Endowments are sound financial mechanisms which are created to provide a permanent corpus of funds for on-going support of a designated program. They allow donors to maximize the impact of their contribution while ensuring perpetuity of their gift.
The endowment spending policy balances the need of today against those of tomorrow. The objective is to ensure that endowment growth keeps pace with rising costs so that present and future beneficiaries enjoy equivalent endowment support. Hence only a portion of the income form the corps us utilized and, depending on the rate of inflation, the remainder is ploughed back as a hedge against rising costs to ensure long term visibility.
The Endowments funds are invested in sound financial instruments and partial income therefore is utilized for the purpose the endowment is established. The balance is ploughed back to cover inflation and rising costs.