How a museum fire helped shape Brazil’s endowment fund regulation

On September 3, 2018, Brazilians woke up to a loss for which may never be compensated. The country’s 200-year-old National Museum burst into flames, turning its vast collection to ashes and exposing decades of neglect toward the country’s cultural heritage. Unlike most cases, the museum fire actually inspired action to solve one of the sector’s main problems: its sheer lack of funding. The country decided to settle on a way to use endowment funds to support culture and education in Brazil.

Endowment funds are created using financial donations to support a cause or institution. The money is invested in financial markets and its profits are used to fund all kinds of projects: museum conservations, academic or medical research, college scholarships, humanitarian actions, and environmental protection initiatives. Since the main capital is preserved, endowment funds are seen as a perpetual source of money for tertiary entities, guaranteeing their financial sustainability in spite of paltry government resources.

The model is well-established around the world. In the United States, billion-dollar endowments support some of the country’s most prestigious universities. Harvard University, for instance, has a fund worth USD 39.2 billion, accounting for 35 percent of the university’s income.

In Brazil, this kind of investment has been discussed and tested for decades, already to some success. For example, the endowment fund for Fundação Getúlio Vargas’ law school, one of the most prestigious private colleges in Brazil, started receiving very small donations and now manages almost BRL 3 million in assets, providing scholarships for students...