How do scholarships not run out of money?

Question

There are scholarships at my University that have been around for a few decades. Do people top them up constantly?

In: Economics

Answer 1

Usually they have endowments and use the interest only to fund the scholarships, or only dip into principal to a level that market increases will replace.

So a $1m endowment might kick off $50k per year in interest payments, which allow for $50k worth of scholarships granted annually.