What is an Endowment?
An endowment fund is most commonly established by a tax-exempt organization and is a permanent fund that uses its earnings to advance the charitable, religious, or educational mission of the organization for which it is established. The principal amount of the endowment fund always stays intact while all or a part of the earnings are utilized by the charity each year. The earnings are used to fund projects or programs designated by the endowment fund. A percentage of the earnings are generally left in the fund to increase the fund principal. As the principal increases, the earnings available for use each year increases.