An endowment held by a non-profit organization such as Fordham Prep consists of funds that have been donated usually with a specific objective or purpose and then invested to generate income in perpetuity. Thus, the donation provides a long-lasting benefit to the organization, rather than if it were spent all at one time. Gifts of this type are classified as “pure” or “restricted” endowments, meaning that they must be used as originally intended/specified by the donor.
A benefactor may choose to support student scholarships. Another might fund a special program (e.g., a monthly guest speaker’s forum, faculty development, a specific need identified by the President) or a student prize (e.g., to recognize outstanding extracurricular leadership or exceptional sportsmanship). Most endowment funds given to the Prep have been earmarked for financial aid to students.
The funds that have been donated are not meant to be spent—nor are all of the earnings from the invested principal. A portion of the earnings is usually added to the principal; this is done to augment the endowment and to compensate for future inflation and possible economic downturns. The spendable income of the earnings is used for the purpose that the donor originally specified. Only endowment income can be spent. By law, the principal must remain intact in perpetuity.
Gifts to the endowment will be placed in the Fordham Prep Formation Foundation Trust. A robust Endowment is a measurement of the Prep's long-term strategic plans and financial sustainability.