A financial endowment is a legal structure for managing, and in many cases indefinitely perpetuating, a pool of
financial
Finance is the study and discipline of money, currency and capital assets. It is related to, but not synonymous with economics, the study of production, distribution, and consumption of money, assets, goods and services (the discipline of fina ...
,
real estate
Real estate is property consisting of land and the buildings on it, along with its natural resources such as crops, minerals or water; immovable property of this nature; an interest vested in this (also) an item of real property, (more general ...
, or other investments for a specific purpose according to
the will of its founders and donors.
Endowments are often structured so that the inflation-adjusted
principal or "corpus" value is kept intact, while a portion of the fund can be (and in some cases must be) spent each year, utilizing a prudent spending policy.
![B&M Gates Complex](https://upload.wikimedia.org/wikipedia/commons/c/c3/B%26M_Gates_Complex.jpg)
Endowments are often governed and managed either as a
nonprofit corporation
A nonprofit corporation is any legal entity which has been incorporated under the law of its jurisdiction for purposes other than making profits for its owners or shareholders. Depending on the laws of the jurisdiction, a nonprofit corporation may ...
, a
charitable foundation
A foundation (also a charitable foundation) is a category of nonprofit organization or charitable trust that typically provides funding and support for other charitable organizations through grants, but may also engage directly in charitable act ...
, or a
private foundation
A private foundation is a tax-exempt organization not relying on broad public support and generally claiming to serve humanitarian purposes. The Bill & Melinda Gates Foundation is the largest private foundation in the U.S. with over $38 billion ...
that, while serving a good cause, might not qualify as a public charity. In some jurisdictions, it is common for endowed funds to be established as a
trust
Trust often refers to:
* Trust (social science), confidence in or dependence on a person or quality
It may also refer to:
Business and law
* Trust law, a body of law under which one person holds property for the benefit of another
* Trust (bus ...
independent of the organizations and the causes the endowment is meant to serve. Institutions that commonly manage endowments include academic institutions (e.g.,
college
A college (Latin: ''collegium'') is an educational institution or a constituent part of one. A college may be a degree-awarding tertiary educational institution, a part of a collegiate or federal university, an institution offering ...
s,
universities
A university () is an institution of higher (or tertiary) education and research which awards academic degrees in several academic disciplines. Universities typically offer both undergraduate and postgraduate programs. In the United States, t ...
, and
private school
Private or privates may refer to:
Music
* " In Private", by Dusty Springfield from the 1990 album ''Reputation''
* Private (band), a Denmark-based band
* "Private" (Ryōko Hirosue song), from the 1999 album ''Private'', written and also recorde ...
s); cultural institutions (e.g., museums, libraries, and theaters); service organizations (e.g., hospitals, retirement homes; the
Red Cross
The International Red Cross and Red Crescent Movement is a Humanitarianism, humanitarian movement with approximately 97 million Volunteering, volunteers, members and staff worldwide. It was founded to protect human life and health, to ensure re ...
); and religious organizations (e.g., churches, synagogues, mosques).
Private endowments are some of the wealthiest entities in the world, notably
private higher education endowments.
Harvard University's endowment (valued at $53.2 billion )
is the
largest academic endowment in the world. The
Bill and Melinda Gates Foundation
The Bill & Melinda Gates Foundation (BMGF), a merging of the William H. Gates Foundation and the Gates Learning Foundation, is an American private foundation founded by Bill Gates and Melinda French Gates. Based in Seattle, Washington, it was ...
is one of the
wealthiest private foundations as of 2019 with endowment of $46.8 billion .
Types
Most private endowments in the United States are governed by the
Uniform Prudent Management of Institutional Funds Act The Uniform Prudent Management of Institutional Funds Act (UPMIFA) is a uniform act that provides guidance on investment decisions and endowment expenditures for nonprofit and charitable organizations. As of 2012 UPMIFA is the law in 49 states, the ...
which is based in part on the concept of
donor intent
A donor in general is a person, organization or government which donates something voluntarily. The term is usually used to represent a form of pure altruism, but is sometimes used when the payment for a service is recognized by all parties as rep ...
that helps define what restrictions are imposed on the principal and earnings of the fund. Endowments in the United States are commonly categorized in one of four ways:
*Unrestricted endowment can be used in any way the recipient chooses to carry out its mission.
*Term endowment funds stipulate that all or part of the principal may be expended only after the expiration of a stated period of time or occurrence of a specified event, depending on donor wishes.
*Quasi endowment funds are designated endowments by an organization's governing body rather than by the donor. Therefore both the principal and the income may be accessed at the organization's discretion. Quasi endowment funds are still subject to any other donor restrictions or intent.
*Restricted endowments ensure that the original principal, inflation-adjusted, is held in perpetuity and prudent spending methods should be applied in order to avoid the erosion of corpus over reasonable time frames. Restricted endowments may also facilitate additional donor's requirements.
Restrictions and donor intent
Endowment revenue can be restricted by donors to serve many purposes. Endowed professorships or scholarships restricted to a particular subject are common; in some places a donor could fund a trust exclusively for the support of a pet.
Ignoring the restriction is called "
invading" the endowment.
But change of circumstance or financial duress like bankruptcy can preclude carrying out the donor's intent. A court can alter the use of restricted endowment under a doctrine called
cy-près meaning to find an alternative "as near as possible" to the donor's intent.
History
The earliest
endowed chairs
A financial endowment is a legal structure for managing, and in many cases indefinitely perpetuating, a pool of financial, real estate, or other investments for a specific purpose according to the will of its founders and donors. Endowments are o ...
were established by the
Roman
Roman or Romans most often refers to:
*Rome, the capital city of Italy
*Ancient Rome, Roman civilization from 8th century BC to 5th century AD
*Roman people, the people of ancient Rome
*''Epistle to the Romans'', shortened to ''Romans'', a letter ...
emperor
An emperor (from la, imperator, via fro, empereor) is a monarch, and usually the sovereignty, sovereign ruler of an empire or another type of imperial realm. Empress, the female equivalent, may indicate an emperor's wife (empress consort), ...
and
Stoic
Stoic may refer to:
* An adherent of Stoicism; one whose moral quality is associated with that school of philosophy
*STOIC, a programming language
* ''Stoic'' (film), a 2009 film by Uwe Boll
* ''Stoic'' (mixtape), a 2012 mixtape by rapper T-Pain
*' ...
philosopher
A philosopher is a person who practices or investigates philosophy. The term ''philosopher'' comes from the grc, φιλόσοφος, , translit=philosophos, meaning 'lover of wisdom'. The coining of the term has been attributed to the Greek th ...
Marcus Aurelius
Marcus Aurelius Antoninus (Latin: áːɾkus̠ auɾέːli.us̠ antɔ́ːni.us̠ English: ; 26 April 121 – 17 March 180) was Roman emperor from 161 to 180 AD and a Stoic philosopher. He was the last of the rulers known as the Five Good ...
in
Athens
Athens ( ; el, Αθήνα, Athína ; grc, Ἀθῆναι, Athênai (pl.) ) is both the capital and largest city of Greece. With a population close to four million, it is also the seventh largest city in the European Union. Athens dominates ...
in AD 176. Aurelius created one endowed chair for each of the major schools of philosophy:
Platonism
Platonism is the philosophy of Plato and philosophical systems closely derived from it, though contemporary platonists do not necessarily accept all of the doctrines of Plato. Platonism had a profound effect on Western thought. Platonism at le ...
,
Aristotelianism
Aristotelianism ( ) is a philosophical tradition inspired by the work of Aristotle, usually characterized by deductive logic and an analytic inductive method in the study of natural philosophy and metaphysics. It covers the treatment of the socia ...
,
Stoicism
Stoicism is a school of Hellenistic philosophy founded by Zeno of Citium in Athens in the early 3rd century Common Era, BCE. It is a philosophy of personal virtue ethics informed by its system of logic and its views on the natural world, asser ...
, and
Epicureanism
Epicureanism is a system of philosophy founded around 307 BC based upon the teachings of the ancient Greek philosopher Epicurus. Epicureanism was originally a challenge to Platonism. Later its main opponent became Stoicism.
Few writings by Epi ...
. Later, similar endowments were set up in some other major cities of the Empire.
The earliest universities were founded in Europe, Asia and Africa.
[Rüegg, Walter: "Foreword. The University as a European Institution", in: ''A History of the University in Europe. Vol. 1: Universities in the Middle Ages'', Cambridge University Press, 1992, , pp. XIX–XX.][Hunt Janin: "The university in medieval life, 1179–1499", McFarland, 2008, , p. 55f.][de Ridder-Symoens, Hilde]
''A History of the University in Europe: Volume 1, Universities in the Middle Ages''
Cambridge University Press, 1992, , pp. 47–55['']Encyclopædia Britannica
The (Latin for "British Encyclopædia") is a general knowledge English-language encyclopaedia. It is published by Encyclopædia Britannica, Inc.; the company has existed since the 18th century, although it has changed ownership various time ...
''
"University"
, 2012, retrieved 26 July 2012) Their endowment by a prince or monarch and their role in training government officials made early Mediterranean universities similar to Islamic
madrasa
Madrasa (, also , ; Arabic: مدرسة , pl. , ) is the Arabic word for any type of educational institution, secular or religious (of any religion), whether for elementary instruction or higher learning. The word is variously transliterated '' ...
s, although madrasas were generally smaller, and individual teachers, rather than the madrasa itself, granted the license or degree.
Waqf
A waqf ( ar, وَقْف; ), also known as hubous () or '' mortmain'' property is an inalienable charitable endowment under Islamic law. It typically involves donating a building, plot of land or other assets for Muslim religious or charitabl ...
( ar, وَقْف; ), also known as 'hubous' (حُبوس) or ''
mortmain
Mortmain () is the perpetual, inalienable ownership of real estate by a corporation or legal institution; the term is usually used in the context of its prohibition. Historically, the land owner usually would be the religious office of a church ...
'' property, is a similar concept from
Islamic law
Sharia (; ar, شريعة, sharīʿa ) is a body of religious law that forms a part of the Islamic tradition. It is derived from the religious precepts of Islam and is based on the sacred scriptures of Islam, particularly the Quran and the ...
, which typically involves donating a building, plot of land or other assets for
Muslim
Muslims ( ar, المسلمون, , ) are people who adhere to Islam, a monotheistic religion belonging to the Abrahamic tradition. They consider the Quran, the foundational religious text of Islam, to be the verbatim word of the God of Abrah ...
religious or charitable purposes with no intention of reclaiming the assets. The donated assets may be held by a
charitable trust.
The two oldest known ''waqfiya'' (deed) documents are from the 9th century, while a third one dates from the early 10th century, all three within the Abbasid Period. The oldest dated ''waqfiya'' goes back to 876 CE, concerns a multi-volume Qur'an edition and is held by the
Turkish and Islamic Arts Museum
The Turkish and Islamic Arts Museum ( tr, ) is a museum located in Sultanahmet Square in Fatih district of Istanbul, Turkey. Constructed in 1524, the building was formerly the palace of Pargalı Ibrahim Pasha, who was the second grand vizier to ...
in
Istanbul
Istanbul ( , ; tr, İstanbul ), formerly known as Constantinople ( grc-gre, Κωνσταντινούπολις; la, Constantinopolis), is the List of largest cities and towns in Turkey, largest city in Turkey, serving as the country's economic, ...
. A possibly older ''waqfiya'' is a papyrus held by the
Louvre
The Louvre ( ), or the Louvre Museum ( ), is the world's most-visited museum, and an historic landmark in Paris, France. It is the home of some of the best-known works of art, including the ''Mona Lisa'' and the ''Venus de Milo''. A central l ...
Museum in
Paris
Paris () is the capital and most populous city of France, with an estimated population of 2,165,423 residents in 2019 in an area of more than 105 km² (41 sq mi), making it the 30th most densely populated city in the world in 2020. S ...
, with no written date but considered to be from the mid-9th century.
The earliest known waqf in Egypt, founded by financial official Abū Bakr Muḥammad bin Ali al-Madhara'i in 919 (during the
Abbasid period), is a pond called Birkat Ḥabash together with its surrounding orchards, whose revenue was to be used to operate a hydraulic complex and feed the poor. In India, wakfs are relatively common among Muslim communities and are regulated by the
Central Wakf Council
Central Waqf Council, India is an Indian statutory body established in 1964 by the Government of India under the Waqf Act, 1954 (now a subsection of the Waqf Act, 1995) for the purpose of advising it on matters pertaining to the working of th ...
and governed by Wakf Act 1995 (which superseded Wakf Act 1954).
Modern college and university endowments
Academic institutions, such as colleges and universities, will frequently control an endowment fund that finances a portion of the operating or capital requirements of the institution. In addition to a general endowment fund, each university may also control a number of restricted endowments that are intended to fund specific areas within the institution. The most common examples are endowed professorships (also known as named chairs), and endowed
scholarship
A scholarship is a form of financial aid awarded to students for further education. Generally, scholarships are awarded based on a set of criteria such as academic merit, diversity and inclusion, athletic skill, and financial need.
Scholarsh ...
s or fellowships.
The practice of endowing professorships began in the modern
European university system in England in 1502, when
Lady Margaret Beaufort
Lady Margaret Beaufort (usually pronounced: or ; 31 May 1441/43 – 29 June 1509) was a major figure in the Wars of the Roses of the late fifteenth century, and mother of King Henry VII of England, the first Tudor monarch.
A descendant of ...
, Countess of Richmond and grandmother to the future king
Henry VIII
Henry VIII (28 June 149128 January 1547) was King of England from 22 April 1509 until his death in 1547. Henry is best known for his six marriages, and for his efforts to have his first marriage (to Catherine of Aragon) annulled. His disa ...
, created the first endowed chairs in divinity at the universities of Oxford (
Lady Margaret Professor of Divinity) and Cambridge (
Lady Margaret's Professor of Divinity
The Lady Margaret's Professor of Divinity is the oldest professorship at the University of Cambridge. It was founded initially as a readership by Lady Margaret Beaufort, mother of King Henry VII, in 1502. Since its re-endowment at the end of ...
).
[Lady Margaret's 500-year legacy](_blank)
– University of Cambridge. Nearly 50 years later, Henry VIII established the
Regius Professorships
A Regius Professor
is a university professor who has, or originally had, royal patronage or appointment. They are a unique feature of academia in the United Kingdom and Ireland. The first Regius Professorship was in the field of medicine ...
at both universities, this time in five subjects: divinity, civil law, Hebrew, Greek, and physic—the last of those corresponding to what are now known as medicine and basic sciences. Today, the
University of Glasgow
, image = UofG Coat of Arms.png
, image_size = 150px
, caption = Coat of arms
Flag
, latin_name = Universitas Glasguensis
, motto = la, Via, Veritas, Vita
, ...
has fifteen Regius Professorships.
Private individuals also adopted the practice of endowing professorships.
Isaac Newton
Sir Isaac Newton (25 December 1642 – 20 March 1726/27) was an English mathematician, physicist, astronomer, alchemist, theologian, and author (described in his time as a "natural philosopher"), widely recognised as one of the grea ...
held the
Lucasian Chair of Mathematics
The Lucasian Chair of Mathematics () is a mathematics professorship in the University of Cambridge, England; its holder is known as the Lucasian Professor. The post was founded in 1663 by Henry Lucas, who was Cambridge University's Member of Pa ...
at Cambridge beginning in 1669, more recently held by the celebrated physicist
Stephen Hawking.
In the United States, the endowment is often integral to the financial health of educational institutions. Alumni or friends of institutions sometimes contribute capital to the endowment. The use of endowment funding is strong in the United States and Canada but less commonly found outside of North America, with the exceptions of
Cambridge
Cambridge ( ) is a university city and the county town in Cambridgeshire, England. It is located on the River Cam approximately north of London. As of the 2021 United Kingdom census, the population of Cambridge was 145,700. Cambridge bec ...
and
Oxford
Oxford () is a city in England. It is the county town and only city of Oxfordshire. In 2020, its population was estimated at 151,584. It is north-west of London, south-east of Birmingham and north-east of Bristol. The city is home to the ...
universities. Endowment funds have also been created to support secondary and elementary school districts in several states in the United States.
Endowed professorships
An endowed
professor
Professor (commonly abbreviated as Prof.) is an Academy, academic rank at university, universities and other post-secondary education and research institutions in most countries. Literally, ''professor'' derives from Latin as a "person who pr ...
ship (or endowed chair) is a position permanently paid for with the revenue from an endowment fund specifically set up for that purpose. Typically, the position is designated to be in a certain department. The donor might be allowed to name the position. Endowed professorships aid the university by providing a faculty member who does not have to be paid entirely out of the operating budget, allowing the university to either reduce its student-to-faculty ratio, a statistic used for
college rankings
College and university rankings order the best institutions in higher education based on factors that vary depending on the ranking. Some rankings evaluate institutions within a single country, while others assess institutions worldwide. Ranking ...
and other institutional evaluations, or direct money that would otherwise have been spent on salaries toward other university needs. In addition, holding such a professorship is considered to be an honour in the academic world, and the university can use them to reward its best faculty or to recruit top professors from other institutions.
[Cornell's "Celebrating Faculty" Website](_blank)
Endowed faculty fellowships
An endowed faculty
fellow
A fellow is a concept whose exact meaning depends on context.
In learned or professional societies, it refers to a privileged member who is specially elected in recognition of their work and achievements.
Within the context of higher education ...
is a position permanently paid for to recruit and retain new and/or junior (and above) professors who have already demonstrated superior teaching and research. The donor might be allowed to name the faculty fellowship. A faculty fellow appointment cultivates confidence and institutional loyalty, keeping the institution competitive over hiring and retention of talents.
Endowed scholarships and fellowships
An endowed
scholarship
A scholarship is a form of financial aid awarded to students for further education. Generally, scholarships are awarded based on a set of criteria such as academic merit, diversity and inclusion, athletic skill, and financial need.
Scholarsh ...
is tuition (and possibly other costs) assistance that is permanently paid for with the revenue of an endowment fund specifically set up for that purpose. It can be either merit-based or need-based (the latter is only awarded to those students for whom the college expense would cause their family financial hardship) depending on university policy or donor preferences. Some universities will facilitate donors' meeting the students they are helping. The amount that must be donated to start an endowed scholarship can vary greatly.
Fellowships are similar, although they are most commonly associated with graduate students. In addition to helping with tuition, they may also include a stipend. Fellowships with a stipend may encourage students to work on a
doctorate
A doctorate (from Latin ''docere'', "to teach"), doctor's degree (from Latin ''doctor'', "teacher"), or doctoral degree is an academic degree awarded by universities and some other educational institutions, derived from the ancient formalism ''l ...
. Frequently, teaching or working on research is a mandatory part of a fellowship.
Charitable foundations
A foundation (also a charitable foundation) is a category of
nonprofit organization
A nonprofit organization (NPO) or non-profit organisation, also known as a non-business entity, not-for-profit organization, or nonprofit institution, is a legal entity organized and operated for a collective, public or social benefit, in co ...
or
charitable trust that will typically provide funding and support for other
charitable organization
A charitable organization or charity is an organization whose primary objectives are philanthropy and social well-being (e.g. educational, Religion, religious or other activities serving the public interest or common good).
The legal definitio ...
s through grants, but may engage directly in charitable activities. Foundations include public charitable foundations, such as
community foundation
Community foundations (CFs) are instruments of civil society designed to pool donations into a coordinated investment and grant making facility dedicated primarily to the social improvement of a given place. Community foundations are a global pheno ...
s, and
private foundation
A private foundation is a tax-exempt organization not relying on broad public support and generally claiming to serve humanitarian purposes. The Bill & Melinda Gates Foundation is the largest private foundation in the U.S. with over $38 billion ...
s which are typically endowed by an individual or family. The term foundation though may also be used by organizations not involved in public grant-making.
Fiduciary management
A financial endowment is typically overseen by a board of
trustee
Trustee (or the holding of a trusteeship) is a legal term which, in its broadest sense, is a synonym for anyone in a position of trust and so can refer to any individual who holds property, authority, or a position of trust or responsibility to t ...
s and managed by a trustee or team of professional managers. Typically, the financial operation of the endowment is designed to achieve the stated objectives of the endowment.
In the United States, typically 4–6% of the endowment's assets are spent every year to fund operations or capital spending. Any excess earnings are typically reinvested to augment the endowment and to compensate for inflation and recessions in future years.
This spending figure represents the proportion that historically could be spent without diminishing the principal amount of the endowment fund.
Criticism and reforms
Donor intent
The case of
Leona Helmsley
Leona Roberts Helmsley (July 4, 1920 – August 20, 2007) was an American businesswoman. Her flamboyant personality and reputation for tyrannical behavior earned her the nickname Queen of Mean.
After allegations of non-payment were made by co ...
is often used to illustrate the downsides of the legal concept of donor intent as applied to endowments. In the 2000s, Helmsley bequested a multi-billion dollar trust to "the care and welfare of dogs".
This trust was estimated at the time to total 10 times more than the combined 2005 assets of all registered animal-related charities in the United States.
In 1914, Frederick Goff sought to eliminate the "dead hand" of organized philanthropy and so created
the Cleveland Foundation
The Cleveland Foundation, based in Cleveland, Ohio, is the world's first community foundation and one of the largest today, with assets of $2.5 billion and annual grants of more than $100 million. Established in 1914 by banker Frederick Harris Gof ...
: the first
community foundation
Community foundations (CFs) are instruments of civil society designed to pool donations into a coordinated investment and grant making facility dedicated primarily to the social improvement of a given place. Community foundations are a global pheno ...
. He created a corporately structured foundation that could utilize community gifts in a responsive and need-appropriate manner. Scrutiny and control resided in the "live hand" of the public as opposed to the "dead hand" of the founders of private foundations.
Economic downturn
Research published in the
American Economic Review
The ''American Economic Review'' is a monthly peer-reviewed academic journal published by the American Economic Association. First published in 1911, it is considered one of the most prestigious and highly distinguished journals in the field of ec ...
indicates that major academic endowments often act in times of economic downturn in a way opposite of the intention of the endowment. This behavior is referred to as
endowment hoarding
Endowment most often refers to:
*A term for human penis size
It may also refer to: Finance
* Financial endowment, pertaining to funds or property donated to institutions or individuals (e.g., college endowment)
*Endowment mortgage, a mortgage to ...
, reflecting the way that economic downturns often lead to endowments decreasing their payouts rather than increasing them to compensate for the downturn.
Large U.S.-based college and university endowments, which had posted large, highly publicized gains in the 1990s and 2000s, faced significant losses of principal in the
2008 economic downturn
The Great Recession was a period of marked general decline, i.e. a recession, observed in national economies globally that occurred from late 2007 into 2009. The scale and timing of the recession varied from country to country (see map). At t ...
.
The Harvard University endowment, which held $37 billion in June 2008, was reduced to $26 billion by mid-2009.
Yale University
Yale University is a private research university in New Haven, Connecticut. Established in 1701 as the Collegiate School, it is the third-oldest institution of higher education in the United States and among the most prestigious in the wo ...
, the pioneer of an approach that involved investing heavily in alternative investments such as real estate and
private equity
In the field of finance, the term private equity (PE) refers to investment funds, usually limited partnerships (LP), which buy and restructure financially weak companies that produce goods and provide services. A private-equity fund is both a ty ...
, reported an endowment of $16 billion as of September 2009, a 30% annualized loss that was more than predicted in December 2008. At
Stanford University
Stanford University, officially Leland Stanford Junior University, is a private research university in Stanford, California. The campus occupies , among the largest in the United States, and enrolls over 17,000 students. Stanford is consider ...
, the endowment was reduced from $17 billion to $12 billion as of September 2009.
Brown University
Brown University is a private research university in Providence, Rhode Island. Brown is the seventh-oldest institution of higher education in the United States, founded in 1764 as the College in the English Colony of Rhode Island and Providenc ...
's endowment fell 27 percent to $2.04 billion in the fiscal year that ended June 30, 2009.
George Washington University
, mottoeng = "God is Our Trust"
, established =
, type = Private federally chartered research university
, academic_affiliations =
, endowment = $2.8 billion (2022)
, preside ...
lost 18% in that same fiscal year, down to $1.08 billion.
In Canada, after the financial crisis in 2008,
University of Toronto
The University of Toronto (UToronto or U of T) is a public research university in Toronto, Ontario, Canada, located on the grounds that surround Queen's Park. It was founded by royal charter in 1827 as King's College, the first institution ...
reported a loss of 31% ($545 million) of its previous year-end value in 2009. The loss is attributed to over-investment in hedge funds.
Endowment repatriation
Critics like Justice Funders’ Dana Kawaoka-Chen call for "redistributing all aspects of well-being, democratizing power, and shifting economic control to communities.". Endowment repatriation refers to campaigns that acknowledge the history of human and natural resource exploitation that is inherent to many large private funds. Repatriation campaigns ask for private endowments to be returned to the control of the people and communities that have been most affected by labor and environmental exploitation and often offer ethical frameworks for discussing endowment governance and repatriation.
After the Heron Foundation's internal audit of its investments in 2011 uncovered an investment in a private prison that was directly contrary to the foundation's mission, they developed and then began to advocate for a four-part ethical framework to endowment investments conceptualized as Human Capital,
Natural Capital, Civic Capital, and Financial Capital.
Another example is the
Ford Foundation
The Ford Foundation is an American private foundation with the stated goal of advancing human welfare. Created in 1936 by Edsel Ford and his father Henry Ford, it was originally funded by a US$25,000 gift from Edsel Ford. By 1947, after the death ...
's co-founding of the independent
Native Arts and Culture Foundation
Native may refer to:
People
* Jus soli, citizenship by right of birth
* Indigenous peoples, peoples with a set of specific rights based on their historical ties to a particular territory
** Native Americans (disambiguation)
In arts and entertai ...
in 2007. The Ford Foundation provided a portion of the initial endowment after self-initiated research into the foundation's financial support of Native and Indigenous artists and communities. This results of this research indicated "the inadequacy of philanthropic support for Native arts and artists", related feedback from an unnamed Native leader that "
ce
ig foundations IG, Ig, or ig may refer to:
Companies
* IG Farben, a former German industrial conglomerate
* IG Group, a UK financial services company
* IG Recordings, a record label formed by the Indigo Girls, an American folk/rock duo
* Production I.G, a Japane ...
put the stuff in place for an Indian program, then it is not usually funded very well. It lasts as long as the program officer who
had an interest and then goes away" and recommended that an independent endowment be established and that "
tive leadership is crucial".
Divestment campaigns and impact investing
Another approach to reforming endowments is the use of
divestment
In finance and economics, divestment or divestiture is the reduction of some kind of asset for financial, ethical, or political objectives or sale of an existing business by a firm. A divestment is the opposite of an investment. Divestiture is a ...
campaigns to encourage endowments to not hold unethical investments. One of the earliest modern divestment campaigns was
Disinvestment from South Africa
Disinvestment (or divestment) from South Africa was first advocated in the 1960s, in protest against South Africa's system of apartheid, but was not implemented on a significant scale until the mid-1980s. The disinvestment campaign, after bein ...
which was used to protest apartheid policies. By the end of apartheid, more than 150 universities divested of South African investments, although it is not clear to what extent this campaign was responsible for ending the policy.
A proactive version of divestment campaigns is
impact investing, or mission investing which refers to investments "made into companies, organizations, and funds with the intention to generate a measurable, beneficial social or environmental impact alongside a financial return." Impact investments provide capital to address social and environmental issues.
Endowment taxes
Generally, endowment taxes are the taxation of financial endowments that are otherwise not taxed due to their charitable, educational, or religious mission. Endowment taxes are sometimes enacted in response to criticisms that endowments are not operating as
nonprofit organization
A nonprofit organization (NPO) or non-profit organisation, also known as a non-business entity, not-for-profit organization, or nonprofit institution, is a legal entity organized and operated for a collective, public or social benefit, in co ...
s or that they have served as
tax shelter
Tax shelters are any method of reducing taxable income resulting in a reduction of the payments to tax collecting entities, including state and federal governments. The methodology can vary depending on local and international tax laws.
Types of ...
s, or that they are
depriving local governments of essential property and other taxes.
See also
*
Foundation (nonprofit)
A foundation (also a charitable foundation) is a category of nonprofit organization or charitable trust that typically provides funding and support for other charitable organizations through grants, but may also engage directly in charitable acti ...
*
Lists of institutions of higher education by endowment size
The following are lists of institutions of higher education by endowment size.
Africa
* List of South African universities by endowment
Europe
* List of United Kingdom universities by endowment
* See table below for France.
North America
* ...
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in Canada
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in South Africa
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in the UK
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in the United States
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List of wealthiest charitable foundations
This is a list of wealthiest charitable foundations worldwide. It consists of the 45 largest charitable foundations, private foundations engaged in philanthropy, and other charitable organizations such as charitable trusts that have disclosed the ...
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Endowment tax
Endowment tax is the taxation of financial endowments that are otherwise not taxed due to their charitable, educational, or religious mission. Endowments can be up to several billion dollars at some universities, some charitable foundations, and ...
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Waqf
A waqf ( ar, وَقْف; ), also known as hubous () or '' mortmain'' property is an inalienable charitable endowment under Islamic law. It typically involves donating a building, plot of land or other assets for Muslim religious or charitabl ...
References
Further reading
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External links
Ford Foundation: ''A Primer for Endowment Grantmakers''*
12 SMA for Financial Endowments
{{DEFAULTSORT:Financial Endowment
Education finance