Is it permissible to borrow from either an Endowment Fund or a Cash Reserve Fund that was established by virtue of a NEA grant?
An Endowment Fund is permanent and restricted, and no borrowing from the fund is permissible. However, if certain conditions are met, earnings and capital gains may be used for other purposes such as operations. Borrowing from a Cash Reserve Fund is permissible. However, the borrowing should be considered temporary and repayment must be made within two years. (For Challenge grants awarded between 1984 and 1993, the NEA in October 2007, reviewed the permanence restrictions imposed on these grants, and as a result of this review, the NEA is converting the terms of the grants made during these years for cash reserves and/or endowments from permanent to a term of the grant period plus 10 years after the grant end date. Note that the grantee must have been in compliance with the grant terms at the end of the 10 year period for the permanence restrictions to be removed.) (For FY 94 grants and later, restrictions on permanence ends 10 years after the grant end-date.
Related Questions
- If the Foundation successfully establishes an endowment fund to take care of the Park will the town cease to support the Park financially?
- Is it permissible to borrow from either an Endowment Fund or a Cash Reserve Fund that was established by virtue of a NEA grant?
- Why did the Fund accumulate a cash reserve?
