At Cushing—as at any school, including independent schools, and colleges and universities, both public and private—an endowment works as a kind of permanent savings account for the institution. Donations to the endowment are invested and the returns on those investments are both spent and reinvested. The rate at which the funds are spent varies so that both the value of the endowment and the expenditures rise over time to keep pace with inflation.
Endowment size is related to institutional health and sustainability because the larger the endowment, the better the return. A larger return on investment means that a higher percent of the return can be spent each year. For example, an endowment that has an annual return of 10 percent might spend 5 percent of that return, thus ensuring that the principal continues to grow and keep pace with inflation. Likewise, an endowment with an 8 percent return might spend only 4 percent.
Of course, the growth of an endowment is not dependent only on investment return. The endowment also grows as a result of gifts to the school.
Often, a school's endowment is broken up into smaller funds directed toward a specific purpose such as scholarships, faculty salaries, unrestricted funds for a department, or maintenance for facilities. Frequently, such funds are named by a donor and the size of those funds varies depending on its purpose. For example, a full scholarship fund must be large enough to generate adequate funding to support a student whereas a fund that provides unrestricted funding for a department could be smaller. That said, a gift needn't be large to support a school's endowment. A gift of any size may be directed toward the endowment in support of any area of the school.
Sometimes, as is largely the case at Cushing, the endowment supplements the Academy's operating budget. However, endowments may also add to what an institution might do above and beyond operating expenses such as constructing new facilities, helping faculty continue their educations, and allowing faculty to take students on field trips, thereby supplementing the education the students receive.
If you have questions about Cushing's endowment, its growth, or how you can support it, please contact the Development Office at 978-827-7400 or by emailing firstname.lastname@example.org