gift is being managed thoughtfully and responsibly.

For nonprofits, it means more consistent year-to-year funding.

Why This Matters to You as a Donor

LACF’s spending policy is designed to honor donor intent while strengthening long-term community impact.

When you establish or contribute to an endowed fund:

  • Your gift supports causes you care about every year, not just once
  • The fund is managed to remain effective through changing economic conditions
  • Your generosity continues working for the community well into the future

Frequently Asked Questions

How much of an endowment is paid out each year?
Does market volatility affect annual distributions?
Can the spending percentage change?
Does this apply to all endowed funds?
How does this protect my gift long term?
How is an endowment at LACF invested?

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