By Jessica Lin (VI) and Keira Chen (III)

To most people, the term “endowment” elicits vague references to money and stands as a distant term reserved for larger universities. However, Pingy actually maintains an endowment fund of its own, which is more relevant to the community than people realize; in fact, this $80 million strong endowment is responsible for funding all of the school’s financial operations. We spoke to Mr. Olaf Weckesser, the CFO and COO of Pingry, about the school’s endowment, hoping to shed some light on this elusive subject.

An endowment is a pool of money or assets that a not-for-profit, commonly educational, institution uses to maintain itself long-term. Every year, the endowment is invested in various securities, such as stocks, bonds, and real estate. The following investment return can be spent on the institution’s financial operations, while the principal amount remains untouched and is only used to generate returns in future years. An endowment’s size varies according to the institution’s size and needs. Sometimes, endowments can amass to enormous sums, especially for larger college institutions. To give an extreme example, Harvard University boasts the largest academic endowment in the world with a hefty $40.9 billion, according to a 2019 Harvard Crimson report.

A common misconception that the general public holds, and misinformed media outlets often criticize, is that schools are “hoarding” their endowments, prioritizing the wealth of the fund over the school’s operations and overall health. After all, it is difficult to imagine why any institution would need to accumulate billions of dollars when they could be spending it on school improvements. However, Mr. Weckesser clarified that opinions like these most likely stem from a lack of financial expertise. Unlike a savings account, where the holder can spend the entire amount, the principal endowment amount is used for creating investment returns, not for spending. Going back to the Harvard example, they only spent 2 of their $40.9 billion endowment in the 2019-20 fiscal year according to their website. Leaving the principal amount unspent allows the school to continuously sustain the fund for years to come; without a healthy endowment, tuitions would need to be raised significantly in order to keep the school running. 

Pingry’s endowment fund comes almost entirely from donations and growth in asset value. Currently, the school website states that its endowment is approximately $80 million. Funds drawn from the endowment cover a wide range of financial operations, such as financial aid, to which more than half the fund is allocated, faculty salaries, which also take up a large percentage of the fund, and even individual club budgets. Endowment decisions are made by the Board of Trustees and Mr. Weckesser. Additionally, within the Board is an Investment Committee whose goal is to complete investments that maximize returns and minimize risk for the fund. According to Mr. Weckesser, the Board sets a draw rate of approximately 3% for the school to spend every year. Although the Board has the power to adjust the draw rate, Mr. Weckesser said that it generally stays constant throughout the years. 

It’s important to note that not all donations go to Pingry’s endowment. Benefactors have the choice to donate to either the school’s endowment or to the Annual Fund, also commonly referred to as the Pingry Fund. As the name suggests, the Annual Fund consists of the money that gets spent within the year. According to Mr. Weckesser, although there’s no fixed threshold for either fund, larger gifts generally go to the endowment fund, while smaller donations go to the Annual Fund. On Giving Day for example, one of Pingry’s most well-known donation events, all proceeds go to the Annual Fund.

The Pingry endowment is responsible for financing many operations, from the maintenance of the Basking Ridge campus to the Outing Club’s movie night. Even though only a portion of the Pingry community donates to the endowment fund, it is crucial to understand how the school is financed. The wealth of the fund affects everyone in the community, and can provide clearer illustration of the behind-the-scenes work at Pingry, as well as a better appreciation of the school’s resources.

Art by Evan Wen (IV)