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An endowment fund is a pool of donated assets, typically invested to generate income for a nonprofit organization over the long term. The principal of the fund is usually kept intact, while a portion of the investment earnings is used each year to support the nonprofit's mission and programs. Endowment funds are often established through donor restrictions, meaning the organization must use the funds in accordance with the donor’s wishes. Proper management and accounting of endowment funds are critical for ensuring compliance, long-term sustainability, and donor confidence.
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The main purpose is to provide long-term financial support by investing principal donations and using the earnings for the nonprofit’s mission.
Typically, the principal is preserved according to donor wishes, and only the investment income is available for use.
Aplos enables nonprofits to track endowment funds separately, ensuring compliance with donor restrictions and accurate financial reporting.
