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

Most scholarship funds are set up as endowments. A donor gives a bunch of money to a school who then gives it to a fund manager to invest in financial instruments like the stock market. When those investments generate profits, it’s those profits that are then used to fund scholarships for students. This way the initial donation could fund scholarships in perpetuity, in theory.