Stanford University has a significant endowment.
A donation is money donated to an organization, usually for a specific purpose. Equity funds must generally be used for investments that will create indefinite interest income for the recipient. There are many types of endowments and they can be classified according to the type of recipient, the purpose or the way in which the endowment’s finances are managed. Recipients of endowments can usually be a college or university, a library or a hospital. The appropriations can be real or permanent, or they can be term appropriations.
A donation is money donated to an organization, usually for a specific purpose.
Appropriations are generally administered in four ways. A term endowment pays a designated recipient, but only for a predetermined period of time or until a specific event occurs. An example of an event that can end a donation is the death of the recipient of the donation or the closure of the organization receiving the donation. This type of endowment can also be called a living trust.
Retirees can choose to donate funds to endowment accounts at various educational institutions.
Another way to award a grant is to have an investor outside the receiving organization invest the principal and deliver the principal’s income to the recipient. This type of donation is called a fund held in third-party custody. A permanent, or true, endowment is a principal investment that provides interest income to an organization indefinitely.
Sometimes a donation can be classified by how an organization is allowed to use its funds, whether spending is restricted or unrestricted. Restricted Endowment Funds, sometimes called Restricted Endowment Funds, are financial gifts given to an organization for a specific purpose. Unrestricted endowment funds, also called quasi-grants, provide general funding for an organization or department. Where an unrestricted donation would allow an organization to spend money on anything it needs, a restricted donation might give a specific gift, such as new musical instruments for a high school music program. In science, a restricted endowment may be for a specific purpose within a specific area of study.
In the academic world, another type of endowment is the endowed professorship. These highly regarded salaried positions are awarded by an institution of higher learning. Often, professors who receive this honor are considered ranked above a standard professor at that institution. A scholarship is a restricted-purpose donation awarded to students of an educational institution.