Endowments Law and Legal Definition

An endowment is a permanent fund of property or money established to benefit an institution or person. It has a specific purpose defined for which the income derived from the money or property is to be applied. In an endowment fund, the principal is invested, and only a portion of the investment earnings is spent. The rest of the earnings are directed back into the fund, so that the endowment grows over time. In this manner, the endowment becomes a perpetual source of funding for whatever the donor wishes to achieve.

For example, the National Endowment for the Arts is the largest annual funder of the arts in the United States. An independent federal agency, the National Endowment for the Arts is the official arts organization of the United States government. It supports works of artistic excellence, advancing learning in the arts, and strengthening the arts in communities throughout the country.