Modelling the fund
An illustration, not a forecast
This page lets you see how a permanent endowment behaves arithmetically over time. It is a teaching tool for the model, not a prediction of what this fund will do.
The assumptions
| Nominal return | 6.5% a year by default, being the real return target of CPI plus 4% net of all fees at 2.5% inflation, which the Investment Policy Statement assesses over rolling five-year periods. Adjustable from 3% to 12%. |
|---|---|
| Distribution rate | 5.5% a year by default, applied to the average corpus at the three preceding financial year ends rather than the latest balance. The Investment Policy Statement sets 5.5% where new gifts over the three preceding years have averaged at least 2.0% of that corpus, and 4.0% in any other case. In the fund’s first three years the preceding year end is used instead of a three-year average. The directors determine the applicable rate by resolution each year. Adjustable from 1% to 10%. |
| New contributions | A$10,000 a year by default, indexed to inflation. Set this to zero to see the fund on its existing capital alone. |
| Inflation | 2.5% a year, used both to index contributions and to show figures in today's dollars. |
| Not modelled | Market volatility, sequence of returns, fees, tax, currency movement, and the board's discretion to reinvest instead of distributing. Real outcomes will differ, in both directions. |
| Currency | LKR figures use an approximate rate of 238 LKR per AUD, which will change. |
The model
Use the year slider to see the fund at any point in its life, then adjust the assumptions to test different scenarios.
In year 1
A$2,750
distributed to Sri Lanka
≈ LKR 654,500
Fund size at year 1
A$61,750
corpus value
in today's dollars
Total distributed so far
A$2,750
≈ LKR 654,500 total
Adjust assumptions
Figures shown are nominal unless labelled otherwise. Returns are not guaranteed.
What a distribution buys
The figures below apply the distribution rate you have set to a contribution of your choosing, at current Sri Lankan retail prices.
LKR 327,250 / year
could reach Sri Lanka each year, indefinitely
LKR 8,181,250
total over 25 years on the same assumptions
An annual distribution of that size buys approximately
32
school bags
avg LKR 1,000 each
12
pairs of shoes
avg LKR 2,550 each
109
activity books
avg LKR 300 each
Based on Sri Lankan retail prices, at approximately 238 LKR per AUD. Illustrative only.
Beyond the numbers
The model works because the constitution prevents the capital being spent and requires the directors to document every distribution decision.
How the fund is governed Ways to give