The donor stipulates that the city is to establish an endowment, from which income only is expendable.
Income is defined to include interest, dividends, and investment gains.
All income is to be recorded initially in a nonexpendable endowment fund. Each year the city is to transfer to an expendable endowment fund all income for the year that exceeds the rate of inflation as measured by the consumer price index times the beginning fund balance. The expendable funds are to be used exclusively to acquire books for the library. Transferred expendable income to a newly established expendable trust. Nothing was spent from this fund during the year as funds were not available until end of the year.