Currently, The Episcopal Academy operates under a tuition-driven model, with the majority of each year¹s budget -- roughly 85% -- coming from tuition revenue. This model limits our ability to achieve new goals and make new investments without increasing tuition to unacceptably high levels. The goal set forth in the 2010 Strategic Plan is for Episcopal to become less dependent on tuition. The most fiscally responsible way to do this is to significantly increase the school’s endowment.
Why Endowment Matters
Endowment is not an abstraction. Endowment is about people. It is an opportunity to invest in Episcopal’s students and faculty and to enrich the total educational experience, inside and outside the classroom, in perpetuity. What makes endowment gifts important is their permanence. Through wise investment and stewardship, these gifts maintain their purchasing power year after year.
Paying It Forward
Episcopal has been blessed over the years by the generosity of alumni, parents, and friends. The success of the Ever Episcopal Campaign helped pave the way to our new campus in Newtown Square. Our Annual Fund continues to grow.
Support for the endowment is the one area in which Episcopal’s performance has been underwhelming. Our current endowment, roughly $37 million as of June 2012, just doesn’t measure up to our reputation or our aspirations. We lag behind many local and national peers, significantly so in some instances.
For example, the endowments of Philadelphia’s William Penn Charter and Buckingham Browne & Nichols, in Cambridge, MA, both exceed $60 million. As a frame of reference, top boarding schools such as Exeter and St. Paul’s boast endowments in excess of half a billion dollars.
Episcopal’s relative shortfall is most telling when comparing endowment-per-student figures, a critical benchmark (please see Episcopal’s endowment/student comparison chart at right).
The Facts
What is an endowment?
An endowment is made up of gifts and bequests, with the principal kept intact in perpetuity and invested to create a growing source of income. Episcopal’s endowment is comprised of many funds contributed by donors over time. The endowment grows through additional gifts, income, and capital appreciation. It has been the policy of the school to distribute 5.0% annually of the twelve-quarter trailing average market value of the endowment. However, beginning with the 2013-14 fiscal year, the spending rate will be lowered to 4.75% annually.
Who oversees Episcopal’s endowment?
The Board of Trustees maintains fiduciary responsibility for the school’s endowment, with the Investment Committee overseeing investment strategy. The committee is made up of professionals who have knowledge of financial markets and are members of the Episcopal community, including alumni, parents, and trustees. Funds Evaluation Group, an investment advisory firm based in Cincinnati, has served as the school’s endowment consultants since 2009. The firm offers advice and expertise on portfolio construction and manager selection and proves ongoing due diligence.
What are our investment objectives?
Episcopal seeks to achieve a competitive total return on its endowment assets to meet the school’s annual income requirements and at the same time generate long-term growth of the endowment. Our three-year investment performance exceeds our benchmarking targets versus a Broad Policy Index and a Weighted Average Index.
To view a master list of the endowed funds, please
click here.