A category of a charity’s assets that the donor has restricted to remain intact, usually in perpetuity. If assets are held as endowment, the charity typically spends annually either a percentage of the market value of the assets, or the income generated by the assets, for the purposes for which the endowment was established. An endowment can be unrestricted, meaning distributions can be used for any purpose, or restricted, meaning distributions must be used for a limited purpose, such as funding scholarships. (A charity’s board of directors may also decide to set aside charity assets for endowment, but those assets are termed “quasi-endowment” or “board-designated endowment” and are considered to be unrestricted expendable assets from an accounting perspective.)

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