Endowment invasion

Endowment invasion is when an institution draws on its financial endowment to pay off debts and cover the yearly operating expenses. In New York the practice requires approval from the state attorney general's office and the New York State Supreme Court. By 2009 most states had adopted Uniform Prudent Management of Institutional Funds Act, a law which allows "invading principal".[1] It is considered a last resort for any institution to stave off closure.[2]

Examples

  • From 2003 to 2009 New York City Opera drew down their endowment from $57 million to $16 million to pay off debts and cover annual operating expenses.[2]
  • In the 1980s the New-York Historical Society began using money from their endowment to pay their annual operating costs and cover their salaries to the point where by 1988 they had only enough money in their endowment to pay for another 18 months of operating expenses.[3][4]

See also

References

  1. ^ "Prudent Management of Institutional Funds Act". National Conference of Commissioners on Uniform State Laws. Archived from the original on January 6, 2014. Retrieved June 5, 2014.
  2. ^ a b Pogrebin, Robin (June 17, 2009). "City Opera Tries to Hold Off the Ultimate Finale". The New York Times. Archived from the original on Jul 17, 2014. Retrieved 2009-06-18.
  3. ^ McGill, Douglas C. (November 30, 1988). "Historical Society Reshaping Itself for Survival". The New York Times. Archived from the original on Mar 9, 2014. Retrieved 2009-06-18.
  4. ^ McGill, Douglas C. (August 28, 1988). "Troubled Museums Try to Master the Fine Art of Survival". The New York Times. Archived from the original on Mar 9, 2014. Retrieved 2009-06-24.
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