That vision of a strong foundation for McCallie is what has sustained the school through 116 years of challenges and growth. While the founding McCallie family capitalized the school for its early strength and success, McCallie needs a new generation of “founders” to recapitalize it for its next 100 years.
This is what led to the creation several years ago of the Founders Club, a group of alumni and parents who, because of their love for their alma mater and their desire to ensure an outstanding McCallie experience is available to young men for future generations, has committed to significantly growing the school’s endowment through a combination of cash and estate gifts. Their legacy gifts, both cash gifts during the next five to eight years, and planned/estate gifts at their death, position McCallie to be on strong financial footing for the future.
Unique provisions of the gifts to the Founders Club, including reinvesting rather than spending any returns during the first five years, will enable these gifts to grow far more significantly over the long term.
While it started as an informal group of donors, the Founders Club now has turned into a more formal part of McCallie’s advancement effort, working in tandem with the Board of Trustees to help grow the endowment that will sustain the school for years to come.
“One of the six imperatives of the Board’s visioning plan is to ensure that McCallie is positioned onto the strongest financial foundation possible,” said David Stonecipher ’59, Chairman of the Founders Club. “To do so will give future generations of McCallie boys the same life-changing experience that you, I, and thousands of others have had.” Mr. Stonecipher’s initial gift established the Founders Club. The group has now grown to 26 patrons who have committed over $80 million to McCallie. They range in age from their 40’s to 70’s. At their recent annual meeting, members of the Founders Club set a goal to have at least one member from every class of alumni.
“Founders Club members recognize that McCallie is undercapitalized compared with other great schools, and we are working to build McCallie’s endowment through our gifts,”
Mr. Stonecipher continued. “A larger endowment allows our Board to plan with even greater confidence. Our endowment is a key component in our ability to attract excellent faculty, achieve our strategic plan goals, and continue to serve boys as we have for generations.”
Founders Club members make a planned/estate pledge of at least $1,000,000 with prepayment on that pledge of at least $200,000 within five to eight years.
A key component of the Founders Club effort is a new fund within McCallie’s larger endowment fund. This Founders Endowment Fund:
1. Will encourage legacy commitments. The fund will encourage and promote legacy commitments along with early payment of some portion of the commitment over the first five to eight years. Early gifting is more tax efficient (no tax on growth). Coupled with the school’s pledge to defer draws against the gift for five years and more modest subsequent draws, the value of the gift could double in 10 to 12 years.
2. Will be invested in an S&P 500 index fund. This all-equity fund is broadly diversified, highly liquid and has extremely low expenses. Over the past several decades, this index has returned approximately 10% per year. Since capital placed in the fund is to become permanent, volatility of this index is not the primary concern; rather, the primary focus will be on long-term returns.
3. Will have a low spend rate to accelerate growth. McCallie, which traditionally has had a 5% draw on its endowment, will defer using a donor’s gift to the Founders Endowment Fund for the first five years. Beyond the fifth year, McCallie will spend no more than 3% of a donor’s gift annually.
4. Will give credit to the donor for the appreciated value of the gift. Every donor will receive recognition credit for all investment returns as reflected in the appreciated value of the donor’s gift during the first five years.
The Founders Endowment Fund encourages prepayment of a significant part of legacy gifts, a tactic that can over time lead to a doubling of the gift. That will enable McCallie’s endowment to grow substantially, and will allow the Board to reduce the annual draw rate from 5% to 3%, which is a more sustainable objective. And a larger endowment allows the Board to plan with even greater confidence.
Founders Club members participate in annual meetings in which members and their spouses are introduced and they participate in a series of discussions with Board members and administrators about the direction and vision of the school.
The questions that every alumnus should ask himself are important, Mr. Stonecipher said:
- Have I recently thought about my legacy?
- Does McCallie rank among the top organizations that have had a substantial impact on my life and the lives of others around me?
- Is McCallie in my estate plan?
- Is McCallie worthy of receiving 5 to 10 percent of my estate?
“As you think about these questions, I invite you to join the long blue line of McCallie leaders – from the legends of the early days to the legends of the present – who have made transformative commitments to the future of our beloved school,” he said.