Endowment Fund

AAA

DEFINITION of 'Endowment Fund'

An investment fund set up by an institution in which regular withdrawals from the invested capital are used for ongoing operations or other specified purposes. Endowment funds are often used by nonprofits, universities, hospitals and churches. They are funded by donations, which are tax deductible for donors.

INVESTOPEDIA EXPLAINS 'Endowment Fund'

There are three main components to the typical endowment fund:

1. Investment Policy: This policy dictates the types of investments the manager can make and how aggressive he or she can be in meeting return targets.
2. Withdrawal Policy: This policy determines the amount that the institution can take from the endowment fund at each period and is usually based on the institution's needs as well as the amount remaining in the fund.
3. Fund Usage Policy: This policy ensures that the money from the endowment fund is being used properly and for the purposes set out by the fund.

RELATED TERMS
  1. New Mexico State Investment Office ...

    The New Mexico State Investment Office (SIO) is responsible for ...
  2. Private Foundation

    A charitable organization that, while serving a good cause, does ...
  3. Nonprofit Organization

    A business entity that is granted tax-exempt status by the Internal ...
  4. Donor Advised Fund

    A private fund administered by a third party and created for ...
  5. Endowment

    A financial asset donation made to a non-profit group or institution ...
  6. Gift

    Property, money or assets that one person transfers to another ...
RELATED FAQS
  1. Can I donate stock to charity?

    Giving stock, instead of cash, as a donation can greatly benefit both parties. You will find that most charities, hospitals, ... Read Full Answer >>
  2. How do university endowments work?

    Endowments represent money or other financial assets that are donated to universities or colleges. The sole intention of ... Read Full Answer >>
  3. Does the federal government fund any NGOs? Which ones?

    A non-governmental organization (NGO) is a non-profit, citizen-based group that functions independently of government. NGOs ... Read Full Answer >>
  4. How do NGOs get funding?

    A non-governmental organization (NGO) is a non-profit, citizen-based group that functions independently of government. NGOs ... Read Full Answer >>
  5. Do nonprofit organizations pay taxes?

    Section 501 of the Internal Revenue Service (IRS) tax code exempts qualified nonprofit organizations from federal taxes. ... Read Full Answer >>
  6. What does "pro bono" mean?

    The term pro bono is short for the Latin "pro bono publico," which means "for the public good." The term generally refers ... Read Full Answer >>
Related Articles
  1. Fundamental Analysis

    Stock School: Student-Managed Investment Plans

    Student-managed investment funds offer future investment professionals a chance to manage real money while earning their degrees.
  2. Taxes

    Cut Your Tax Bill With Donor-Advised Funds

    Beat the tax man come April 15 by investing in a charity-friendly fund.
  3. Taxes

    Deducting Your Donations

    Generosity may be its own reward, but some charitable giving also provides personal tax benefits.
  4. Retirement

    Gifting Your Retirement Assets To Charity

    There are several things to consider when it comes to this type of charitable giving. Make sure you're well informed.
  5. Fundamental Analysis

    How To Invest Like An Endowment

    Historically, Ivy League endowments have had a successful investment strategy. Will it work for you?
  6. Budgeting

    It Is Better To Give AND Receive

    You give to benefit others, but there can be perks for you too.
  7. Taxes

    Tips on Charitable Contributions: Limits and Taxes

    An overview of the limits and tax deductions of charitable donations.
  8. Investing

    Internet.org: What It Is and How It Works

    Basic Internet access remains out of reach for many in developing nations. Internet.org aims to bring basic Internet access to these countries.
  9. Taxes

    Top Fund-Raising Strategies For Nonprofits

    Top fund-raising strategies for nonprofit organizations
  10. Taxes

    The Top Nonprofit Organizations

    Did you know basketball and volleyball were invented by instructors at a charity?

You May Also Like

Hot Definitions
  1. Fixed-Income Arbitrage

    An investment strategy that attempts to profit from arbitrage opportunities in interest rate securities. When using a fixed-income ...
  2. Venture-Capital-Backed IPO

    The selling to the public of shares in a company that has previously been funded primarily by private investors. The alternative ...
  3. Merger Arbitrage

    A hedge fund strategy in which the stocks of two merging companies are simultaneously bought and sold to create a riskless ...
  4. Market Failure

    An economic term that encompasses a situation where, in any given market, the quantity of a product demanded by consumers ...
  5. Unsystematic Risk

    Company or industry specific risk that is inherent in each investment. The amount of unsystematic risk can be reduced through ...
  6. Security Market Line - SML

    A line that graphs the systematic, or market, risk versus return of the whole market at a certain time and shows all risky ...
Trading Center