Add new comment

Add new comment

http://www.nonprofitissues.com/ready-reference/charities-often-restructure-protect-corporate-assetsMost all organizations I have worked with have their endowments set up separately both in funds and actual entities. My understanding is separating the endowed funds from the operations of the nonprofit (under a separate EIN and organization) protects the funds from being assets that could be included in the event the nonprofit were sued.

Normally, the principal of a permanently restricted fund like an endowment is protected from the claims of creditors, although the income may be subject to attachment by a creditor.  There is often an added layer of protection from separating reserve assets into a separate entity (See Ready Reference Page:  "Charities Often Restructure to Protect Corprate Assets") but it may not be practical for smaller organizations.  --Don Kramer

Sign-up for our weekly Q&A; get a free report on electioneering