Frequently Asked Questions about Endowment Funds
What is an endowment fund?
Endowment gifts are not fully expendable; rather, they are invested in perpetuity to provide ongoing support for the school’s programs.
Endowments can be funded to support scholarships, academic and extracurricular programming that are at the heart of Flintridge Prep’s mission. These funds ensure that the school is strong today and for generations to come.
How does it work? How are endowment funds managed and spent by the school?
For investment purposes, Prep’s endowment funds are pooled together and professionally managed. When an endowed fund is established, the original principal of the fund is invested and a portion of the earnings is allocated each year for expenditure. The current spending policy approved by the Board of Trustees enables up to 4.5% of an endowment fund’s fair market value (averaged over three years) to be spent in a given year. In order to keep pace with inflation, annual spending from an endowment fund is generally designed to be less than the overall growth of the fund. This spending policy enables an endowment fund to consistently support its intended purpose at a meaningful level.
How does an endowment keep giving to the school forever?
The best way to answer this question is with an illustration. Assume a $100,000 endowed scholarship fund has an 8% annual rate of return. Per Flintridge Prep’s spending policy, up to $4,500 (4.5%) of the earnings will be available for financial aid scholarships the following year. The remaining 3.5% will be reinvested back into the fund, enabling it to grow over time. As the endowment fund grows, the income available from the endowment will also grow; as a result, the income available for financial aid scholarships will increase. For instance, if the value of the endowment increases to $110,000, the amount available for scholarships will increase to $4,950.
What kinds of endowment funds exist at Prep?
Flintridge Preparatory School has over 40 endowment funds. The market value of Prep’s endowment exceeds $22 million. These funds support programs that are essential to the school’s mission, including:
- Financial aid scholarships
- Technology infrastructure
- Athletics programs and facilities
- Faculty and staff development
- Student programs
Where does the school need my support the most?
Tuition doesn’t cover the entire cost of an education at Flintridge Prep. Annual Fund donations make up the crucial difference. Endowment gifts ensure the school’s mission forever. Both of these types of giving are important to the school’s well-being. We’re grateful you give to the school and we appreciate gifts to the Annual Fund as much as we appreciate gifts to our endowment.
Can I start an endowment fund?
You may choose to establish a new endowment fund in your family’s name or in honor of a significant individual. The minimum gift levels to establish a new endowment fund begin at $50,000 and are available upon request. You also might consider supporting an endowment fund through a bequest. To establish a named endowment fund reflective of your personal wishes and interests, please call or email Lakshmi Dastur-Johnson, Director of External Affairs at 818.949.5524.