Financial Management |
Article by Elizabeth Dabney
From the May/June 2020 Net Assets magazine
In the July/August 2019 issue of Net Assets, my colleague Mary Kay Markunas pondered the impact of the Tax Cuts and Jobs Act — passed in December 2017 — on annual giving to independent schools. Like many others, she feared the law would have a chilling effect on charitable contributions and subsequently annual giving.
Data from Business Intelligence for Independent Schools (BIIS) FY19 is in, and while it does not currently show cause for alarm, this indicator bears watching in the coming years. The data provided by participating schools showed that:
But this is only part of the story. Many independent schools look to annual giving to fill the ever-growing gap between the net tuition and fees collected and the total costs of running schools. NBOA’s newest research report, “Financial State of the Industry: BIIS 5-Year Trend Report 2015-2019,” found that over five years, the average gap between total operating expenses per student and net tuition and fees per student increased $609 among the schools in this study. Average annual giving per student among these schools increased $8. While annual giving did not take a big hit under the new tax law, schools might not want to rely on annual giving to fill the gap. To read more about the financial health of independent schools, visit nboa.org/FSI.
Another research effort, the Commonfund Study of Independent Schools, reflected on the effects of the tax law on gifts to endowment. The report questioned whether declining gifts to endowment from FY17 to FY19 indicates a worrisome trend or a return to normal after a strong giving year in FY16. To learn more about independent school endowments, visit go.nboa.org/CommonfundStudy.
How do these national trends compare to the trend in annual giving at your school? If your school participated in BIIS, you can find out by logging in and reviewing your NBOA Financial Dashboard. Annual giving per student is a key indicator, and you can compare your annual giving trends to peer schools. Given the current uncertain environment our schools find themselves in, along with the challenged economy, it will be even more important to understand your school's annual giving and endowment patterns and adjust expectations for the coming fiscal year.
Download a PDF of this article.
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