The LAHSAI was a six-year initiative that helped to catalyze the cultural shift in Los Angeles towards both middle income day school affordability and day school endowment development. Because neither of these cultures existed in Los Angeles at the time, schools required a significant investment to convince them to participate. In addition, the Los Angeles Jewish community lacked the infrastructure to successfully raise endowment dollars. Properly developing this infrastructure also required significant funding.
The five LASHAI schools were the first-ever participants in this type of initiative in Los Angeles. The positive outcomes they achieved convinced the rest of the community of the importance of both middle income affordability programs and endowment development. Particularly due to the emphasis on middle income affordability programs and the marketing surrounding this message, the LA community has begun to understand that increasing enrollment of students from middle income families is critical to the viability and sustainability of their schools. While the issue has certainly not been resolved, schools throughout Los Angeles are now providing more financial assistance to middle income families and more middle income families are willing to apply for financial assistance.
Since LAHSAI’s inception, BJE has expanded its support of endowment development to 12 additional day schools. These programs, built on the foundation of the LAHSAI, required significantly lower grant incentives/investments. Schools no longer needed a huge incentive to be convinced of the importance of endowment development. Furthermore, most schools understood the importance of having a robust enough infrastructure to support a multi-prong development effort. It is important to note that in large part, because of the efforts of the Jim Joseph Foundation and the LAHSAI, other foundations and national organizations have made endowment part of a national conversation. This has tremendously aided schools’ current understanding of the need for such a cultural shift.
That being said, the level of funding required to support similar initiatives will depend heavily on the school or community’s readiness to address middle income affordability and endowment development.
Because endowment development is a long-term process, a minimum 4 year program is recommended. The first year is focused on changing the messaging and culture, creating a team of lay and professional leaders that understand the importance of building endowment for their institution, and creating an integrated development plan which ensures that everyone on the team is moving in the same direction.
The following funding ranges should be considered in order to incentivize schools to take on these difficult but critical new directions and to provide the schools with the essential support needed for success:
> INDIVIDUAL SCHOOL SPECIFIC COSTS – Per school funding needed would range from $38,750/school/year to $132,500/school/year.Middle Income Tuition Assistance Range – $25,000-100,000/year
Schools that do not currently have funding to provide middle income tuition assistance will need initial support until their endowment value can generate enough funds to address the middle income need. These dollars must be used to augment and not supplant each school’s current financial aid program. Setting the level of funding needs to take into account current school enrollment, enrollment growth capacity, the cost of tuition, the minimum number of middle income students/year needed to accomplish the cultural shift, the need to sustain funding over the 3-8 years each student is enrolled at the school (depending on whether it is elementary school, middle school or high school) and the school’s ability to realistically raise enough endowment dollars over the four year period to sustain, at a minimum, the same level of middle-income tuition assistance in perpetuity.
The Generations Program has shown that on average, a school should be able to raise $2,000-4,000/enrolled student during a three-four year period. Thus a school with 300 students should be able to raise between $600,000 and $1.2 million in endowments. A $1.2 million endowment would yield approximately $ 60,000/year at a 5% return.
Recommendation: The grant level of tuition assistance should match the benchmark cash level of endowment that each school commits to raise (i.e. a school committing to raise $500K would need $25,000/year in grant subsidy, a $1million benchmark school would need $50,000/year, a $2million benchmark school would need $100,000/year)
The number of students funded per year will vary by school based not only on the available tuition subvention but also on actual tuition costs and family needs. The LAHSAI began with a projection of six new students per school per year.
Endowment Coaching Range – $3,750-7,500/school/year
One of the important readiness factors for schools is a development infrastructure already in place that includes: staff focused on development, Head of School and lay leadership committed to the program and a donor tracking system. Thus, while development staff and donor tracking was funded in the LAHSAI model, the financial model recommended for other communities does not include the expenses for the development infrastructure, unless such an infrastructure is totally lacking.
In its place, we found that except schools with the most advanced development infrastructure (only one out of the five LAHSAI schools) coaching was needed to help the leadership team develop an appropriate campaign plan, train staff and lay leadership, help schools implement the campaign plan and stay on course, liaise to a central or national agency in order to identify school challenges and opportunities, model solicitations. Click here to read about the Leadership and Fundraising Academy that provided coaching and training for four of the five LAHSAI schools.(link to LFA Final Report document)
The first year requires the most intense work with the coaches in order to accomplish the cultural shift and ensure that the schools are moving in the right direction. Coaching, however, does need to continue at a minimum in years two and three. Schools that desire coaching in year four should be required to fund it out of their budget.
Recommended level of coaching: Up to 40 hours/school for the 1st year, 30 hours/school for the 2nd year and 20 hours/school for the 3rd year. Schools interested in continuing coaching in the 4th year should incorporate this cost into the school budget.
The national standard cost of coaching based on the Leadership and Fundraising Academy and Generations is $187.50/hour
Incentive for Meeting Program Benchmarks – Range: $10,000-25,000/school/year
Changing the communal culture to define and recognize the needs of middle-income families and building endowments to sustain those tuition incentives is challenging. In every institution, many competing priorities and interests can easily derail efforts. The LAHSAI found that cash incentives for meeting endowment benchmarks in a timely manner were essential to keep schools focused and on task. The level of cash incentive needs to be significant enough to deter a school from the risk of losing the grant. Middle-income tuition grants cannot be the incentive as it is unlikely that a funder would reduce or eliminate a student’s tuition subsidy because a school fails to reach its endowment benchmarks.
> COMMUNAL COSTS
Scaffolding Support (for 5-10 schools) – $125,000/year
As stated above, the competing priorities and interests facing schools can easily derail the best intentions. It is much easier to stay focused on the task at hand if schools are part of a larger effort that both provides support and requires accountability
A central body (either locally, if there are enough ready schools or nationally) can provide this type of scaffolding. This would include professional staff who convene the schools to share best practices, provides program specific training, holds the schools accountable and focused on their benchmarks and goals, ensures timely and accurate reporting to funders, as well as coordinates program visibility and donor stewardship
In addition, developing and disseminating messaging regarding middle-income needs and the availability of and consideration for tuition assistance is easier and more cost-efficient as a community-wide coordinated effort. Templates can be created centrally to simplify marketing and recruitment messaging and further reduce costs.
1:4 Communal Endowment Match – Cost: 25% of the value of endowment benchmarks
For many schools and donors, it is difficult to understand the importance of raising endowment dollars whose principal cannot be touched and whose benefit they will not receive for at least one year until interest begins to accrue. In the LAHSAI model, another significant incentive in convincing schools to participate was the existence of a 1:4 match for new endowment dollars raised, up to a cap per school, through the Simha and Sara Lainer Day School Endowment Fund. In a weak stock market, an additional 25% value to a school’s investment is extremely appealing. We have also found that donors in particular are motivated to contribute to endowments because of the communal match incentive, which immediately increases the value of their investment.