Endowment

It's the life blood of most universities and/or charitable institutions. An endowment is created through the good will and good nature of myriad alum who will have donated their hard-earned savings to the university in return for...good feelings.

Maybe they donate $3M and get a professor's chair named after them, i.e. the Smith Family Professor of Whoopee Cushionality. Or for $25-50M, they get a building. Or for $100M+, they endow a center.

Most endowments are required to have a minimum distribution, or percentage of their total assets, distributed annually. So, for example, Blah Blah University has a $1B endowment. In order to retain their non-profit status, they must distribute 4.25%, or $42.5M, annually to...do stuff. The money may go to fund golf team coaches' salaries. The money may go to buy new laptops for all. Or the money may go to fund private jet travel to Columbia on the White Powder Winter Tour.

Most endowments have the lion's share of their assets invested in one form or another of the equity market, and most funds grow at about 8 or 9 or 10% a year, such that the required distribution of 4.25% is roughly half of their growth, leaving room to accommodate for inflation, and even with zero additional donations, continue to grow.

The whole notion behind an endowment and the way this structure operates is that it outlives every student, and maybe even the university itself.