The prudent spending rate is a key concept for the trustees of endowments: the managers of the Norwegian oil fund, the overseers of the Harvard endowment, the trustees of the Gates Foundation. Because sophisticated investors like these think total return, they are no longer bound, either legally or in their own planning, by the traditional convention that you should match your spending to the income you receive – the total of the dividends, interest, rents, etc., arising year by year.
