A financial endowment is a donation of money or property to a nonprofit organization for the ongoing support of that organization. Usually the endowment is structured so that the principal amount is kept intact, while the investment income is available for use, or part of the principal is released each year, which allows for their donation to have an impact over a longer period than if it were spent all at once. An endowment may come with stipulations regarding its usage.
The total value of an institution's investments is often referred to as the institution's endowment and is typically organized as a public charity, private foundation, or trust. Among the institutions that commonly manage endowments are academic institutions (e.g., colleges, universities, and private schools), cultural institutions (e.g., museums, libraries, and theaters), service organizations (e.g., hospitals, retirement homes, the Red Cross, the SPCA), and religious organizations (e.g., churches, synagogues, mosques).
The earliest "endowed chairs" were those established by the Roman emperor and Stoic philosopher Marcus Aurelius in Athens in AD 176. Aurelius created one endowed chair for each of the major schools of philosophy: Platonism, Aristotelianism, Stoicism, and Epicureanism. Later, similar endowments were set up in some other major cities of the Empire.  
The practice was adapted to the modern university system beginning in England in 1502, when Lady Margaret Beaufort, Countess of Richmond and grandmother to the future king Henry VIII, created the first endowed chairs in divinity at the universities of Oxford ( Lady Margaret Professor of Divinity) and Cambridge ( Lady Margaret's Professor of Divinity).  Nearly 50 years later, Henry VIII established the Regius Professorships at both universities, this time in five subjects: divinity, civil law, Hebrew, Greek, and physic—the last of those corresponding to what are now known as medicine and basic sciences. Today, the University of Glasgow has fifteen Regius Professorships.
Private individuals soon adopted the practice of endowing professorships. Isaac Newton held the Lucasian Chair of Mathematics at Cambridge beginning in 1669, more recently held by the celebrated physicist Stephen Hawking. 
- Unrestricted endowment can be used in any way the recipient chooses to carry out its mission.
- Term endowment funds stipulate that all or part of the principal may be expended only after the expiration of a stated period of time or occurrence of a specified event, depending on donor wishes.
- Quasi endowment funds must retain the purpose and intent as specified by the donor or source of the original funds and earnings may be expended only for the specified purpose.
Endowment revenue can be restricted by donors to serve many purposes. Endowed professorships or scholarships restricted to a particular subject are common; in some places a donor could fund a trust exclusively for the support of a pet.   Ignoring the restriction is called " invading" the endowment.  But change of circumstance or financial duress like bankruptcy can preclude carrying out the donor's intent. A court can alter the use of restricted endowment under a doctrine called cy-près meaning to find an alternative "as near as possible" to the donor's intent.  The restricted/unrestricted distinction focuses on the use of the funds; see quasi-endowment below for a distinction about whether principal can be spent.
Academic institutions, such as colleges and universities, will frequently control an endowment fund that finances a portion of the operating or capital requirements of the institution. In addition to a general endowment fund, each university may also control a number of restricted endowments that are intended to fund specific areas within the institution. The most common examples are endowed professorships (also known as named chairs), and endowed scholarships or fellowships.
In the United States, the endowment is often integral to the financial health of educational institutions. Alumni or friends of institutions sometimes contribute capital to the endowment. The use of endowment funding is strong in the United States and Canada but less commonly found outside of North America, with the exceptions of Cambridge and Oxford universities. Endowment funds have also been created to support secondary and elementary school districts in several states in the United States. 
An endowed professorship (or endowed chair) is a position permanently paid for with the revenue from an endowment fund specifically set up for that purpose. Typically, the position is designated to be in a certain department. The donor might be allowed to name the position. Endowed professorships aid the university by providing a faculty member who does not have to be paid entirely out of the operating budget, allowing the university to either reduce its student-to-faculty ratio, a statistic used for college rankings and other institutional evaluations, and/or direct money that would otherwise have been spent on salaries toward other university needs. In addition, holding such a professorship is considered to be an honour in the academic world, and the university can use them to reward its best faculty or to recruit top professors from other institutions. 
An endowed scholarship is tuition (and possibly other cost) assistance that is permanently paid for with the revenue of an endowment fund specifically set up for that purpose. It can be either merit-based or need-based (which is only awarded to those students for whom the college expense would cause their family financial hardship) depending on university policy or donor preferences. Some universities will facilitate donors' meeting the students they are helping. The amount that must be donated to start an endowed scholarship can vary greatly.
Fellowships are similar, although they are most commonly associated with graduate students. In addition to helping with tuition, they may also include a stipend. Fellowships with a stipend may encourage students to work on a doctorate. Frequently, teaching or working on research is a mandatory part of a fellowship.
A financial endowment is typically overseen by a board of trustees and managed by a trustee or team of professional managers. Typically, the financial operation of the endowment is designed to achieve the stated objectives of the endowment.
At universities, typically 4–6% of the endowment's assets are spent every year to fund operations or capital spending. Any excess earnings are typically reinvested to augment the endowment and to compensate for inflation and recessions in future years.  This spending figure represents the proportion that historically could be spent without diminishing the principal amount of the endowment fund. However, the financial crisis of 2007–2010 had a major impact on the entire range of endowments globally.
Most notably, large U.S.-based college and university endowments, which had posted large, highly publicized gains in the 1990s and 2000s faced significant losses of principal across a range of investments. The Harvard University endowment fund, which held $37 billion on June 30, 2008, was reduced to $26 billion during the following year.  Yale University, the pioneer of an approach that involved investing heavily in alternative investments such as real estate and private equity, reported an endowment of $16 billion as of September 2009, a 30% annualized loss that was more than predicted in December 2008.  At Stanford University, the endowment was reduced from about $17 billion to $12 billion as of September 2009.  Brown University's endowment fell 27 percent to $2.04 billion in the fiscal year that ended June 30, 2009.  George Washington University lost 18% in that same fiscal year, down to $1.08 billion. 
In Canada, after the financial crisis in 2008, University of Toronto reported a loss of 31% ($545 million) of its previous year-end value in 2009. The loss is attributed to over-investment in hedge funds. 
A quasi-endowment, or fund functioning as an endowment, are funds merely earmarked by an organization's governing board, rather than restricted by a donor or other outside agency, to be invested to provide income for a long but unspecified period, and the governing board has the right to decide at any time to expend the principal of such funds.  Separately from the endowment versus quasi-endowment distinction, there's another 2-way categorization of restricted and unrestricted, which focuses on the use of the funds. As an example, a quasi-endowment might be restricted by the donor to supporting the tennis team; the use is restricted to one purpose, but the governing board could "invade principal" to support the tennis team.
- Lists of institutions of higher education by endowment
- List of wealthiest charitable foundations
- Endowment tax
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- Kansas incorporated its first public school district endowment association in Paola, Kansas, a small town of 5,000 people, in 1983. Today, it has approximately $2 million in endowed principal, which generates approximately $110,000 annually to distribute in scholarships to high school graduates and fund special projects in the district, which can not be afforded by the tax base. To promote the development of endowment associations across Kansas, USD 368 Endowment Association, which received a statewide award recognizing, has developed a "starter kit" to assist other Kansas school districts in the organization and establishment of new endowment associations.
- Cornell's "Celebrating Faculty" Website Archived 2005-05-01 at the Wayback Machine.
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- Stanford University endowment loses big Archived 2009-09-06 at the Wayback Machine., a September 3, 2009 article from the San Francisco Chronicle
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- GW endowment drops 18 percent Archived August 31, 2009, at the Wayback Machine., an August 27, 2009 article from The GW Hatchet
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- Ford Foundation: A Primer for Endowment Grantmakers
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- 12 SMA for Financial Endowments