Earlier this year, Commonfund Institute released the 2023 Commonfund Benchmarks Study® of Independent Schools (CSIS), reporting on key investment governance trends and insights over the July 1, 2022 – June 30, 2023 fiscal year (FY2023). The CSIS, produced in partnership with NBOA – Business Leadership for Independent Schools, since 2005, is a comprehensive annual survey of investment policies and governance practices of the independent schools’ sector.
Following the release of the FY2023 study, Commonfund did a deep dive into the 59 participating schools who indicated they have a religious affiliation. The results reflect a comparative analysis between those 59 schools and the 210 total respondents from the full CSIS report. Note: religious schools included in this analysis are those who self-reported they have a religious affiliation when completing the questionnaire for the Study.
THE TOP-LINE RESULTS
Performance
FY2023 one-year returns for participating schools were positive across all size cohorts in both the religious schools’ cohort and the 210 total CSIS respondent’s group, which was a reversal of FY2022’s down year. Religious schools reported a 9.8 percent one-year return vs. 9.2 percent for total respondents in FY2023. Looking at the three- and five-year returns, both groups of respondents reported similar positive returns—7.0 percent for religious schools vs. 7.1 percent for all schools for the three-year, and 6.0 percent for both groups for the five-year. Ten-year returns were also positive across the board. Religious schools outperformed total CSIS respondents over the ten-year period, reporting 6.9 percent vs. 6.7 percent for all schools on average.
Asset Allocation
When compared to CSIS total respondents, the 59 religious schools’ cohort reported an overweight to U.S. equities (39 percent vs. 33 percent), fixed income (19 percent vs. 16 percent) and non-U.S. equities (19 percent vs 16 percent) but an underweight to alternatives (19 percent vs. 29 percent). Schools in the Under $10 million cohort reported the greatest allocation to those over-weighted asset classes—42 percent U.S. equities and 28 percent fixed income. Religious schools in the Over $50 million cohort reported a 22 percent allocation to alternative strategies vs. the 29 percent reported by total CSIS respondents.
Spending
Religious schools Under $10 million reported the highest stated policy spend rate across all size cohorts, at 4.7 percent, followed closely by religious schools Over $50 million at 4.6 percent. The 59 religious schools and total CSIS respondents reported 4.4 percent and 4.3 percent stated policy spend rates on average, respectively.
Gifts
After a marked increase in gifts to institutions in FY2022, average gifts to independent schools were down for FY2023. Religious schools reported average new gifts to their endowment of $1.5 million, while the total CSIS respondent’s cohort reported an average of $1.7 million. Interestingly the largest religious schools, those in the Over $50 million cohort, reported an average gift of $3.7 million, more than two times the average of both the total religious schools group and the 210 total CSIS respondents group.
Operating Budget Support
In FY2023, religious schools reported that an average of 5.2 percent of their operating budget was funded from their endowment, compared with total CSIS respondents that reported an average of 6.4 percent. Religious schools Over $50 million reported that 9.7 percent, on average, of their operating budget is funded by their endowment, which is six times the 1.6 percent average reported by religious schools in the Under $10 million cohort, and almost double the percentage of the total religious schools’ cohort (5.2 percent).
While these top line insights from the full report are valuable data points, we encourage you to read the Study in its entirety and review all of the findings detailed in the report to best evaluate your performance vs. your benchmark or peers. We hope this important research and future studies serve as a guidepost for your own analysis.