diff --git a/x/protocolpool/keeper/keeper.go b/x/protocolpool/keeper/keeper.go
index ca79d60e81..f0d6cff755 100644
--- a/x/protocolpool/keeper/keeper.go
+++ b/x/protocolpool/keeper/keeper.go
@@ -177,6 +177,31 @@ func (k Keeper) SetToDistribute(ctx context.Context) error {
 	// Calculate the amount to be distributed
 	amountToDistribute := distributionBalance.Sub(lastBalance)
 
+	// Check if there are any recipients to distribute to, if not, send straight to the community pool and avoid
+	// setting the distributions
+	hasContinuousFunds := false
+	err = k.ContinuousFund.Walk(ctx, nil, func(_ sdk.AccAddress, _ types.ContinuousFund) (bool, error) {
+		hasContinuousFunds = true
+		return true, nil
+	})
+	if err != nil {
+		return err
+	}
+
+	// if there are no continuous funds, send all the funds to the community pool and reset the last balance
+	if !hasContinuousFunds {
+		poolCoins := sdk.NewCoins(sdk.NewCoin(denom, amountToDistribute))
+		if err := k.bankKeeper.SendCoinsFromModuleToModule(ctx, types.ProtocolPoolDistrAccount, types.ModuleName, poolCoins); err != nil {
+			return err
+		}
+
+		if !lastBalance.IsZero() { // only reset if the last balance is not zero (so we leave it at zero/nil)
+			return k.LastBalance.Set(ctx, math.ZeroInt())
+		}
+
+		return nil
+	}
+
 	if err = k.Distributions.Set(ctx, k.HeaderService.HeaderInfo(ctx).Time, amountToDistribute); err != nil {
 		return fmt.Errorf("error while setting Distributions: %w", err)
 	}
diff --git a/x/protocolpool/keeper/keeper_test.go b/x/protocolpool/keeper/keeper_test.go
index a543f0c30d..fa147d9731 100644
--- a/x/protocolpool/keeper/keeper_test.go
+++ b/x/protocolpool/keeper/keeper_test.go
@@ -186,9 +186,32 @@ func (suite *KeeperTestSuite) TestSetToDistribute() {
 	distrBal := sdk.NewCoins(sdk.NewCoin(sdk.DefaultBondDenom, math.NewInt(1000000)))
 	suite.bankKeeper.EXPECT().GetAllBalances(suite.ctx, poolDistrAcc.GetAddress()).Return(distrBal).AnyTimes()
 
+	// because there are no continuous funds, all are going to the community pool
+	suite.bankKeeper.EXPECT().SendCoinsFromModuleToModule(suite.ctx, poolDistrAcc.GetName(), poolAcc.GetName(), distrBal)
+
 	err := suite.poolKeeper.SetToDistribute(suite.ctx)
 	suite.Require().NoError(err)
 
+	// Verify that LastBalance was not set (zero balance)
+	_, err = suite.poolKeeper.LastBalance.Get(suite.ctx)
+	suite.Require().ErrorContains(err, "not found")
+
+	// create new continuous fund and distribute again
+	addrCdc := address.NewBech32Codec("cosmos")
+	addrStr := "cosmos1qypq2q2l8z4wz2z2l8z4wz2z2l8z4wz2srklj6"
+	addrBz, err := addrCdc.StringToBytes(addrStr)
+	suite.Require().NoError(err)
+
+	err = suite.poolKeeper.ContinuousFund.Set(suite.ctx, addrBz, types.ContinuousFund{
+		Recipient:  addrStr,
+		Percentage: math.LegacyMustNewDecFromStr("0.3"),
+		Expiry:     nil,
+	})
+	suite.Require().NoError(err)
+
+	err = suite.poolKeeper.SetToDistribute(suite.ctx)
+	suite.Require().NoError(err)
+
 	// Verify that LastBalance was set correctly
 	lastBalance, err := suite.poolKeeper.LastBalance.Get(suite.ctx)
 	suite.Require().NoError(err)