Viewpoint | Top Concerns for Independent Schools

For the first time since the inception of the Study, the FY2023 Commonfund Benchmarks Study® of Independent Schools (CSIS) report asked respondents to identify the top concerns for their institutions. Enrollment, inflation, fundraising, and not meeting target returns arose as respondents’ top concerns.¹

Enrollment - In the face of declining fertility rates, the COVID-19 pandemic, and declining international student interest,² enrollment has emerged as a key concern among independent schools, with 30 percent of Study respondents citing it as their top concern. Enrollment is closely linked with tuition revenue, a major source of income for most independent schools. It can also impact future giving—schools with larger enrollment tend to receive more in total philanthropic dollars than schools with smaller enrollment.³ When looking at all schools’ responses, enrollment was the top concern in a weighted ranking that also considers second and third ranked responses.⁴ This finding aligns with other studies in the field, including the United Educators (UE) Top Risks Survey in which enrollment was the risk most often cited by respondents.⁵

Inflation - Inflation peaked when the fiscal year began,⁶ then fell year-over-year from 8.5 percent in July 2022 to 3 percent in June 2023. However, price increases throughout the fiscal year were still above the prior decade’s norms, and uncertainty remained as the trajectory of inflation emerged. Study data show that inflation was top of mind for independent schools in FY2023, as the second highest ranked concern for schools overall. There were material consequences of inflation that independent schools grappled with as well—1 in 5 schools reported increasing endowment spending in response to inflation in FY2023, adding pressure on budgets, endowments, and fundraising.

Fundraising - Fundraising—a major factor in financial stability alongside the other concerns mentioned here—was the third highest ranked concern among schools overall. According to historical Study data, average endowment gifts have fluctuated between $1.2 million and $2.4 million over the past ten years. The FY2023 average gift to endowment of $1.7 million matched the ten-year average for schools overall, but average gifts for large- and mid-sized schools fell slightly below their ten-year average. Average gifts are important to track since large gifts comprise an outsized share of total gifts—more than half of total philanthropic funds received by independent schools in 2022 were comprised of donations above $100,000, according to Council for Advancement and Support of Education (CASE).⁷ Bolstering and mitigating large swings in fundraising is top of mind for independent schools today.

Meeting Target Returns - Not meeting target returns was the fourth highest ranked concern among schools overall, largely driven by high ranks among the largest schools that are more reliant on their endowments for operations, and likely a concern of increased attention across institutions due to recent years’ market volatility.

Top Concerns Differ by School Size and Type

Different trends emerge when looking at schools by their endowment size. For schools with assets over $50 million, inflation was the top concern, followed by not meeting market returns. Not meeting market returns may be of higher relative importance to larger schools because they tend to be more reliant on their endowment for general operating support (Viewpoint | The Main Purpose of Independent School Endowments), and also have higher return objectives on average (“Chapter 1 | Investment Environment” of the FY2023 Commonfund Benchmarks Study® of Independent Schools (CSIS)). Fundraising was the third ranked concern among the largest schools.

For schools with assets between $10-$50 million, and those with assets under $10 million, enrollment was the top concern. The second and third ranking concerns for both size cohorts were inflation and fundraising, with mid-size schools ranking inflation higher than fundraising, and smaller schools reversing that order.

Day schools ranked inflation as their top concern, followed by enrollment and fundraising, while schools with boarding had top ranking concerns of enrollment, fundraising, and inflation, in that order. Despite trends among schools with boarding reflecting those of larger schools throughout many Study findings, they diverge here. This may be due to falling enrollment at boarding schools, according to data looking at five-year changes from FY2018-FY2022, while enrollment at day schools increased during that time.⁸

Weighted Ranking of Top 3 Concerns, by Size and Type

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1. Note that the options were an array of investment and governance related concerns, including but not limited to volatility, not meeting target returns, liquidity, asset allocation, ESG, DEI, and more, rather than a full set of potential concerns for independent schools. 
2. Long-term decline in birth rates may impact the number of school age children in various age groups in any given area, potentially impacting enrollment for K-12 schools. NAIS, “5 Independent School Market Trends to Watch in 2022–2023,” Independent School magazine, Fall 2022, accessed December 2023, https://www.nais.org/magazine/independent-school/fall-2022/5-independent-school-market-trends-to-watch-in-2022-2023.
3. CASE Insights on Philanthropy in Independent Schools with NAIS - 2022 Key Findings.pdf
4. A weighted average methodology was used to determine the top concerns overall—multiplying each top ranked concern responses by three, secondary concerns by two, and tertiary concerns by one, then dividing each concern’s weighted multiple by the sum of all weighted multiples. This was done for all schools, as well as for schools by size and type.
5. Survey was fielded for three weeks in September 2022. Top Risks Report K12 | United Educators (ue.org)
6. 12-month CPI percentage change reached a local maximum of 9.1 in June 2022.
7. See Figure 7, CASE Insights on Philanthropy in Independent Schools with NAIS - 2022 Key Findings.pdf
8. NAIS, “5 Independent School Market Trends to Watch in 2022–2023,” Independent School magazine, Fall 2022, accessed December 2023, https://www.nais.org/magazine/independent-school/fall-2022/5-independent-school-market-trends-to-watch-in-2022-2023.