A quasi endowment agreement is a legal document that defines the use of funds that are designated to support a particular organization or cause. These funds are not technically endowments, but they function similarly in that the organization is required to maintain the principal and use only the interest or earnings generated from the investment of the funds.

The purpose of a quasi endowment agreement is to provide the organization with a predictable source of income that can be used to support its operations or specific programs. This type of funding is often provided by donors who want to ensure the long-term sustainability of the organization or cause they support.

A quasi endowment agreement typically includes several key provisions:

1. Designation of the funds: The agreement will specify which funds are designated as quasi endowment funds and how they can be used.

2. Restrictions on the use of principal: The organization is typically required to maintain the principal of the fund and use only the interest or earnings generated from the investment of the funds.

3. Investment guidelines: The agreement may specify guidelines for investing the funds, such as the types of investments allowed or the level of risk that can be taken.

4. Reporting requirements: The organization is often required to provide regular reports to the donor or other stakeholders on the performance of the fund and how the funds are being used.

Quasi endowment agreements are often used by non-profit organizations to provide a stable source of funding for their operations. This type of funding can be particularly useful for organizations that rely on donations or grants that may fluctuate from year to year.

However, quasi endowment agreements can also have drawbacks. For example, they may limit the organization`s flexibility to use the funds in response to changing needs or priorities. Additionally, the investment guidelines specified in the agreement may limit the organization`s ability to generate the returns necessary to support its activities.

Overall, a quasi endowment agreement can be a useful tool for organizations looking to establish a stable source of funding. However, it is important to carefully consider the terms of the agreement and the potential limitations it may impose on the organization`s activities.