10.1 Introduction

There are several types of endowment funds, which typically stipulate how and when the funds can be disbursed.

Term Endowment

Term endowment funds have a built-in stipulation that either part or all of the principal may be used only after a pre-established period of time has passed or until a specified event has occurred. The term depends on the wishes of the donor.

Restricted and Unrestricted

Unrestricted funds may be used in any way the recipient chooses. Restricted endowment revenue may have limitations put in place by the donor to serve a specific purpose. A common example is a university scholarship that is restricted to students pursuing a career in a certain field.


Quasi-endowment funds are earmarked by the governing board of an organization instead of being restricted by donors or some other outside agency. These endowment funds are to be invested to generate income for a lengthy, unspecified period.