What characteristic defines an endowment?

An endowment is best defined as a long-term investment portfolio established by non-profit institutions, designed to provide ongoing financial support for their operations and initiatives. The key characteristic of an endowment is its purpose to generate investment income while preserving the principal, allowing it to fund organizational needs over an extended period.

Endowments generally involve a commitment to a long-term investment strategy, ensuring that the institution can rely on a steady stream of funds over time while allowing the principal to grow. This characteristic is crucial for the sustainability and financial health of non-profit organizations, as it balances the immediate funding needs with the long-term objective of maintaining the endowment's value against inflation and market fluctuations.

Understanding this helps differentiate endowments from other types of funds, which may not have the same long-term focus or may be subject to different spending policies. The other options provide different contexts or restrictions that may apply to particular types of funds but do not capture the essence of what specifically defines an endowment in a general sense.