Identify and describe three types of endowments.

Answer 1

Permanent endowment, term endowments, and quasi endowments or board designated funds that function as endowments. Permanent endowments refer to amount that have been contributed with donor specified restrictions that the principle be invested in perpetuity; income from those investments may also be restricted by donors. These amounts are reported under net assets with donor restrictions. Term endowments are similar to permanent endowments, except that the resources originally contributed become available to the entity at some future date or upon the occurrence of specified event for unrestricted or purpose restricted use. These amounts are also reported as net assets with donor restrictions. Quasi endowments refer to resources designated by an entity’s governing board to be retained for a specific purpose and are reported as net assets without donor restrictions. Quasi endowments are always unrestricted because they are resources that are designated to be retained for internally reporting purpose, and the entity’s governing board has power to decide how and when to use these resources.