Tony Catolina, age 15, of Akron, Ohio, for his question:
WHAT IS AN ENDOWMENT?
An endowment is a fund that is set aside by a donor, or giver, for a specific purpose. The term "endowment" also has the same meaning as foundation, fund or trust.
The money for endowments may come from individuals, family estates or business organizations. Most endowments are designed to run forever, or until the money in the fund has been spent. Many endowments are nonprofit, tax exempt organizations that use their funds for social welfare projects.
Endowments also refer to funds that are held by colleges, universities, hospitals, orphanages and other similar institutions. The money for such endowments is usually invested so that the institution has a continual income of some kind.
Usually the institution spends only the income or profit from the investments. In this way, the endowment can continue forever. Generally, the income is used only for the general operations of the institution, or for some particular purpose for which the endowment was created.