Thank you @nick.eth and @katherine.eth for the feedback.
Our initial approach was working back the required endowment size based on required spending - this was due to uncertain future revenues and expenses. However, we agree that the DAO Budget approach could be a better one, given it allows the DAO to think about Budgets and Endowment in a more holistic manner. The IPS would also be regularly updated (annually, at least), and the revisions could take into account the changing revenues and expenses.
We will revert with revised IPS based on your comments.