A transfer, generally as a gift, of money or property to an institution for a particular purpose. The bestowal of money as a permanent fund, the income of which is to be used for the benefit of a charity, college, or other institution.
A classic example of an endowment is money collected in a fund by a college. The college invests the endowment so that a regular amount of income is earned for the school. Typically, the monies for the endowment are derived from donations by alumni of the college.
Often, an endowment is designed to support a particular activity, such as the construction of a new wing by a hospital. Each donor sets up an endowment fund sufficiently large to earn income to pay the expenses of one room or a different part of the wing, such as a library.
The Uniform Management of Institutional Funds Act (7A U.L.A. 233 [West Supp. 1992]), which was first created in 1972 and has since been adopted as law in many states, regulates spending and investment decisions related to such endowments.
The term endowment is also used to describe the act of putting aside the amount of property that a wife is lawfully due to inherit from her spouse. At COMMON LAW, a woman was "endowed at the church door," upon marriage, when she acquired her DOWER right—the right to use one-third of her husband's land upon his death for the remainder of her life.