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What are some common endowment fund requirements?

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Quick Answer

Common endowment fund requirements include the need for funds to be maintained in perpetuity and the restriction that only income generated from the endowment fund is to be spent, according to CharityLawyer. Endowment funds are governed by each state's version of the Uniform Prudent Management of Institutional Funds Act.

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Full Answer

An endowment fund is a gift of money or property to an institution, particularly a university, that allows the recipient to use interest on the gift as income in perpetuity, since the principal generally cannot be spent, explains CharityLawyer. The version of the Uniform Prudent Management of Institutional Funds Act in effect as of 2016 allows donors to create temporary endowment funds and allows recipients to spend the fund's principal during economic downturns, when prudent.

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