Two other forms of endowment have evolved that retain the spirit of long-term investment and principal preservation, yet permit more flexibility as financial planning tools. True Endowment A true endowment is created by a gift from a donor who intends that the gift principal be maintained inviolate in perpetuity and that only income be available for current spending. The College is legally prohibited from spending the original principal value. It is important to determine exactly what the donor intends with the gift. State law and College policy permit the College to spend income and appreciation unless the donor has specifically prohibited in writing the spending of appreciation .
Terms can be a period of time, an event, growth of principal, etc.
An example is a class fund in which the principal is preserved until the last living member of a class dies, and when that event occurs, the principal may be spent according to the Trustees' discretion. This form of endowment offers the College the most flexibility in long-term financial planning than either true or term endowment. A quasi endowment can be created by a donor, but more often the Trustees decide to create a quasi endowment with unrestricted, current use gifts. EFS uses an investment share method for valuing endowment principal and additions to principal and uses equivalent shares for calculating the fund's income. A fiscal year is an annual accounting period, not necessarily the same as a calendar year.