Institutional PM: I do not really get what the differences between endowment and foundations are. Both are “usually indefinite” going concerns and have some tax advantages, and make mostly periodic payments to whosoever. Could someone explain this to me? Thanks in advance, OA
Only major difference that I tend to associate with the two is related to the spending rules that may apply to the various foundation types (for US purposes) which don’t exist for endowments. In terms of generating an IPS for either, much of the same applies when it comes to Objectives & Constraints. Anybody else?
If you are Bill and Melina Gates and you wish to give away money, you setup a foundation. You donate money to worthy causes. You may not exactly care about growing the foundation wealth to keep up with purchasing power increases over time. If you are Harvard university, you have a stash of money you collected to finance a part of your ongoing operations. That is an endowment. Endowments want to grow the corpus fund at PPP and only take the excess return on an average to fund their operations. There are 4 types of foundations in the cirriculum. One of those …Operational foundation functions typical to an endowment. Endowment and Foundation are different legal entities, governed by different rules. did i make any sense ? or did i further add to the confusion ? cheers 
IMO, there isn’t too much difference in terms of TTLLU for both entity. So minor tax consideration for foundation (however, I don’t think CFA will try to nail on that since this is an investment test, not a tax test).
Foundations risk tolerance is generally higher than endowments. Endowments risk tolerance depends on what percentage of the operating budget of the organization they are contributing.