Private School Endowments
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Anonymous
An endowment of $1M is only going to have a draw of ~$40k/year, and that’s probably going straight into the operating budget. It’s not an unlimited spending slush fund. You are going to get asked for money. |
Anonymous
The endowment is $1M per STUDENT. So, according to your math, each student starts the academic year with a personal $40k subsidy on top of the $65k full annual tuition that - according to the school - 60% of the students pay. |
Anonymous
Yeah, I missed the per student part! Still, that “subsidy” isn’t going to go to straight to student experience. Endowment draws are great for the yucky stuff that donors don’t want to pay for: repointing brick, boiler upgrades, green energy requirement compliance retrofits, and on and on. Unless you have a brand new, leased building, maintenance requirements alone can suck up that $40k/student. Remember too that endowments are often restricted- so maybe $1k of that has to go to professional development, $2k to a really specific annual book order dictated by someone who’s been dead for 40 years, $4k to sports, $10k to financial aid, etc. They’re probably also directing unrestricted endowment draws to various reserve funds that won’t be actively used until enough funds are accumulated for repaving a parking lot or redoing a flat roof somewhere. Endowment draws are not magical pocket money. |
Anonymous
Should endowment size be considered by parents when looking at privates for their kids? |
Anonymous
If it's too small, then the school is not viable long term. If you need aid, then a big endowment means the school can afford to be generous and stay generous. Other than that no |
Anonymous
I would look at it if: 1) multiple grades have mid-year openings 2) buildings are visibly old or historic 3) you will not be on financial aid The reason I suggest this is that a school with a healthy endowment can deal with a few years of sketchy enrollment trends or maintenance surprises. A school with a very small endowment gets in trouble if it has a low enrollment year. Tuition payments are covering operating budgets and a miss of 4-6 students at a school of 350 kids can mean that you’re drawing from reserve funds or putting off planned maintenance projects. It means you’re not doing anything new and salary and benefit increases depend on tuition increases. This can happen for 1-2 years before you have a big problem. For our 400 kid school, the target is a $10M endowment. We’re at $2M. This puts a lot of pressure on enrollment management, annual giving, and future capital campaigns. Everything has to go perfectly to hold things together. The truth is that most independent schools are in this situation and large endowments are the exception, not the rule. |
Anonymous
Norwood's $20m is impressive for a PK-8! |
Anonymous
At one point in the late 90s, the top endowed school in Maryland was Johns Hopkins (and still is) and the 2nd most endowed school was Gilman. Just goes to show you how much schools have delved into increasing their endowment. |
Anonymous
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@OP where are you pulling the "endowment" numbers from on the 990s? I just looked at Maret's and on the Balance Sheet (page 11) of the their 2021 Tax Year 990, their total investments totaled over $45,000,000. That's just investments - it excludes cash on hand, gifts and pledges, and other receivables, as well as land, buildings, and equipment...
https://projects.propublica.org/nonprofits/organizations/530211355/202311089349300731/full |
Anonymous
| Endowment funds are listed separately on schedule D part V typically. Assume OP used that data. |
Anonymous
| A good independent -- no matter the emdowment -- should provide regular reports on the state of the school's finances. Ours is in the middle of the pack in terms of endowment and every year they offer a program for parents outlining the financial and strategic outlook for the school -- progress, challenges, etc. I don't participate every year but a PowerPoint is provided afterwards as well. Parents have a good idea of how and where monies and efforts are being spent to enhance their child's education. I personally feel looking at the schoool's facilities and asking questions related to the percentage of alumni and current families who give as well as staff retention/tenure and percentage of financial aid given are more important than the raw endowment figure. As many people have mentioned, endowments may be influenced by many factors. |
Anonymous
| Madeira is a wonderful school. So underrated. |
Anonymous
This makes sense. Thank you for the thoughtful response. |
Anonymous
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Just got standard-spammed by SFS for more year end donations — as if they need it. Wondering if the rest of these schools have done anything particularly innovative to raise money
Madeira $74,328,182 GDS $71,560,246 Potomac $ 62,576,002 Holton $46,683,595 Maret $24,592,423 Landon $22,079,303 Norwood $19,563,635 St Andrews $10,742,213 Bullis $9,966,287 Langley $9,566,473 WIS $8,316,938 Sheridan $5,290,001 Lowell $4,950782 Barrie $1,607,944 Burke $1,157230 Field $485,167 |
Anonymous
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I think I read that to be considered financially stable a school needs to have an endowment that is at least 3 X their annual operating budget.
So that say, for example, their is a world wide pandemic requiring an outlay of millions to install air filters , perform covid testing and hire support staff while perhaps having a down turn in enrollment, the school can spend what it needs to to ensure faculty and student safety instead of trying to BS their way through it. Or say if the school has a low yield on admission offers a few years in a row, they can ride that out instead of having to fire teachers or close certain course offerings. Many schools also need a buffer for outlay of sexual abuse law suits |