It takes a village not only to raise a child, but also to raise the funds to fully support that child. That’s why Charles Wright dedicates so much time to nurturing the Annual Fund and planning the Spirit Auction year after year. But those aren’t the only ways in which the school raises money for our programs: We also have an endowment.
An endowment is a gift or bequest of money or assets to an organization that is then invested to provide a source of income. Endowments come mostly in two forms. The most commonly known type is a pure or a true endowment where the original gift amount is intended to be kept intact in perpetuity with only the investment income generated from the principal amount used to support a purpose specified by the donor. CWA’s overall endowment is comprised of 41 true endowments, covering general support as well as specific areas such as financial aid, faculty salaries, professional development, and the science and math departments. The other type is a quasi-endowment where the governing board of the organization can make the decision to spend the funds on specific purposes—in some cases using some of the principal investment as well as the income it generates. CWA has built a sizeable quasi-endowment, which is mostly used to help fund the operating budget shortfall between what it costs to operate the school and what it receives in tuition and other revenue such as Annual Fund donations and other fund-raising.
CWA’s Board of Trustees, through its Endowment Committee, has authority over and responsibility for CWA’s endowment. They—in conjunction with staff, investment advisers, and other consultants—make the major long-term decisions on how the endowment should be invested and what type of investment firms should be hired to manage the day-to-day investments. The Commonfund, an investment consultant that specializes in advising to foundations, universities, and independent schools, currently manages CWA’s endowment. Unlike a personal investment, an endowment is meant to last forever (or at least last as long as CWA), so endowment funds look to achieve investment returns that can grow the fund over the very long term without as much concern about monthly fluctuations. This means most endowment funds like ours invest broadly and diversely but in investments like equities and other assets that can provide higher returns in the long run to grow the fund with acceptable risk.
An endowment fund is an important part of the financial health of any school. Schools like Yale and Harvard have grown endowments that are now measured in the tens of billions of dollars, and they rely on these endowments to help fund their impressive academic programs, attract talented faculty, and maintain their financial aid programs. While CWA operates on a much smaller scale—and while it does not have the benefit of these universities’ long histories—its endowment has grown quite impressively over the years, and its importance to CWA as a school is no different. CWA can spend up to 4 percent of the average of the fund’s value over the previous three years. So if current levels of the endowment were maintained, this represents more than $900,000 in revenue for the school. This level of revenue maintains all of CWA’s wonderful extras without which programs would have to be cut and tuition would have to be raised. All that said, though, expanding our endowment with additional gifts could truly have a game-changing impact on CWA. For instance, doubling the size of CWA’s endowment would effectively double the income it could generate to expand the programs we have, help keep tuition increases in check, and fund new initiatives that we cannot yet conceive. Beside the wonderful faculty, staff, parents, and other assets that make CWA such an impressive school today, our endowment is truly the engine that fuels the future growth and success of CWA.