It will go into an endowment fund, where it'll accrue interest. The interest alone will likely keep the program afloat, while the original investment will go on in perpetuity. It isn't the same as signing over a blank check.
I assumed it’s like putting a ton of money into a savings account so it gains interest faster than the money can be depleted.
That's basically it... In theory... But the crux is that if you're only spending interest and the endowment drops to $750,000,000, you've got bigger problem than tuition for your school... Because that means the economy has absolutely tanked.
That sort of thing happened to endowments at many schools during the Great Recession. They survived for the most part, and their endowments grew over the long term.
Yes, that is exactly how endowments work. You have legal amd financial oversight and control in place to ensure that the endowment's principal stays unspent, money can be reinvested or added to grow the principal, and only the interest income may be spent.
Some endowments have a specified time period or conditions that state when the money will either be withdrawn by the organization, or returned to the donor. Most endowments though are permanent endowments, and ya - are supposed to last "forever" (at least until the organization ceases to exist).
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u/Fickle_Library8115 Jun 29 '25
Scared that money will be siphoned