Not sure understand what an endowment is and how it may be used.
An endowment is an aggregation of assets invested by a college or university to support its educational and re- search mission in perpetuity. It represents a compact between a donor and an institution and links past, current, and future generations. These gifts also allow an institution to make commitments far into the future, knowing that resources to meet those commitments will continue to be available.
An institution’s endowment actually comprises hundreds or thousands of individual donations. Endowments allow donors to transfer their private dollars to public purposes with the assurance that their gifts will serve these purposes for as long as the institution continues to exist.
Endowments serve institutions and the public by:
Providing stability. College and university revenues fluctuate over time with changes in enrollment (tuition), donor interest (gifts), and public support (largely state and federal). Although endowment earnings also vary with changes in financial markets and investment strategies, most institutions follow prudent guidelines that are intended to buffer economic fluctuations and to produce a relatively stable stream of income. Because
the endowment principal is not spent, the interest generated by endowment earnings supports institutional priorities year after year. This stability is especially important for activities that cannot readily be started and stopped, or for which fluctuating levels of support could be costly or debilitating. Endowments frequently support student aid, faculty positions, innovative academic programs, medical research, and libraries.
Leveraging other sources of revenue. Institutions have dramatically increased their own student aid expen- ditures in recent years, and endowments have enabled institutions to respond more fully to changing demo- graphics and families’ financial need. It is not surprising that the colleges and universities with the largest endowments are the ones most likely to offer need-blind admission (admitting students without regard to financial circumstances and then providing enough financial aid to enable them to attend). At the same time, endowments help institutions provide financial aid to students who cannot afford full tuition. An endowment also allows a college or university to provide a higher level of quality of service at a lower price than would otherwise be possible. This has been especially important in recent years, particularly for publicly supported institutions that have experienced significant cuts in state support. Without endowments or other private gifts, institutions would have had to cut back even further on their programs, increase tuition and fees even further, and/or obtain additional public funding to maintain current programs at current prices.
Encouraging innovation and flexibility. An endowment enables faculty and students to conduct innovative research, explore new academic fields, apply new technologies, and develop new teaching methods even if funding is not readily available from other sources, including tuition, gifts, or grants. Such innovation and flexibility has led to entirely new programs and to important discoveries in science, medicine, education, and other fields.
Allowing a longer time horizon. Unlike gifts expended upon receipt, an endowed gift keeps giving over time. Endowed institutions can plan strategically to use a more reliable stream of earnings to strengthen and enhance the quality of their programs, even if some of their goals will take many years to achieve. By making endowed gifts, alumni and others take responsibility for ensuring the long-term well-being of colleges and universities. Their gifts help enable future generations of students to benefit from a higher quality of education and allow these institutions to make even greater contributions to the public good. Endowments ensure that the education offered today at a particular college or university will have the same value 25 or 50 years from now