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Endowment

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Hoover Tower near the Main Quad at Stanford University in the San Francisco Bay Area, Palo Alto, California, United States of America, North America
Billy Hustace/Robert Harding World Imagery/Getty Images

Definition: A fund that is made up of gifts and bequests that are subject to a requirement that the principal be maintained intact and invested to create a source of income for an organization. Donors may set up an endowment to fund a specific interest; and a nonprofit's governing body may set up an endowment. In any case, an endowment requires that the principal remain intact in perpetuity, or for a defined period of time, or until sufficient assets have been accumulated to achieve a designated purpose.

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Examples: The university has the largest endowment in the higher education community.

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