Guidelines : endowments financed with appropriated funds

Endowments provide another mechanism for achieving A.I.D."s development goals that complements our more traditional assistance forms. Unlike traditional mechanisms, which focus on financing goods and services in furtherance of foreign assistance objectives, endowments allow us to support more directly an entity whose purpose is to further such objectives. However, endowments also present a series of unique difficulties, which must be thoroughly assessed before a Mission or Bureau makes a funding decision. These problems are often exacerbated because of a lack of familiarity with endowments in many developing countries, and because the legal and regulatory environment in such countries may not provide an adequate framework for the establishment and oversight of such funds. In many cases, design of an endowment may also be very labor intensive. These guidelines are intended to assist Missions and Bureaus in their analysis and funding of endowments, and to ensure that relevant factors are adequately taken into account. Some of the main issues covered are the objectives that can be achieved through the use of endowments; characteristics of organizations for which endowments are appropriate; financial management of both the investment fund and program income; application of legislative restrictions; mechanisms and appropriate degree of oversight; and termination of the endowment. (Author abstract)