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A sort of investment fund known as an endowment fund is created to offer ongoing financial support for a particular goal, such as sustaining the operations of a nonprofit organization or funding the academic programs of a university. Endowment funds are normally run by qualified investment managers and are funded by contributions from businesses, charities, or people.
An endowment fund's main goal is to produce long-term income and growth while retaining its initial principal. Endowment funds often employ a cautious approach to investing, placing a large emphasis on safe investments like bonds and reputable equities. The endowment's intended function, such as sponsoring research projects or awarding scholarships to deserving students, is supported by the income from these investments.
Endowment funds are frequently designed as permanent funds, which means that only the income from the assets, not the principal, is utilized to further the stated goal. In doing so, the endowment is able to continue giving money in perpetuity, ensuring that the organization or institution can carry out its purpose for the foreseeable future.
A board of trustees oversees the investment manager and establishes investing guidelines for endowment funds. The endowment's board may also lay out policies for how the money is to be used, such as defining which projects or programs are acceptable for support.
