What is a Nonprofit Endowment?

An endowment is a capital fund or donation used by a non-profit organization to finance its ongoing operations. Endowments typically consist of cash, stocks, or other assets, and are usually managed by the organization's board of directors. The income from an endowment can be used to cover operational expenses, such as salaries and rent, or it can be used to fund special projects. Some endowments are also used to create scholarships or support research initiatives. While endowments can provide a much-needed financial boost to an organization, they also come with certain risks. For example, if the stock market declines, the value of an endowment's assets may also decline. As a result, nonprofits must carefully consider both the potential benefits and risks of accepting an endowment before making a decision.