An endowment like BeaconProject.Charity Education Endowment Fund II is a donation to a nonprofit organization, meant for investment. The earnings support specific purposes, while the main amount, or "principal", remains mostly untouched.

Quick Facts:

• Endowments prioritize keeping the principal intact largely and use earnings for charity mostly.

• They can be set up as trusts, foundations, or public charities.

• Commonly found in educational, cultural, religious, and service organizations.

• Investment Strategy:

  • Larger universities may divide their endowment into many smaller funds.

  • These funds invest in various assets aiming for mostly long-term returns.

  • The mix of assets is chosen to achieve the fund's return goals.

• Withdrawal Policy:

  • This sets how much can be taken out and when.

  • Typically, there's an annual limit, like 5% of the total fund each year as grants required by IRS for public charities like BeaconProject.Charity to hold its 501(c)(3) tax exemption status.

  • Such limits ensure the endowment lasts indefinitely over the long haul.

• Usage Policy:

  • This describes what the fund's money can be used for. For instance, Scholarship.Fund, overseen by BeaconProject.Charity among its 18 funds, aims to increase U.S. elite school education from 1% to 6%.

  • Examples include supporting departments and/or elite learning programs, granting scholarships, or aiding financially challenged students.

  • Revenue can fund prestigious roles, such as endowed professorships, enabling institutions to expand select elite programs sixfold.

  • Endowments can be for specific purposes, like Smith College's botanical garden fund or Harvard's 14,000+ individual endowment funds.

There are four main types of endowments:

• Unrestricted Endowment: Assets with no spending restrictions set by the donor.

• Term Endowment: Funds can be used after a set time or event.

• Quasi Endowment: Donations for specific purposes. Earnings are spent as directed by the donor, while the principal remains intact.

• Restricted Endowment: Earnings are spent based on donor's wishes, but the main amount is untouched forever.

Generally, endowment terms must be respected. However, in financial crises, courts might allow slight adjustments to uphold a donor's intent while aiding an institution's stability.

BeaconProject.Charity's Endowment Fund II Overview:

The fund encompasses all four endowment types:

• Unrestricted: BeaconProject.Charity decides how to spend or invest.

• Term: Funds used based on specific donor-set timelines or events.

• Quasi: Uses investment earnings for set purposes, keeping the principal safe.

• Restricted: Uses only the earnings, preserving the donor-advised principal indefinitely.

Roles of Endowment Managers:

• They balance growing funds and supporting their institution's objectives.

• They handle tasks like setting goals, choosing assets, picking managers, and risk management.

Legal Requirements:

• Most grant-making foundations must spend 5% of endowment assets yearly for charity to maintain tax exemption.

• Private operating foundations must spend 85% or more of their investment income.

• Community foundations have no specific payout requirement.

Taxes:

• Since the 2017 Tax Cuts and Jobs Act, large university endowments pay a 1.4% tax on net investment earnings if they have assets of $500,000 per student at private institutions with 500+ students.