What is the typical time horizon for foundations that manage endowments?

Foundations that manage endowments typically have an enduring time horizon, which aligns with the concept of permanence in philanthropic financing. The goal of these foundations is to support their missions over the long term, effectively ensuring the continuity of their operations and programs across generations.

When an endowment is created, the principal amount is invested, and a portion of the earnings is used for grants and operational expenses, while the principal amount remains intact. This structure allows the foundation to exist indefinitely, often referred to as "perpetuity." Hence, the typical objective is to ensure that the endowment maintains its purchasing power over time, maximizing its ability to fund initiatives far into the future.

This long-term perspective sets foundations apart from entities that might focus on shorter time horizons, such as individual projects or operational funding with defined lifespans. The nature of endowments emphasizes sustainability and a commitment to carry out the foundation’s mission long after initial contributions are made.