Endowment for a Rainy Day
In recent decades, nonprofits have significantly increased the size of their endowments. Yet during the current economic crisis, they made scant use of their sizable holdings. Instead of drawing down their endowments to offset losses of income, nonprofits resorted to cutting programs and personnel, sometimes dramatically. To prepare for future financial downturns, nonprofits should treat endowments as rainy day funds, not cut programs to preserve the endowment.