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
edit- 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
edit- Deaccessioning, the practice of selling museum objects to cover expenses
- List of wealthiest charitable foundations
References
edit- ^ "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.
- ^ 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.
During Ms. Baker's tenure, City Opera has raided its endowment — which now stands at $16 million, down from $57 million when she was appointed in December 2003 — to pay off debts and cover operating expenses. The practice, known as endowment invasion, requires approval from the state attorney general's office and the State Supreme Court, and is widely considered a last resort for any arts institution.
- ^ 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.
Last January, after many years of using money from the society's endowment to pay for yearly operating deficits, the trustees determined that the endowment had dwindled to the point where the institution would be bankrupt in 18 months.
- ^ 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.
In recent weeks, the New York Historical Society, which for years had used money from its endowment and from a few wealthy trustees and patrons to compensate for growing annual deficits, finally reached ...