An Endowment Fund is perpetual in nature and may be used only for the stated purpose of the fund. Following the Uniform Prudent Management of Institution Funds Act, the Foundation employs a spending policy of approximately 5% of the average value of the fund over the prior 36 months for distribution each year. Doing so enables the fund to benefit the stated purpose the year after being established. Emergency distribution up to 20% may be made with appropriate approvals.
A Fund is different from an endowment in that the principal may be spent for the donor’s intended purpose. Both types of funds have advantages. The type of fund chosen depends upon the donor’s intentions and which type of fund is best suited to meet the donor’s needs.