Reply to Why are private schools constantly raising money when they clearly have a surplus?

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[quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous]So they can build up the endowment, be able to issue more financial aid, pay teachers better, and build new buildings.[/quote]

Yep. This is the correct answer for well-run private schools (and yes there are certainly poorly run ones that don't budget wisely!) [/quote]

So when is it that they will offer more financial aid and pay teachers better?

(And wouldn't keeping tuition down be basically the same thing as offering more financial aid?)[/quote]

I posted earlier in the thread. I was continually annoyed by administrative decisions where my kids were in school. Realistically though, a sustaining endowment needs to be significant.

Say a school has a $5,000,000 endowment that is partly kept for emergency repairs, collateral for capital expense loans, and financial aid. To maintain that endowment, and only spend earnings (not addressing the unknown future) the old rule of thumb was to only spend 4% annually.

$200,000 a year is a small amount given the costs of running the school, offering financial aid and maintaining buildings and grounds.

Spending down a small endowment offers no long term sustainability. Arguably, schools don’t need a pretty campus to teach basics. Also arguably, most families who want an attractive,  child-friendly environment would not opt for a school in a strip mall.

A place like Episcopal High School, with an endowment in the hundreds of millions plus some specified funds, is an outlier.

Most of the area small schools are balancing tight budgets. We don’t always agree with their spending choices, but that’s usually different from surviving beyond the next couple of years. [/quote]

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