The New York Times-20080126-Schools Call on Alumni Networks to Help Fill Coffers
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Schools Call on Alumni Networks to Help Fill Coffers
Rich prep schools, with wealthy and talented alumni to draw on, are becoming a lot richer. And it's not just because they have a lot of generous donors.
Exeter's endowment, for example, relies on Stephen F. Mandel, who graduated in 1974, to oversee its portfolio. Mr. Mandel, who runs Lone Pine Capital, a well-regarded hedge fund, led Exeter to generate a 21.6 percent return in the fiscal year that ended last June 30.
In 2005 Andover hired an alumna, Amy Falls, to oversee its portfolio. She had been a managing director and global fixed-income strategist for Morgan Stanley. In the 2007 fiscal year, her first full year, she nearly doubled the return to 21.2 percent.
Those money managers in turn tap into others. At Exeter, Mr. Mandel was able to put some money into Farallon Capital Management, a successful hedge fund run by Thomas F. Steyer, another Exeter alumnus.
Last year Ms. Falls set up a daylong seminar of 70 Andover graduates to discuss ideas for the school's portfolio. Among those she has relied on are two brothers who graduated from Andover: Stanley S. Shuman, a partner of Allen & Company, and Alfred J. Shuman, who runs Archstone, a $1 billion fund of hedge funds. I bounce a lot of ideas off Fred, Ms. Falls said.
While most schools are eager to raise money, not all school heads think it should go to the endowment. At Harvard-Westlake School in Los Angeles, Thomas Hudnut, the headmaster, said the school was more focused on its capital campaign than on building its $57 million endowment. Over the last 20 years, it has raised $200 million for purposes other than the endowment.
There has not been unanimity that a big endowment is a good thing, he said. For instance, if a school's operations are in the red, its draw on its endowment may lift it above the line, obscuring the reality that the school is not running optimally.
Wherever the money goes, schools are also turning to professionals. Tom Hogan, a New York consultant, said he just worked on a campaign for the Children's School, a prep school in Stamford, Conn., that raised $7 million. Over the years fund-raising has become a very sophisticated business, he said. There is even a master degree in fund-raising at New York University.
John Buxton, head of schools at the Culver Academies and formerly vice rector of St. Paul's School in Concord, N.H., said many schools used to be an operation like a proprietary business.
Benefactors and alumni supported them and tuition and endowment covered most of the needs, he explained. But as concerns began about diversity and equal opportunity, they needed more money.
Service groups like Cambridge Associates and Commonfund saw there was big business in the secondary school market, he said. In the past decade the competition has really heated up.
In general, day school endowments are far smaller than those of boarding schools. Board members are more often parents of current students, rather than alumni, and may not have the wherewithal for big gifts, according to Patrick Bassett, president of the National Association of Independent Schools.
Even prominent independent schools still have relatively small endowments. Hackley School in Tarrytown, N.Y., is more than a century old but its endowment is just $41 million. It is largely a day school and had a relatively small student body until the 1980s, said its headmaster, Walter Johnson.
Indeed, raising money is still a struggle for many schools. Pope John High School in rural Nebraska, with 150 students, is trying to raise $600,000 with the goal of spending half and adding half to its $1.2 million endowment.
Parents and grandparents built these communities, said Deborah Warren, who works with the advancement office at the school. By contributing, they will keep alive what they helped to build.
[Illustration]CHART: Educational Wealth: Some independent schools have accumulated sizable endowments. Here are some of the largest, at the end of the schools' most recent fiscal year. Chart details the following into separate categories: SCHOOL; LOCATION(S); and ENDOWMENT.