Endowment invasion
Encyclopedia
Endowment invasion is when an institution uses the 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, however, most states have adopted UPMIFA, a law which allows "invading principal." It is considered a last resort for any institution to stave off closure.
Financial endowment
A financial endowment is a transfer of money or property donated to an institution. The total value of an institution's investments is often referred to as the institution's endowment and is typically organized as a public charity, private foundation, or trust....
to pay off debts and cover the yearly operating expenses. In New York
New York
New York is a state in the Northeastern region of the United States. It is the nation's third most populous state. New York is bordered by New Jersey and Pennsylvania to the south, and by Connecticut, Massachusetts and Vermont to the east...
the practice requires approval from the state attorney general’s office and the New York State Supreme Court; by 2009, however, most states have adopted UPMIFA, a law which allows "invading principal." It is considered a last resort for any institution to stave off closure.
Examples
- From 2003 to 2009 New York City OperaNew York City OperaThe New York City Opera is an American opera company located in New York City.The company, called "the people's opera" by New York Mayor Fiorello La Guardia, was founded in 1943 with the aim of making opera financially accessible to a wide audience, producing an innovative choice of repertory, and...
drew down their endowment from $57 million to $16 million to pay off debts and cover annual operating expenses. - In the 1980s the New-York Historical SocietyNew-York Historical SocietyThe New-York Historical Society is an American history museum and library located in New York City at the corner of 77th Street and Central Park West in Manhattan. Founded in 1804 as New York's first museum, the New-York Historical Society presents exhibitions, public programs and research that...
began using money from the 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.
See also
- List of wealthiest charitable foundations
- Deaccessioning, the practice of selling museum objects to cover expenses