Financial Management |
Article by Robert Riggar, SunTrust Bank
The focus on endowment often takes a back seat to the daily operations of a school. Because net tuition revenue alone doesn’t cover the costs of education, however, many schools agree that growing their endowment investments can help the bottom line. And when schools do list endowment growth as a key priority, they often complete capital projects without fundraising for the endowment. New buildings and their operating costs make an inadequate endowment even more acute.
We are working on ways to make endowment giving more attractive to a larger audience because we see it as a key pillar of our long-term financial sustainability.
Will KeslerBattle Ground Academy
These two strategies can help schools maintain focus on a school’s endowment:
Here's an example of the first strategy: A school might require that 120 percent of the cost of a capital project be raised before breaking ground. The 20 percent premium funds the endowment. Some schools have even passed a board resolution making it a policy to fund raise a specific percentage greater than the actual cost of any project. Decisions like these move the endowment from an afterthought to a forethought.
This practice also creates the opportunity to have a richer dialogue with donors. After thanking them for a generous gift, ask if they would consider including the school in their will. The gift is evidence they care for the school, and the will is where people provide for those for whom they care. “Planned or estate gifts can be transformational for both the donor and the school community,” said Bradford Gioia, headmaster at Montgomery Bell Academy. They also “take time and a lot of patience,” said Sister Anne Catherine, the new director of advancement for St. Cecilia Academy and Overbrook School, which has seen endowment growth over the past 10 years. “Especially as tuition prices in Nashville continue to climb, we are making specific goals for increasing our planned gifts.”
When one independent school receives a significant bequest, it could help other independent schools nearby:
“Giving to the endowment provides [alumni] the opportunity to honor the school's impact on their lives and add to the legacy of their alma mater,” said Will Kesler, head of school at Battle Ground Academy. He explained that starting an endowment has helped Battle Ground alumni connect to the school even as its location and student population have changed over the years, from co-ed to single-sex back to co-ed and with additional grades.
These are just a few strategies to help put endowment building front and center. Independent school leadership has the opportunity to be proactive, enacting short and long-term strategies to ensure the current and future stability of their schools.
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