August 27, 2020

Why Your Nonprofit Would Benefit from an Endowment

August 27, 2020 | Alicia Beck | UMB

As universities and schools start to finalize back-to-school plans, many are leaning on their endowments during the current economic downturn. During the 2008-2009 financial crisis, nearly half of all institutions reported increasing their endowment spending amid financial challenges, while others shied away from spending their long-term funds in order to save for the future. Already in the first quarter of 2020, returns from college endowments are down, with smaller endowments taking the bulk of the hit.

We haven’t seen the full effects of how this pandemic will impact endowments, however it’s safe to say that it could have a lasting effect on philanthropy and giving to higher education. Endowments can help support nonprofits through that recovery.

What is an endowment?

An endowment can help any nonprofit, no matter the size of the organization or the amount of money, by establishing an ongoing stream of income to help prepare for and offset future expenditures.

Although most people have an understanding of the word, few know the real impact that an endowment can have. Unlike a general donation, an endowment is established for a nonprofit organization to use the income for a specific purpose. Endowments are able to grow donations as investments and provide additional income for the nonprofit’s cause.

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