K-8 schools have a particularly difficult time creating endowments that provide meaningful support for operations, scholarships, and the like. The usual complaint of development directors, heads, and trustees is that, without a grades 9-12 component that keeps graduates better tied to the school over the years, growing a serious endowment is simply not possible.
What compounds the issue further is that most K-8 schools are small, either by design or by market choice. With fewer families, so the argument goes, the opportunity for gifts to endowment is diminished.
Tuition levels at K-8 schools, however, are not so different from K-12 schools, or, for that matter, from 9-12 schools. After all, it takes money to run the school. From this perspective, K-8s are very much on similar footing with their counterparts. Similar footing equals similar needs; simply adjust for scale.
So, what to do?
1. Adjust institutional mindset. In other words, choose to stop pointing the finger of blame at factors other than what you can control. K-8s are invaluable. Invert your thinking. You're no longer at the bottom of the mountain, you're at the summit. Read Carol Dweck's book on mindsets and choose to have a growth mindset! The fixed mindset gets you nowhere.
2. Adjust your operational budget to accommodate a line item for endowment building. Don't skimp. Few are the K-8s that can run advancement offices with results similar to large K-12s. Choose not to! This line item may hurt; that's OK. It should. If you want a meaningful endowment, this annual number has to be just as meaningful. For instance, if you want to hit $1 million within 10 years, you'd better be allocating $100K per year to this line item. That's your baseline.
3. Reconfigure your Annual Fund so that a certain percentage feeds into your endowment. I would recommend a minimum of 10%, but 25% would be a nice goal. Even higher would be better. For the truly brave and innovative: stop using your annual fund to support your annual budget for a period of five years. If your modest annual fund brings in $300K per year, in five years, you will have accumulated $1.5 million.
4. Ignore the fact that a donor may provide you with a major or planned gift. That being said, choose to pursue these gifts as complements to your other funding. In other words, don't count on them in your data projections: count on hard dollars only, combined with a percentage of your Annual Fund.
5. Ignore the potential endowment campaign. As with #4 above, decide to pursue an endowment campaign as a complement to your other funding, not as a replacement for that funding.
6. Establish a threshold at which point you will begin to draw on your endowment. For instance, maybe once you reach $2 million. That figure will be different for each school. (n.b. That's right...I'm suggesting that you NOT take a draw on your endowed funds until the corpus reaches a target size. With the deleterious effects of inflation, you really can't afford to take a draw on anything less than $1.5 million.)
In case you didn't notice, over the course of 10 years, steps 2 and 3 will produce an endowment of $4 million. And that figure doesn't include any appreciation of assets, dividend payments, or interest payments.
