Definition

Noun: 1. A permanent fund of money that is invested to provide income for an institution: An endowment fund is a pool of financial assets, such as donations, that is invested. The primary goal is to grow the principal value over time while using the generated investment income (e.g., dividends, interest) to support the operations, programs, or specific purposes of a non-profit institution, such as a university, museum, hospital, or charitable foundation. The principal amount is typically kept intact in perpetuity.

Usage

The term "endowment fund" is used specifically in the context of institutional finance and philanthropy. It refers to the invested capital itself, not the income it produces. * The university's endowment fund grew significantly due to wise investments and a major donation. * Income from the museum's endowment fund is used exclusively for art restoration. * Managing a large endowment fund requires a dedicated committee and a long-term strategy.

Advanced Usage

• To be endowed: An institution that has an endowment fund is said to be endowed.
  • The well-endowed college can offer many scholarships.
• Spending rate/policy: Refers to the calculated percentage of the endowment's value that is spent annually to support operations.
  • The foundation's spending policy allows for a 5% annual draw from the endowment fund.

Variants and Related Words

• Endowment (noun): Often used synonymously with "endowment fund" to mean the total capital. It can also refer to the act of providing such a fund.
  • The university's endowment exceeds $1 billion.
• Endow (verb): To provide with an endowment fund.
  • A generous alumnus endowed a new professorship.

Synonyms

• Financial endowment
• Permanent fund
• Invested capital (in this specific context)

Related Phrases

• Quasi-endowment / Board-designated endowment: Funds set aside by an institution's governing board to function like an endowment, but which are not legally restricted by donor stipulations and can be spent at the board's discretion.
• Restricted endowment: An endowment fund where the donor has specified how the generated income must be used (e.g., for a specific scholarship or department).
• Unrestricted endowment: An endowment fund whose generated income can be used for the institution's general purposes at the discretion of its leadership.

Noun

1. the capital that provides income for an institution