The Profit in Being a Not for Profit School - Updated
A little over two years back I wrote a blog about 10 L.A. area private schools and how they show surpluses most years.
Here is the list of the ten schools:
Each of these schools is a not for profit organization, recognized by the Internal Revenue Service as such under the provisions of Section 501(c)(3) of the Internal Revenue Code. Each of them does an annual fundraising drive, commonly known as "Annual Giving" which is marketed as necessary to close the "gap." That gap refers to the difference between the amount of tuition these schools charge and the amount that they claim it costs them to provide the outstanding education they provide to their students. My question is how real is the gap given the surpluses these schools recognize year after year?
These are the numbers from that blog, along with updates on the two years of tax returns these schools filed in the interim.
Average annual surplus:
2012 - $3,771,152
2013 - $4,271,705
2014 - $4,576,092
2015 - $7,125,818
2016 - $8,018,211
Compensation of the person at the top of the organizational chart:
2012 - $482,453
2013 - $595,335
2014 - $548,445
2015 - $543,791
2016 - $574,501
This time around I'm adding the average compensation of the five highest-paid employees:
2012 - $218,397
2013 - $256,399
2014 - $301,813
2015 - $317,238
2016 - $325,572
In case it seems that those average annual numbers of those five highest-paid employees are outpacing inflation, you're right. Those increases work out to an average annual increase of 11%. During that same period, inflation was only 1.3%.
I remember back in 1988 when I was working at one of those schools. Inflation was 4.4%. Our raises were 9% for faculty and 7% for other staff. Private school salaries outpacing inflation is not a new thing. But it seems the gulf between inflation and so-called cost of living adjustment raises in these institutions may be growing.
There is no IRS regulation that bars these organizations from showing a surplus year after year. But one wonders why there is that push for "Annual Giving" when these schools are running at a surplus year after year? Why not just fundraise for endowment as USC recently did in raising $6 billion for their endowment?
Here is the list of the ten schools:
Archer
School for Girls
Brentwood
School
Buckley
School
Chadwick
School
Crossroads
School for Arts and Sciences
Harvard-Westlake
School
Marlborough
School
Milken
Community School
Wildwood
School
Windward
School
Each of these schools is a not for profit organization, recognized by the Internal Revenue Service as such under the provisions of Section 501(c)(3) of the Internal Revenue Code. Each of them does an annual fundraising drive, commonly known as "Annual Giving" which is marketed as necessary to close the "gap." That gap refers to the difference between the amount of tuition these schools charge and the amount that they claim it costs them to provide the outstanding education they provide to their students. My question is how real is the gap given the surpluses these schools recognize year after year?
These are the numbers from that blog, along with updates on the two years of tax returns these schools filed in the interim.
Average annual surplus:
2012 - $3,771,152
2013 - $4,271,705
2014 - $4,576,092
2015 - $7,125,818
2016 - $8,018,211
Compensation of the person at the top of the organizational chart:
2012 - $482,453
2013 - $595,335
2014 - $548,445
2015 - $543,791
2016 - $574,501
This time around I'm adding the average compensation of the five highest-paid employees:
2012 - $218,397
2013 - $256,399
2014 - $301,813
2015 - $317,238
2016 - $325,572
In case it seems that those average annual numbers of those five highest-paid employees are outpacing inflation, you're right. Those increases work out to an average annual increase of 11%. During that same period, inflation was only 1.3%.
I remember back in 1988 when I was working at one of those schools. Inflation was 4.4%. Our raises were 9% for faculty and 7% for other staff. Private school salaries outpacing inflation is not a new thing. But it seems the gulf between inflation and so-called cost of living adjustment raises in these institutions may be growing.
There is no IRS regulation that bars these organizations from showing a surplus year after year. But one wonders why there is that push for "Annual Giving" when these schools are running at a surplus year after year? Why not just fundraise for endowment as USC recently did in raising $6 billion for their endowment?
posted by me at 5:44 PM
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