What is the difference between a current fund and an endowment fund?
A current fund is a fund in which all gifts to the fund can be spent for the purpose designated by the donor. An endowment fund is a fund in which the original amount of the gift (endowment principal) is invested in perpetuity for appreciation in accordance with the Foundation s Endowment Investment Policy. Only the expendable income allocated to the endowment fund as set by the spending policy may be spent on the purpose designated by the donor. Due to the nature of how endowments are invested (primarily in the stock market), they may earn a total annual return (appreciation plus yield) that is far in excess of the spending policy. The total return of the Foundation s endowment portfolio since inception through June 30, 2006 was 11.02% (inception = 1986). Total return earned in excess of allocated spending is retained in the investment pool to provide for growth in the principal. This, in turn, increases the market value of the pool, and thus the five year average, which then increase
