An endowment is a financial asset, typically in the form of a donation, that is invested to generate income for a specific purpose, often to support educational institutions or charitable organizations. The principal amount is usually kept intact, while the income generated is used for operational costs, scholarships, or other designated needs. Endowments play a crucial role in providing financial stability and sustainability for organizations. They allow institutions like universities and nonprofits to plan for the long term, ensuring that they can continue to fulfill their missions even in times of economic uncertainty.