What Is an Endowment Report?

An endowment report is a document that reveals how a non-profit institution is utilizing donated funds. These reports are produced by educational institutions, religious organizations, and other types on non-profits. The endowment report may be made public, or made accessible only to donors and members of the community. It can be released monthly, quarterly or annually as required by the terms of the endowment and local financial laws. The use of endowment reports helps to ensure that institutions are using funds responsibly and in accordance with all applicable laws and standards.

Many endowments are managed by a board of trustees or similar managing body. These representatives allocate the funds within the endowment based on the policies and terms of the endowment. They then generate an endowment report to update stakeholders and donors on the status of these funds.

The endowment report contains a brief overview of the institution's goals and policies, including those related to how donated funds will be processed. It includes detailed financial statements, which show the total value of the endowment and how it has changed since previous reports were issued. This report explains where the funds are invested, and the performance of each of these investment vehicles. Finally, the document reveals how funds were used. For example, an educational institution may allocate a certain portion of funds to provide scholarships to deserving students, while another percentage is used to fund capital improvements.

The layout and contents of an endowment report are determined by laws governing non-profit donations and endowment funds. In the United States, these reports must be prepared according to the standards set forth by the Financial Accounting Standards Board (FASB). Other countries have their own laws governing these reports. Some institutions may have policies with standards that exceed the reporting standards required by these laws, while others provide only the minimum amount of information required by law.

Endowment reports provide numerous benefits to the non-profit and to its stakeholders. They help the firm meet legal reporting requirements that are vital to maintaining the tax benefits of a non-profit endowment or trust. By demonstrating that donations are handled responsibly, these reports also encourage new donors to supply funds that can help the institution continue to meet its goal in the future. Without these reports, people might be hesitant to donate because they wouldn't know exactly where their money was going. A thorough endowment report also serves as a valuable marketing tool for the institution because it demonstrates a sense of transparency and ethical commitment.