In this episode, Jeff Shields, President and CEO of NBOA, discusses highlights from the recently released Commonfund Benchmarks Study® of Independent Schools, including two consecutive years of double-digit investment returns for independent school endowments — a rare occurrence not seen in 15 years. The discussion explores the growing divide between larger and smaller independent schools in terms of resources and opportunities, while addressing persistent challenges like faculty retention and operational pressures. Shields advocates for strategic thinking during this period of strong returns, encouraging school leaders to make decisions today that ensure institutional sustainability for the future.
Hello, everyone. This is George Suttles, Executive Director of Common Fund Institute. And I'm Amanda Novello, Senior Policy and Research Analyst at Common Fund Institute. And this is Espresso Chats, a podcast by Common Fund Institute where we deliver short, strong shots of governance and leadership insight. We are absolutely thrilled to be joined today by a friend and partner of the institute, Jeff Shields, President and CEO of NBOA. Jeff, thanks so much for joining us. It's great to be here. Thank you, George. Thank you, Amanda. Awesome. Jeff, let's begin with this. Can you tell us briefly about NBOA and your role as president and CEO? Sure. So NBOA is the only national association that's focused exclusively on pre K through twelve independent school business and operations professionals. So our work really empowers our members at their member schools with knowledge, community, tools, resources, so they can lead their schools with clarity and confidence. The association's relatively young for associations, we're around twenty seven years old, but we do everything from original research with partners like Common Fund. We obviously host the largest gathering of independent school business leaders and business partners each year. We publish a magazine. We just take our national responsibility very seriously to the profession, to our members, and to our schools. I think it gets in some ways more challenging every year because we always have to think about what's new or different for our member schools and how do we respond in new and different ways. So I think that's it in a nutshell. And I generally say I do what you would think a president and CEO does of organizations like NBOA. Awesome. Thanks, Jeff. And you mentioned the partnership, the long standing partnership between NBOA and Common Fund. So really excited to say that the Common Fund Study of Independent Schools or more fondly known as CSIS that we have partnered with you on to produce for twenty one years now has recently been released. It's perhaps the most comprehensive report on independent school endowments. So from this current study, what takeaways stand out to you? Well, I want to highlight first of all that that aligns perfectly with how I just described that MBOA takes its role seriously and that I often ask the question, if not MBOA, then who? If we didn't partner with an organization like Common Fund, where would pre K-twelve independent schools get resources like the CSIS? Where would they develop a deeper understanding of their school's endowment and how it can work for them and support their school? How can it support their trustees and governance in the investment committee or finance committee, etcetera, etcetera. But with regard to the twenty first report, I think the popping of champagne may be in order when we see two years of double digit investment returns. I think that's pretty exciting. According to my notes, I don't think that's happened for fifteen years. So that's a rare occurrence. It's an important occurrence. What does that mean? Our endowments for our schools are performing well. So what does it mean for business leaders? What is their capacity? What are their opportunities to exercise with that muscle that's being developed? So I think that's always the question I ask. I don't think there's bragging rights, particularly in an independent school having a large endowment. I think the bragging rights are, what are you doing with it? How are serving your mission? How is it benefiting students and families? How is it fulfilling or expanding your program? So I always want to pivot the conversation, not just to the numbers and the growth, which is great, but to what does that mean? What choice are you going to make as a leader knowing that you're developing greater capacity in your endowment resources. Yeah, absolutely and something that we do highlight is that balanced storytelling, right? Between the numbers and then also the purposes in which endowments are being used by independent schools to support general operating, to support scholarships and things of that nature. So there really are important investments being made from the endowment to support students and families, and that feels really important highlight as well, just the numbers. And what jumps out from the study is the financial aid, that the dominance of endowment resources supporting, not just financial aid, supporting need based financial aid for students and families, which I think again, gets buried under the headline, but it's such an important resource that allows schools to lessen lessen the challenges of our tuition costs and providing access to a greater number of students and families. I think that's a wonderful thing to talk more about. Yeah, no, absolutely. So we were talking a little bit about this earlier. So beyond the study, there seem to be both persistent and emergent challenges that independent schools are facing. So what are you seeing from the membership and what's top of mind for you? I hate to say what's keeping you up at night or what are you hearing from members both about persistent and emergent challenges for independent schools? Well, what's really interesting, and I have two ways into this conversation because obviously my role at MBOA, I'm also a trustee for E3N, which is the merger of EMA, the Enrollment Management Association, and ERB, which folks know as testing. One of the things I drew from the study that's in alignment with a lot of conversations we're having at MBOA and at E3N is the story around large pre K through twelve independent schools and smaller pre K through twelve independent schools. And I could mean a million things by those descriptors. Large could be enrollment, large can be staff size, large can be budget size, but we are seeing within the community that larger schools, let's say they have a high school, they do have adequate financial resources, are making choices, are attracting families, are managing their endowments as we see in the study differently because they can from smaller schools. But we're a mission based organization just like Common Fund Institute. We have a responsibility to all of our schools. But that divergence between larger schools being able to find more expert investment resources, to diversify their funds in more sophisticated ways because that produces slightly greater returns than average, etcetera, etcetera. Families looking at larger schools, whether they want a kindergarten through twelfth grade experience or the perception that, wow, that school's big and attracts so many students and families, It must be more desirable for my son or daughter. All of that is happening, and the recent study really just affirmed that. Thanks, Jeff. I know there are a myriad of challenges, but this podcast specifically is about governance and leadership insight, and we like to give listeners takeaways. So are there any best practices or anecdotes of success from NBOA members regarding how leaders are navigating these issues? Well, I think they have their eye on the ball, which is important. I think some of the financial challenges are increased operational pressures, which again, as we pointed out, positive returns from our endowments helps alleviate that. They're having challenges with recruiting and retaining high quality faculty and staff. Again, more resources or having resources in addition to tuition revenue, etc, certainly is positive. But I'll go back to my original premise for this, and that is that with these stronger returns, what does that mean? I think there's a real leadership question there. What conversations should trustees have? What should the leadership team have? What should your finance committee, investment committees have? Because this won't last forever. We just know that everything about the economy cyclical in some way, we don't know when things will change. But I really think it's the responsibility of all business leaders to say, we are in a really good spot right now. We're operating from a position of strength. What choices should we make today to ensure the perpetuity of our school tomorrow? Because that's truly, especially trustees, but that's truly the business we're all in. How does our mission survive all of the crazy things that are going on in the economic environment, uncertain inflationary period, etc, etc, guarantee or to help ensure our mission, our school, and we're serving students and families tomorrow. So I don't like to get too lofty about it, but I do think that's the question at this moment in time when we are enjoying really positive returns from our endowments. Jeff, thanks for that. Just to follow-up, it seems like the positioning is, and Amanda stated this in her question, there's a myriad of challenges, but it also feels like there could potentially be tremendous opportunity as well. Is that right? Does that resonate with you? Well, we would still have these challenges and maybe not have positive returns from our endowment. Right? These challenges, you and I have talked and we've talked a number of times, a lot of these challenges perpetual challenges. Right? Schools are always mindful of enrollment. Schools are always mindful of managing operational costs so that they can have the resources necessary to educate their students. Students are always mindful of attracting high quality teachers and administrators to their schools. So the question is, we're in a positive space right now, what does it mean for how we may address those challenges versus not having these resources at hand? I think it's a great question to ask. I also feel compelled to keep in mind that not every independent school has an endowment available to them. We know that for nearly half our schools, their endowment may be under five million dollars and we know that that can only contribute so much to a school. But focusing on the schools in this study that are very actively managing and growing their endowments, I think that's really the question for them. Yeah, no, absolutely. And I think the aspiration and the hope in regards to the CSIS and us partnering on this study for over two decades is that from the study, we can begin to understand more deeply endowment building strategies for those who want to build endowment, who understand the virtues of having an endowment and want to begin to move in that direction. I agree, and we're having those conversations. And one of my hopes for this study is that we elevate the role an endowment can play for a school's overall financial health. And it's a very unique thing to have available to a nonprofit organization like a pre K through twelve independent school. So I hope this study not only educates folks that are, like I said, actively managing an endowment for the purposes we've described, need based financial aid, reduced operational costs, etcetera, etcetera, but that also a greater number of schools understand the importance of it and can have that conversation to say, how do we create one? How do we build one that really better serves our schools' needs, not today, but in the future? So I hope this study lifts that up for more schools to be thinking about in partnership with their board. Absolutely. So we're in a good space right now. The energy is very hopeful and strategic. So I'll pose this last question to you, Jeff. What is exciting right now about your role or the role of your organization in the field more broadly? I think what's exciting, and I truly believe this, and it's probably true for all associations like MBOA, but MBOA is a reflection of our membership and really even culturally, a reflection of our membership. And so what's exciting about working at MBUA is that there's something new happening all the time. And I don't know if that sounds cliche and I know that's daunting for the business leaders at our member schools, but that also keeps it exciting. I think that's what attracts our members to this work, particularly business, finance, operations, and independent schools. These folks could work anywhere. They choose to work in an educational environment at a pre K through twelve independent school. So they're making that choice. But AI is happening everywhere. We don't even know what's going on. But it's going to change our work. It's going to change our schools. To me, that's more exciting than scary. It started off a little scary, if I'm being honest, but now I'm kind of in the exciting space. What are we going to do with it? So I think that's what keeps me energized. I think it's what attracts really great people, particularly to the CFO role at independent schools, because the portfolio changes, there's always new challenges, etcetera, etcetera. But I think that keeps things exciting. We don't want to do the same thing day after day, year after year, at least I don't. So that's what keeps me excited about NBOA. I believe it's an excitement that my members share when it's not too too overwhelming at the end of the day. Absolutely. And the one thing that Amanda and I can attest to is that the NBOA leadership community is incredibly dynamic, prepared for the moment, and incredibly generous with resources and knowledge. So we're just grateful to be a part of the NBOA community. And Jeff, thanks so much for coming on the show. We really appreciate your friendship, your partnership, and for joining us today. Thank you so much. Thank you for having me. That was a great conversation that flew by. If you liked this conversation and want to hear more from leaders in this field, visit w w w dot commonfund dot org slash espressochats to view the full playlist and subscribe on your preferred podcast platform. See you next episode. Bye.