having a tough time really getting/seeing the differences between the two. anybody have this down?
They are pretty similar but here a few differences I noted: -Endowments aren’t recognized in (most) civil law countries. -There is more than one type of foundation (e.g. independent, company sponsored, operating and community).
endowment is pretty much perpetual. no minimum required spending needs specified. so can be pretty aggressive with their portfolio. Usually associated with universities (for grants etc). foundations have a required minimum spending need - so the stuff about having the minimum required to be available, carry back/carry forward stuff in case the minimum spending is not met in a period. hence usually would tend to be a little more conservative in their portfolios. These could have a time horizon associated as well. (valid for the next 10 years e.g. to take care of Mr. X’s child who is now 11 years old till he grows to be 21).
Endowments are usually “owned” by the charitable organization itself for purposes of meeting the charitable purposes (i.e., feeding the poor, housing the homeless, etc.) Foundations are grant makers who may not have a charitable purpose in and of themselves, but give away money to those that do.
I would add that the risk objectives can be affected by the endowment’s role in the institution’s (ie, university) overall operating budget. Also, the referenced inflation rate for a university endowment will differ from that of a foundation; for university endowments, cfai will have you refer to changes in tuition costs vs. something like CPI for foundations.