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Why Breck Asks for Money

Jeff Slocum, Breck TrusteeIn his many volunteer roles at the school, Development Committee Chair, Meeting the World Campaign Solicitation Team Member, former Board Investment Committee Chair and former Annual Fund Chair, Jeff is often asked this question. He keenly understands how philanthropy and finances are inextricably linked. A passionate advocate for education and philanthropy, Jeff offers his insights on Why Give to Breck?

Good question. The ink is barely dry on your diploma or your check for a princely sum to pay Breck tuition and fees, and the mail brings a solicitation for a contribution. A few nano-seconds later, the phone is ringing, with a parent or alumnus on the other end offering a friendly reminder to make that contribution. If you hold out long enough, there will be emails, Facebook posts, more letters and phone calls. You’ll see thermometers of progress toward the goal, maybe a hand-colored custom-designed note from your child letting you know that your contribution is the only thing standing between your child’s class and an ice cream social. Breck is obviously not faced with famine and pestilence. So what is so ding blasted important about your contribution over and above tuition that merits such feverish activity and attention? Stay with me for a bit, and I will give you a straight, no nonsense answer.

Breck is a non-profit institution, managed such that for each academic year, money coming in equals money going out. According to Breck’s board approved operating budget, it will cost $35,400,414 to run the school for the 2015-16 academic year. If you divide that figure by the total number of students (1,184), the cost of one year at Breck per student is $29,899. This is a lot more than Breck charges families for tuition and fees. So how does Breck balance money coming in with money going out. 

As you would expect, the biggest chunks of Breck’s costs (50 percent) are those associated with routine instructional and academic activity. These include faculty salaries and benefits, classroom materials and supplies, programmatic expenses, media centers, technology and the laptop program, community service programs, guidance and counseling, special programs, curriculum expense, and faculty renewal and development.

What Breck calls “Auxiliary Services” (15 percent) are costs incurred to provide food service, transportation, tutoring, the ice arena, the extended-day program, summer programs, 
the book store, the gym store, and the yearbook.

Breck spends 13 percent of its budget on Administrative and General Expenses. By that we mean things like salaries and benefits for administrators, admissions, communications, human resources, the business office, insurance, technology, phones, and publications.

All costs related to operating, repair, and maintenance of school-owned facilities and grounds comprise 9 percent of the budget. All other significant elements of the budget, including athletics, are each less than 5 percent.

Net tuition and fees cover 70 percent of Breck’s costs. This figure nets out (subtracts) the $5,764,969 of financial aid received by 22 percent of the Breck student body.

Auxiliary Services generates about 14 percent of Breck’s annual revenue. In other words, the revenues from these services basically offset the costs of providing the services.

Over Breck’s history, many generous families have contributed money to support Breck’s needs in perpetuity. These assets (more than $50 million in value) are grouped together as Endowment and Restricted Funds. Since these funds are intended to support the perpetual mission of the school, Breck only draws a small fraction of the funds each year. 
The amount of the draw is flexible to take into account inflation and investment results, but generally the draw ranges from 4-6 percent of the value of the assets. The assets are professionally invested under the supervision of Breck’s board, with the objective of earning long-term returns sufficient to replace the money drawn from the funds, maintain the purchasing power of the assets, cover investment expenses, and provide some modest real growth of the principal. This year Breck will draw about $3.3 million, or 9 percent of Breck’s operating budget.

Breck also maintains reserves for shorter-term needs. These generate a small stream of income, which together with the net proceeds from last year’s “Applause,” covers about 2 percent of Breck’s operating budget.

The rest (between 5-6 percent) comes from the Annual Fund, to which I will return in a minute. Please note, though, that 16 percent of Breck’s annual operating budget comes either directly in the form of current contributions, or from the earnings on endowment contributions made in prior years.

As we are all uncomfortably aware, Breck’s tuition charged for each student tends to rise each year. It does so because Breck’s costs tend to rise faster than the level of prices in the general economy. In the terms of economists, Breck’s brand of intensely personal high-quality education is a handicraft industry. Breck embraces opportunities to employ technology driven efficiencies, but for most of what creates the learning at Breck, bigger and faster machines won’t do. There really is no substitute for an engaged, curious child in close contact with a skillful and knowledgeable teacher. With each year of experience, the teacher should become even more skilled and knowledgeable, and more valuable. There just are not many productivity enhancements and economies of scale for that model, so theoretically Breck’s costs should rise faster than costs in the general economy.

Breck grapples with rising costs every day. Over the past several years, Breck has implemented countless cost-saving initiatives to try to squeeze more value out of each tuition dollar. This dedicated effort will go on forever, but cost-saving initiatives can only take us so far. At some point, saving more money could start to compromise quality.

Breck could add more tuition-paying students, and thereby spread the rising costs over a broader base. There are practical limitations to this, not least of which is that the City of Golden Valley, citing traffic and safety concerns, has capped Breck’s enrollment at 1,200, which is pretty much right where we are. More important, adding students, without a corresponding increase in program resources, could start to chip away at the personal attention accorded each child, diminishing the educational experience.

Breck could address rising costs by raising tuition more than it does. At the margin, though, each additional dollar of tuition charged prices a Breck education beyond the means of more and more families. The effect is felt most acutely not by families at the economic extremes, but by families in the middle. A cherished value of Breck is the diversity of the community. Economic diversity is an important part of that picture.

The only solution to Breck’s problem of rising costs that doesn’t impose potentially negative consequences on our ability to fulfill Breck’s mission is to raise more money through contributions.

So Breck starts by asking for contributions from the people closest to it — alumni, parents and grandparents of current and former students, and other friends. In a telling tribute to our mission, Breck’s faculty have generously supported the school for many years. This year, Breck is asking for contributions to support two broad fundraising efforts: Meeting the World, Breck’s campaign to meet long-term needs, and Breck’s Annual Fund, which every year provides the critical margin to lift Breck’s standards of excellence in all facets of its operations. Hitting the Annual Fund goal ensures budget support equivalent to the draw from an additional $33 million of endowment assets. Stating Breck’s need for your support is admittedly long, but pretty straightforward. 

On the other hand, why supporting Breck should be important to you is not so easily answered, because it is more personal. I would hazard three reasons. The first is pure self-interest. There may not be a 1:1 correlation, but there is a distinct relationship between a school’s resources and educational quality. If together we can lift Breck’s resources, that will improve the quality of education for all Breck students. Students will be better prepared for college and life. The benefit of one’s association with Breck will increase in value for things like college admissions and for alumni. And the improved quality of education will generate greater community interest in Breck, which in a virtuous circle would enhance Breck’s programs and admissions.

The second reason is obligation. As I’ve tried to show, the cost of a Breck education per student exceeds the tuition we extract. Every Breck family is substantially subsidized. Is it not fair and just, as one’s family means allow, to return something to Breck in grateful recognition of these annual subsidies, and to help make sure that the subsidies continue?

But there is, I think, a more generous reason: Supporting Breck redounds to the benefit of all society. Breck graduates “lean in” — they teach, perform service, lead institutions, invent, create, write, counsel, collaborate, mediate, and advocate. They advance the ball. It is hard to imagine any problem in the world whose amelioration is not somehow related to education, and odds are good you will find Breck students and graduates smack dab in the middle of those amelioration efforts.

So there you have it. This is why Breck is always asking for money, and some reasons for you to make those requests high priorities in your charitable interests. I hope you will find your own reasons, and I hope that armed with this information, you will help spread the word about the nature of Breck’s fundraising effort throughout our community.

By Jeff Slocum, Breck Trustee
Originally published in the December 2015 Meeting the World newsletter