Foundation vs Endowment

Hi All,

Can anyone explain what is the actual difference between Foundation & Endowment, It’s quite confusing …

Thanks in advance.

Exactly I’d not say that the difference is relevant. CFAI differs them according to their mission. First are established to finance some not specific organization’s requirements while Endowments finance particular organization spending needs. Example. Foundation for financing the AIDS cure. Endowment established to finance only “XYZ” hospital. I think is not relevant to differ between those.

Foundations are usually established by families, Such as Rockefeller foundations, Clinton foundations. Even Qatar foundation is setup by qatar sheikh family.

Foundations typically have an objective to accomplish a goal not tied to one specific entity. Like the above commentor, to find a cure for AIDS they would provide financing to any entity they would deem beneficial to its cause. Endowments generally provide financing for one entity’s operations or spending needs.

To add, I always think of colleges or universities for endowments because they spend that in themselves on research and such. So the money goes back into the university. Whereas, the Clinton Foundation, as corrupt as it is (sigh), may allocate it’s funds to many different recipients

In my homeland, those are established with the only purpose to pay less taxes or completely avoid the taxes, but somehow I doubt there are other reasons elsewhere.

True but I think it’s a cost benefit thing…the legal, compliance and setup fees are probably high, no? I have no idea but I’m assuming it can’t just be as easy as setting it up, passing it my children so they can avoid taxes.

It’s as easy as the law permits, it’s dangerous to just assume as David points out in Schweser…

If congress forgets to re-new a tax code for bequesting (it’s happened before), then you could as simple as just die and the assets transfer tax free that year. Not everything is logical when it comes to Tax Codes, there could be a 10000 page tax code, but it could be as simple as a 1 page document online in creating a registered small business.

I also think endowments have funds that can only be used for certain purposes if the person donating says so. Such as “I want my money to go do the professorship of Micro economics”…that money can only be spend for that. Whereas the Foundation is setup for a general case (like mentioned above, curing Aids).

Thanks Guys…