Wall Street wealth helps boost endowments at posh New York City private schools

By Gertrude Chavez-Dreyfuss

NEW YORK (Reuters) - The endowments of New York City's pricey private schools are flourishing thanks to a steady inflow of contributions from wealthy donors and the boost to portfolios from the rising U.S. stock market.

The tuition to attend private day schools in New York City can range from $58,000 to about $65,000 per year. These schools are equipped with state-of-the-art facilities, smaller class sizes, and resources dedicated to getting their students to elite colleges and universities.

Roughly 20% of school children attend private schools in New York City, according to think tank Manhattan Institute.

The concentration of wealth in New York City means larger donations to endowments at these private schools, which are overtaking the growth of their peers in the country, according to a study by wealth advisory firm Wilmington Trust and data from the National Association of Independent Schools (NAIS).

For fiscal year 2022-2023, the median endowment for New York City private schools was $28.9 million, up 41% from about $20.4 million five years ago, NAIS data showed, and 170% higher than the national median of $10.6 million.

With larger endowments and higher income from tuition, New York City private schools have bigger investment portfolios as well, which include long-term investments.

Wilmington Trust ranked the biggest investment portfolios of New York City schools based on "990" regulatory filings with the Internal Revenue Service. The latest filings for most schools covered the 2020 and 2021 fiscal years, characterized by outsized returns in the stock market that benefited many of these institutions.

Horace Mann School, located in the Bronx, had the largest investment portfolio at $159.4 million, Wilmington data showed. That was about 28% higher than the level seen in 2013, the period covered in Wilmington's last study on New York City's private schools, released in 2014.

The Brearley School, an all-girls private school on the Upper East Side, had the second-largest investment portfolio at $140.6 million, up about 7.5% from the 2013 estimate.

"They grew their investment portfolios through fundraising and capital campaigns," said Walter Dillingham, director of endowments and foundations practice at Wilmington Trust. "It was a combination of ... contributions and market performance."

In 2020 and 2021, the S&P 500 posted gains of 16.3% and nearly 27% respectively, helping boost schools' portfolios. In general, private schools' allocation to stocks in 2021 was about 34% on average, according to asset management firm Commonfund.

The average investment portfolio based on the 2020 and 2021 filings was $25.6 million, a 20% increase from the last study done in 2014, Wilmington data showed.

That said, Dillingham pointed out that New York schools' investment portfolios likely fell in 2022 amid weaker performance in stock markets and given the steep rise in inflation that has raised schools' operating costs. New York City private schools have yet to report figures for 2022, when the S&P 500 fell 19%.

A few schools have embraced cryptocurrencies as donations as well, Dillingham said, citing Poly Prep Day School in Brooklyn, Little Red School House in lower Manhattan and Harlem Academy.

Tuitions at New York City private schools are also outpacing those of their counterparts around the country. The average tuition in New York City day schools for the 2022-2023 school year was $57,313, compared with the national average of $29,653.

"Independent schools are people-intensive. The majority of their tuition goes to salaries and benefits," said Myra McGovern, director of media at NAIS in Washington.

"In areas that have high costs of living, the tuition is really substantially higher than in areas with lower costs of living. So tuition in a place like New York is probably double that of say in Kansas City, which is something closer to the median of the country," McGovern said.

(Reporting by Gertrude Chavez-Dreyfuss; Editing by Alden Bentley and Mark Porter)