A Legacy That Lasts: What Is a Museum’s Endowment?

In 1905, Stephen Salisbury III left $3 million to the recently founded Worcester Art Museum. One hundred thirty years later, that gift is still making a direct impact every day. How is that possible? The answer is that this gift established an endowment—an investment in the Museum that will last forever.

An endowment is a pool of invested funds that grows with the market, and the principal (the money originally invested) is never spent. A small percentage of the money earned through those investments is drawn to fund annual expenses. In our case, 50% of the Museum’s annual expenses are funded by income from the endowment. Annual fundraising generates another 30% of the income needed to cover expenses.

An endowment is an essential long-term investment for non-profits that ensures the future of an organization. WAM’s endowment—like most museums’—includes a combination of “funds” (nearly 100 in total at WAM) created by donors and funders over the life of the organization. Some funds are unrestricted, meaning the organization can use the money as needed, while others are restricted, meaning the donor designated the use of the money for a specific purpose. They may fund staff positions, support the acquisition of new artworks, or enable a certain program that holds particular meaning to the donor or grantor. All are essential and all help ensure the future of the Worcester Art Museum for generations to come.