What is a term endowment fund?

Term endowment funds stipulate that all or part of the principal may be expended only after the expiration of a stated period of time or the occurrence of a specified event, depending on donor wishes. Quasi endowment funds are designated endowments by an organization's governing body rather than by the donor.

Why do nonprofits use endowment funds?

Generally speaking, nonprofits use endowment funds because they provide a predictable stream of income and signal to the community that the organization is stable and plans to be around long term. Some donors like endowment funds because they get a tax deduction.

What is a 'endowment fund invasion'?

Drawing down the corpus of the endowment to pay debts or operating expenses is known as “invading” or “endowment fund invasion,” and sometimes requires court approval.

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.