April 23, 2021
Resources

Independent schools (private k-12 schools) often use endowments as a part of their overall comprehensive financial stability planning. Typically, an endowment is established after operational reserves have already been set aside. Common independent school endowments include designated scholarship funds and capital improvement funds although schools and donors can establish many different endowments.

3 Purposes of Independent School Endowments:

The Council for Advancement and Support of Education (CASE) lists 3 main purposes for independent school endowments:

  • To act as a source of financial stability and resiliency
  • Key component of the overall financial health of a school
  • Essential to offering high-quality, affordable and accessible education

Kim Jennings, a Certified Fund Raising Executive and independent school capital campaign consultant, sees the interest in endowments from independent schools growing. She and her colleagues have observed consistent enrollment growth in independent schools, as well as growth in their overall giving. Both of these elements are part of what's leading many independent schools to begin campaigns. Kim has seen endowments wrapped into the schools' campaigns more often than not, taking more of a comprehensive fundraising approach. 

How They Work

An endowment is typically funded by a donor and comes with restrictions on how those monies can be used. Endowments are invested in the market as they are long-term legacy gifts that give in perpetuity. Schools use a set portion of revenue from the investments (often 4-5%) and the remaining revenue is reinvested and the endowment grows. Endowments help create a legacy of giving for donors and long-term sustainability for schools.

Gifting and Establishing

A donor typically gifts an endowment to a school through a major gift or the school decides to start their own endowment. In the past this has been a cumbersome process involving multiple parties. 

Infinite Giving makes this process easy and quick for both the donor and the school while avoiding a lengthy process and typical costs often associated with establishing an endowment. You can have your endowment set up quickly with our online process. Development and advancement teams can leverage gifted endowments with potential donors interested in long term legacy giving or planned giving.

Managing the Endowment

Because an endowment is invested in the market, the school’s board of trustees must develop an Investment Policy Statement to ensure the funds are invested properly and meet the requirements of the endowment. Schools would need a registered investment advisor, like Infinite Giving, to assist with this process and overall fund management. Advisors charge fees for the management of endowments funds. Advisor fees can range significantly so be sure to do your due diligence.

According to an investment management fee survey by the Commonfund Institute, the average advisory and investment fee cost for endowment and foundation portfolios less than $25 million is 1.34%. Infinite Giving charges .65% AUM for endowments under $5 million with breaks at $5 million and $10 million. We offer convenience, fund transparency, and reduced fees so you can focus on what matters most.

‍

Learn more about our endowment management and creation here.

‍