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What is the difference between an endowed fund and a non-endowed fund?

April 26, 2017endowed fund non-endowed

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What is the difference between an endowed fund and a non-endowed fund?

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Principal and earnings in non-endowed funds can be distributed to charities at the timing you choose. On the other hand, endowed funds are intended to leave a permanent legacy. With endowed funds, the original contribution or principal remains in the account to generate earnings; the interest is then available to be distributed to the nonprofit organizations of your choice year after year. You can opt to convert your fund from non-endowed to endowed.

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In an endowed fund, the original contribution or principal, remains in the fund to generate earnings to distribute to charities year after year. A non-endowed fund permits the entire amount in the fund, both principal and earnings, to be distributed to charities at any time.