What is an Endowment?
An endowment, or endowment fund, is the capital (or money) that provides
income for an institution. When properly invested, this capital can produce
substantial interest dividends. In an ideal situation, an organization can
support its operations in large part with the interest income generated from
the principal in the fund. A non-profit organization such as the Honolulu
Symphony Orchestra needs a healthy endowment to survive.
The building and maintenance of a healthy endowment is an ongoing process,
similar to growing a healthy plant from a tiny seed. If properly cared for,
the plant will produce bountiful fruit, and the fruit will in turn produce
vigorous seed.
http://www.virginia.edu/finance/funds/Images/AwdTypes_Tables/Endow_EI.htm
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