Many endowments pay the salary of the fundraisers at major universities, in fact. And legacy gifts are usually set up for "forever" scholarship, where, say 5000

Many endowments pay the salary of the fundraisers at major universities, in fact. And legacy gifts are usually set up for "forever" scholarship, where, say 5000 bucks is available for a certain type of student each semester forever, because the gift to the school was large enough that they know investing it will make at least enough to cover the cost. So no, endowments aren't spent, but the returns fund a lot of stuff.