Endowed Fund Law and Legal Definition

Endowed fund is a trust fund whose income can be expended but the principal sum cannot be expended. The principal of a gift is managed in perpetuity. Only a portion of the earnings is distributed or spent annually so that the principal amount continues to grow. Institutions invest endowed funds to generate annual income in perpetuity for the purpose specified by the donors. Donors can create an endowed fund in present by an outright gift. In future, a donor can create an endowed fund by a bequest or life income gift. For example, a charitable remainder trust.