What is an endowment fund?

Endowment funds consist of cash, equities, bonds, and other types of securities that can generate investment income. The major difference between an endowment fund and a typical investment fund – such as a mutual fund – is that the beneficiary of an endowment fund is a non-profit organization instead of individual investors.

What are investment funds used for?

Investment funds established for the support of institutions such as colleges, private schools, museums, hospitals, and foundations. The investment income may be used for the operation of the institution and for capital expenditures. Copyright © 2012, Campbell R. Harvey. All Rights Reserved.

How does a non-profit fund work?

The funds have specific policies concerning investments, withdrawal as well as usage of the funds. Normally the policies allow that the initial investment, known as the principal, shall remain untouched, and only the investment income can be withdrawn for use in the operations of the non-profit organization.

What is a quasi-endowment fund?

Quasi-Endowment The typical type of endowment fund is permanent funds, which are established to exist in perpetuity. In contrast, a quasi-endowment fund is not required by any legal restriction to exist permanently, which means the principal of a quasi-endowment is allowed to be spent at some point.