Can that money be used for anything?
In: 1
It means that the university basically has an investment account with $5 billion in assets. These are typically funded with gifts to the university, perhaps royalties from patents earned by university research output, etc. and then invested by a team of portfolio managers to grow the fund.
Some portions may be earmarked for specific uses, ie. Mr. Smith gives $5m to fund the Smith Professorship in History, so that $5m pays for that professor’s salary and benefits. Or perhaps gift money is earmarked toward a new music venue, or scholarships for students of certain criteria, etc. Or it may just be general funds for whatever the university sees fit.
Typically, most of the endowment’s principal is kept in tact, generating interest and dividends to fund programs on an ongoing basis. So that $5m professorship endowment uses the $200k in interest and dividends generated annually to pay for the professor’s salary and benefits.
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