Endowment
An endowment is a pool of donated funds a nonprofit invests long-term, spending only the investment income while preserving the principal.
Endowments provide stable, perpetual support but can make an organization look wealthier than its spendable resources suggest, since the principal is usually restricted.
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Related terms
- Net assets — Net assets are what a nonprofit owns minus what it owes — its accumulated financial cushion, the nonprofit equivalent of equity.
- Restricted funds — Restricted funds are donations a nonprofit must spend only on the specific purpose or time period the donor designated.
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