What is the primary purpose of a Permanent Fund?

The primary purpose of a Permanent Fund is to generate income for a specific purpose while preserving the principal amount. This fund is typically established to ensure that the income it generates can support various government needs or initiatives over the long term without jeopardizing the initial capital. For example, many states have Permanent Funds that derive income from investments, such as oil royalties or other revenue sources, to finance public services or promote economic stability while ensuring that the core capital remains intact for future generations.

In this context, focusing on the preservation of principal while generating income highlights the unique nature of Permanent Funds compared to other types of funds that might draw from their principal to cover immediate expenses or projects. This long-term investment strategy is fundamental to the sustainability of the financial resources that support government operations or specific community projects without depleting the original funding.