A Conversation with Lawrence Crimmins, Director of Development and Jake Odden '86, Chief Financial Officer
What does philanthropy look like at Taft? How does it make a difference in the day-to-day life of Taft students? Why is it important?
LC: It's incredibly important. Frankly, mission critical. Philanthropy impacts every corner of the Taft campus—from the actual buildings that students learn and live in, to the smartboards and paintbrushes in classrooms, to the maintenance of the playing fields and the school's ability to attract and retain teachers and students. Taft simply would not be Taft without the generosity of generations of alumni, parents, and friends.
JO: That is completely accurate—Taft would literally not be Taft without philanthropy, which covers approximately 30 percent of the school's annual budget. Our student body would not be as socioeconomically or globally diverse, our faculty and staff as robustly qualified, and our buildings and programs as well funded.
Financially, having multiple streams of revenue is important for any business. In the nonprofit school world, those revenue streams are typically program tuition, annual or current use funds, and endowment income or draw. The latter two prongs are obviously directly associated with philanthropic support for the school. Put simply, more philanthropy enables the school to be less dependent on tuition. Whether it be in more challenging economic times where full pay demand could dissipate, or simply in offering greater financial flexibility in minimizing ever-escalating tuition fees, a larger endowment is critically important to sustaining our competitive position and making Taft more affordable.
Taft has a significant endowment and tuition is $66,300 per year for boarding students. Isn't that enough to support the school?
JO: No, and that's because a Taft education costs more than what we charge. Tuition revenue provides approximately 70 percent of the school's gross revenue, with endowment income or draw (20 percent) and Annual Fund (10 percent) providing the difference. This places us in a relatively enviable position of being less tuition-dependent than most. Among the schools we compete with most directly for boarding students, we are more tuition-dependent. Due to their larger endowments, tuition can comprise as little as 60 percent or less of gross revenue for these peer schools compared to 70 percent for Taft. Our smaller relative endowment contribution requires us to operate more efficiently while delivering the comparable high-end product of our peer schools. Growing our endowment offers us greater flexibility to sustain the broad programmatic excellence we deliver today.
Where do we stand, endowment-wise, with respect to our peer schools?
JO: As [Head of School] Willy [MacMullen] sometimes says, "We're punching above our weight." This is no doubt true, as we have one of the smaller endowments among our peer schools. And as our peers grow their already larger endowments, Taft clearly needs to do the same.
LC: For many years, Horace Taft refused to ask for money because Taft was not incorporated and it was technically a "for-profit" school. When Horace Taft retired, the school was $600,000 in debt with no endowment. This reluctance to raise money continued for the next 50 or so years and, in the long run, has put Taft at a disadvantage to some of our peers that raised funds early in their existence and have benefited from more than 100 years of compound interest. We would be in a different position if we had an endowment in the 1920s!
What are Taft's most significant needs right now? In the long term?
JO: That's a big question with a clear answer: endowment. It is our job—that of school leadership and the Board—to set the course for the school going forward, and with it, specific opportunities for financial support. The onus is on the school to continuously refine, prioritize, and articulate areas of need across campus and program, to enable donors to identify and support our school in ways that carry meaning to the donor.
Endowment is a school's greatest asset in ensuring it can operate with its ideal student and faculty population while delivering the highest-quality program. A larger endowment allows a school greater flexibility in achieving its strategic objectives with people and programs. It ensures that future generations of students will receive the same or even better caliber experience as current and past students. Willy [MacMullen] often says, "Endowment equals destiny." Ultimately, endowment supports the pursuit of excellence across all facets of a school campus: academic and cocurricular programs, quality faculty, financial aid, campus life, student services, and facilities.
With a larger endowment, the Admissions Office has greater financial aid resources and can select students purely on the student's qualifications and ability to thrive at Taft without factoring in the family's ability to pay. At the moment, about one-third of Taft students receive nearly $10 million in financial aid, but less than 50 percent of this aid is funded from the endowment. So there is a tremendous opportunity to increase access and affordability for all applicants across the socioeconomic spectrum through philanthropy.
Over the past dozen years, we've had really old buildings we've had to maintain and improve. Think about it: CPT, for example, had seen no major work in more than 80 years. From a campus plant perspective, there has been a concerted effort to invest in residential life. From the transformation that occurred with the renovation of the dining hall more than a decade ago, through the investment in the oldest residential halls on campus—Mac, Congdon, HDT, and CPT—that was finished this past summer, the school campus is as attractive as ever and offers highly competitive facilities. All of that has come at a cost of more than $30 million over the last 15 years. With that said, maintaining and keeping current approximately 225 acres and 850,000 square feet of buildings is work that never ends and requires continual reinvestment and upgrading.
Our school motto, Non ut sibi sed ut ministret, and approach of educating the whole student existed long before lip service to such an approach became commonplace, and indeed all the school strives for in its Portrait of a Graduate has never been more relevant in preparing the next generation of leaders. The support of our donor base today and going forward is essential to fulfill the school's mission.
How does the Annual Fund help the school? Where do dollars raised go? And what if a donor wants to support a specific part of the school, such as giving specifically to academics or the arts?
LC: This is really important for people to understand: every Annual Fund dollar is used to support the day-to-day operations of the school. As a nonprofit organization, Taft operates without financial support from the local or federal government. We rely on tuition and donations to support the daily functioning of the school—an annual price tag of $51 million. As Jake alluded to, our tuition covers only about 70 percent of what it costs to educate a Taft student. The Annual Fund makes up the difference between tuition and true cost. In that way, all Taft students are receiving financial aid.
JO: As I mentioned earlier, the Annual Fund contributes 10 percent of gross revenue, which, importantly, makes us less dependent on both tuition and endowment draw. So, in the big-picture sense, Annual Fund gifts, particularly when unrestricted, are critical to giving us flexibility in balancing the annual budget.
LC: Yes, the most helpful type of donation to the Annual Fund/Parents' Fund is a donation that is unrestricted. Over time, donors to nonprofits have been increasingly interested in restricting their annual support, channeling it to support a specific program or part of the nonprofit that is important to them. That's a trend that we have seen here as well. Taft is very thankful for any size donation and for any restricted and/or unrestricted contributions to the Annual Fund. But what is the ideal Annual Fund gift? An unrestricted one. And that's what 86 percent of our gifts are. As Jake said, unrestricted gifts allow for more flexibility—and, as evidenced by pandemic expenses, flexibility is often needed.
The Annual Fund provides unrestricted fiscal support necessary to fund annual budgets and provide ongoing services. The Annual Fund supports the gap between the cost of tuition and the actual expense of educating each student—roughly $30,000 for each Taft student.
The Parents' Fund is part of Taft's Annual Fund. It is a fundraising initiative driven and supported by the parents of current Taft students. Over the last 29 years, Taft has maintained a level of 90% participation by our families.
Endowment funds are like savings accounts that grow and generate income from the investment of the principal. For example, a gift to a named scholarship is put in an endowment so that the fund grows and spins off more and more income as the years pass. The principal is not touched. A gift to the endowment is not a gift to the Annual Fund. The Annual Fund helps us live; capital funds help us grow. That is, the Annual Fund is used for annual expenses, while capital and endowed gifts are for building and special projects.
Capital giving (also known as major and principal giving) is defined as the top 10% to 20% of gifts received by a nonprofit organization that produces 70% to 80% or more of its gift income. At Taft a major gift range is $50,000 to $999,000. A principal gift is $1 million or more.From time to time, our Board of Trustees identifies projects that require large sums of money to complete; capital funding may support those projects. Thanks to capital giving, Bingham Auditorium, HDT dormitory, the Martin Health Center, Snyder Field, Camp Field, and Odden Arena were recently renovated. Capital gifts may also bolster our endowment, supporting academic programs, students, faculty, and staff.
Planned giving is the process of making a significant charitable gift during a donor's life or at death that is part of their financial or estate plan. Planned gifts take many forms: an outright gift of assets, such as appreciated securities or an asset such as artwork; other gifts provide a financial benefit plus tax deductions for donors. A charitable remainder trust provides an income stream for individuals throughout their lifetime. Some planned gifts are payable upon the donor's death, such as a life insurance policy, where the beneficiary is a charitable organization.