You are Padre Andrés Quesada-Marenco, Vicar General for Administrative Affairs of the Arquidiócesis de San Joaquín and, in all but title, its chief financial officer. In eight weeks the Finance Council votes on your financial plan, and the first thing it will ask is how much the endowment should pay out.
The situation
On a Tuesday morning in July 2026, Hna. Margarita Solís-Bautista puts a sealed letter on your desk from the chief financial officer of the Universidad Católica San Joaquín, which the archdiocese sponsors and controls. Without a one-time recapitalisation of USD 22 million, the Universidad will fail a bond covenant test in the fourth quarter, and the trustee will be entitled to accelerate. The Universidad already absorbs a subsidy of USD 14 million a year.
The endowment stands at USD 380 million, invested 70% in equities and 30% in fixed income. Over the last decade it returned 4.8% a year in real terms. For years it has distributed 5.0% of its average value over the trailing three years, paid quarterly; you have signed that rate six years running, on a policy set before you arrived. Sunday collections are falling across the 142 parishes, and the clergy pension, with no assets of its own, is paid out of operating cash. The endowment has been absorbing the difference.
The external advisor the secretariat retained puts it simply: a long-horizon portfolio can pay out roughly what it earns in real terms, less what it costs to run the money, less a margin for being wrong. Against a long-run real return he puts nearer 5.0%, he takes 0.4 points for costs and 0.2 for prudence, and arrives at a sustainable distribution of 4.4% to 4.8%.
You can set the distribution rate anywhere between 3.0% and 6.0%, and the equity share between 30% and 90%. Three people must back the plan: Mons. Gabriel Aguirre-Cerdán, the Archbishop; Sr. Fernando Esquivel-Belaúnde, the layman who chairs the Council; and Padre Tomás Iturrizaga-Mendoza, who speaks for the other 141 pastors.