Endowment Policies

Gaining Momentum

One of the best kept secrets at St. Stephen’s is the endowment fund. Management of the endowment has evolved into a prime example of best practices. Yet relatively few people really understand how the endowment fund functions or how annual distributions to the school are integral to the operating budget.

Distributions to the school have increased annually for the last decade and reflect the overall success of growth in gift income and effective fund management. Distributions support mission-driven commitments, such as financial aid, and provide opportunities to enrich educational programs that are core to the ongoing success of St. Stephen's students and the school.

How It Works

List of 5 items.

  • Endowment Spending Policy

    The St. Stephen's Episcopal School Endowment Fund Inc. is governed by the Uniform Prudent Management of Institutional Funds Act. Annually, the school appropriates for distribution a percentage of its endowment based on current board policy. Currently, this distribution is calculated using the endowment's average fair market value over the prior 12 quarters. A newly established, fully funded endowment will be included in the appropriation calculation on June 30 if the fund is greater than six months old. 
  • How Endowment Funds Are Pooled

    The resources for endowment funds are pooled for investment purposes, with the various fund balances sharing proportionately in the outcome, based on the market values of investments at the time of pooling or at specified future dates.
    Each fund receives a pro-rata share of the market appreciation and annual draw. In addition, named endowment donors are notified annually regarding the appreciation of pooled endowment funds with an illustration of their contribution as a portion of the whole.
  • How Endowment Is Governed

    St. Stephen's Episcopal School Endowment Fund is incorporated as a nonprofit charitable organization under Section 501(c)(3) of the Internal Revenue Code of 1986, as amended. The sole purpose of the endowment fund is to support St. Stephen’s Episcopal School and its mission.
    The endowment fund is governed by a board of directors, of which a majority is nominated by the school’s board of trustees. Fund governance adheres to the Uniform Prudent Management of Institutional Funds Act. The endowment board is responsible for selecting and monitoring a money manager, determining asset allocation, establishing distribution policies, and presenting reports to the board of directors. 
    Asset allocation and distribution policies have been established with a long-term perspective in order for the endowment to fulfill its responsibilities to the school, achieve growth after inflation and distribute funds to fulfill its mission. A dedicated portion of the total investment return provides support to the school’s operations. Like similar institutions, the policy of our endowment board is to distribute annually 4 percent of the trailing 12 quarter average of the endowment’s investment portfolio.
    The process that the endowment board follows complies with the Texas Uniform Management of Institutional Funds Act and the Act’s Standard of Conduct. Performance results are reviewed periodically in accordance with the endowment’s Investment Policy Statement. In addition, the endowment fund undergoes an independent financial audit annually, and audited financial statements are made available to donors and partners.
  • How Funds Are Invested

    The endowment assets are invested in a diversified portfolio designed to maximize returns without exposure to undue risk. To satisfy its long-term rate-of-return objectives, St. Stephen’s relies on a total return strategy in which investment returns are achieved through both capital appreciation (realized and unrealized) and current yield (interest and dividends.) A target asset allocation is established for the endowment by the investment committee of the board of trustees and is reviewed on a quarterly basis. The current asset allocation for our diversified endowment includes cash, fixed income, equities and alternative investments. 
  • How the Endowment Is Managed

    All gifts to endowment are considered principal and remain unspent. Income is earned on the invested assets, and a portion of the fund is spent each year for each fund's designated purpose, in accordance with the school's spending policy and donors’ intentions. The goal of positive investment returns and continued contributions allows for growth in each individual fund.

    St. Stephen's Episcopal School Endowment Fund Inc. Board, 2017-18
    James T. Bohart ’88
    James Flieller
    Jolynn Free
    John B. McFarland ’68
    John J. McKetta III, President
    Linda Riley Mitchell
    Suzanne C. Pfeiffer ’84
Address: 6500 St. Stephen's Dr., Austin, TX 78746
Phone: (512) 327-1213