What Are the Different Uses of Endowment Funds?

Laura M. Sands
Laura M. Sands
Endowment funds can be useful to community-based programs, such as homeless shelters.
Endowment funds can be useful to community-based programs, such as homeless shelters.

Endowment funds have a variety of different uses, the most common of which is for educational purposes. It is quite common for such funds to be used to provide scholarships or various other types of financial aid for eligible students. Endowment funds may also be used to fund nonprofit and community-based programs such as mentoring programs, domestic violence outreach efforts, homeless shelters and food programs. Endowment funds are also frequently used to fund various types of research efforts.

While individuals and businesses often make donations to endowment funds, most are established by an individual or a group with specific rules regarding how the investment fund will be used. After its establishment, however, an endowment fund often allows donors to invest in the fund to help it continue its altruistic function. In addition to the charitable work or research supported by endowments, donations made to endowments are tax deductible.

One of the most common uses for an endowment fund is in the support of educational opportunities. Such support is generally offered to students who meet the fund’s criteria by way of financial scholarships applied to tuition costs. Endowment funds may also be used to purchase equipment and supplies for schools and colleges.

Frequently used to fund charitable organizations and causes, endowment funds operate much like private and government grants in that funds do not have to be repaid. Whereas most grants require strict reporting and monitoring of such programs, some endowments do not require such. While many require a recipient’s financial statements, money received from an endowment often does not require ongoing reporting after a donation has been made. In order to access help from endowment funds, however, most applicants are very closely scrutinized in order for fund overseers to determine the organization’s track record in its charitable endeavors.

Endowment funds are also often used in support of research projects, such as health and medical research. Such funds may be used to finance entire research facilities or may be used to fund isolated projects. Research endowments may also be used to provide stipends for individual researchers and any vital research staff members. The length of time provided for such support may vary according to the type of research being done. For example, some may provide support for a year or two, while others may provide research funding for a decade or more.

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    • Endowment funds can be useful to community-based programs, such as homeless shelters.
      By: wjarek
      Endowment funds can be useful to community-based programs, such as homeless shelters.