Endowment

AAA

DEFINITION of 'Endowment'

A financial asset donation made to a non-profit group or institution in the form of investment funds or other property that has a stated purpose at the bequest of the donor. Most endowments are designed to keep the principal amount intact while using the investment income from dividends for charitable efforts.

INVESTOPEDIA EXPLAINS 'Endowment'

Endowments provide ongoing benefits for those that receive them by earning a market rate of interest while keeping the core endowment principal intact to fund future years of scholarships, or whatever efforts the donor sought to fund. In some cases, a certain percentage of the assets are allowed to be used each year, so the amount pulled out of the endowment could be a combination of interest income and principal. The ratio of principal to income would change year to year based on prevailing market rates.

RELATED TERMS
  1. Principal

    1. The amount borrowed or the amount still owed on a loan, separate ...
  2. Endowment Fund

    An investment fund set up by an institution in which regular ...
  3. Philanthropy

    Charitable giving to human causes on a large scale. Philanthropy ...
  4. Donor Advised Fund

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

    A non-bank person or organization that trades securities in large ...
  6. Institutional Fund

    A fund that targets high value investors with low management ...
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. How does revenue recognition differ between profit and non-profit companies?

    Under the generally accepted accounting principles, or GAAP, for-profit companies recognize revenue as it is earned through ... Read Full Answer >>
  4. 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 >>
  5. 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 >>
  6. 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 >>
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. 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.
  3. Fundamental Analysis

    How To Invest Like An Endowment

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

    Preparing For A Career As A Portfolio Manager

    Find out what it takes to win a spot in one of the most coveted financial careers.
  5. Budgeting

    It Is Better To Give AND Receive

    You give to benefit others, but there can be perks for you too.
  6. Savings

    High-Risk Retirement Portfolio Not Always Taboo

    Find out how much risk your portfolio can take and whether your money will last.
  7. Retirement

    The Gatekeepers: Consultants Hold The Key

    Institutional investment consultants help match up asset managers with large institutions.
  8. Retirement

    Profit With Investment Policy Statements

    Defining how investments are managed and monitored can help investors meet their goals.
  9. Taxes

    Tips on Charitable Contributions: Limits and Taxes

    An overview of the limits and tax deductions of charitable donations.
  10. 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.

You May Also Like

Hot Definitions
  1. Hedging Transaction

    A type of transaction that limits investment risk with the use of derivatives, such as options and futures contracts. Hedging ...
  2. Bogey

    A buzzword that refers to a benchmark used to evaluate a fund's performance. The benchmark is an index that reflects the ...
  3. Xetra

    An all-electronic trading system based in Frankfurt, Germany. Launched in 1997 and operated by the Deutsche Börse, the Xetra ...
  4. Nuncupative Will

    A verbal will that must have two witnesses and can only deal with the distribution of personal property. A nuncupative will ...
  5. OsMA

    An abbreviation for Oscillator - Moving Average. OsMA is used in technical analysis to represent the variance between an ...
  6. Investopedia

    One of the best-known sources of financial information on the internet. Investopedia is a resource for investors, consumers ...
Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!