What does the term "endowments" commonly refer to in the context of permanently restricted net assets?

In the context of permanently restricted net assets, the term "endowments" refers specifically to contributions that are intended to be held indefinitely, with the income generated being used for specific purposes established by the donor. This means that the principal amount of the endowment remains intact and is invested, allowing it to grow over time while the earnings can be used for designated initiatives, such as scholarships, program funding, or other predetermined uses stipulated in the donor's restrictions.

This understanding underscores the importance of how endowments function within an organization, as they provide long-term financial stability and support for designated programs or needs without being exhausted. The emphasis on contributions with specific uses and no expiry distinguishes endowments from other types of funding, which may not have the same permanence or use restrictions.