Simply stated, in a school, an endowment is a fund that provides income and earnings to help bridge the gap between a school's financial needs and the ability of students and their families to finance those needs. The Academy's endowment has grown from a series of gifts the school been converted to investments in stocks, bonds, and other financial assets. We use those assets to support the operations of the school.

Currently, the direct educational costs per student per year are approaching $30,000. Since full tuition covers less than half of this cost, the remainder to balance the budget each year and provide our students with a superior education.

The characteristics that make an Academy education special require significant resources: small class size, outstanding faculty, a wide range of academic and extracurricular activities, a high level of service, personalized environment, state-of-the-art facilities, and a broad-based mission.

As of July 1, 2006, the endowment stands at approximately $280 million. We have seen the endowment grow from about $80 million in 1990 to its current level while over the same time period we have spent more than $180 million to support the operation of the school. In a given year, our endowment expenditures for school operations and bond debt repayment* exceeds $14,000,000.

*The school issued bonds to construct many of the buildings on campus.

Most schools, the Academy included, have established a spending policy that provides for a consistent amount to be used to support the operation of the school. In our case, we established a base amount in 1991 and have followed a policy of increasing spending by a consistent percentage each year. The result of the spending policy has been to provide an unusual amount of support to the budget. Our current spending rate of approximately 5.5% remains higher than that of our peer institutions where the average spending rate is closer to 5%. Our goal over the next several years will be to reduce our spending rate to the more sustainable level of 5% of total endowment assets. We expect to accomplish this by increasing the size of the endowment throughearnings and gifts and by carefully considering year-to-year spending increases.

The purpose of an endowment is to insure that an institution will exist in perpetuity and that no one generation of beneficiaries is allowed to benefit to such an extent that there is nothing left for future generations. If we did not charge tuition, several bad things would happen.

First, in order to maintain the quality of the education we offer, it would be necessary to spend over 12% of our endowment annually. Since it is not expected that investments will yield 12% for the foreseeable future, the result would be that in a matter of a few years, the endowment would be depleted and the school would either be forced to close, or to start collecting tuition at a much higher rate. The other alternatives would be to greatly reduce the size of the school, or to reduce the number of academic courses and extracurricular activities that we offer.

None of these solutions would be satisfactory to anyone connected with the school. Therefore, in the interest of intergenerational equity, we have set our tuition at a level that allows for the school to offer one of the best educational programs in the nation while at the same time assuring that future generations will have the same opportunities at the same relative cost as this generation of students.

Academy tuition compares very favorably with other college-preparatory day schools across the country. Our graduates compete nationally, for example in college admissions, with students coming from schools charging significantly higher tuition rates. And while we compare our excellence with these schools across the nation whose tuitions are approaching $30,000, we benchmark our tuition with strong independent schools in cities with a cost of living similar to Albuquerque.

Supporting the Academy is a community-wide effort. If we are to reach our overall goals, it is imperative to include the entire Albuquerque Academy community. We are inviting parents, alumni, parents of alumni, grandparents, faculty, staff, corporations, foundations, and other friends to invest in Albuquerque Academy.

Through your association with Albuquerque Academy, you are part of a larger community. While students today spend a maximum of seven years at the Academy, their formal education is just the starting point of their connection to the school. The desire to learn continues to blossom; intellectual, creative, and athletic prowess is honed; lifelong friendships are formed; and as the years go on, these connections grow, and the entire Albuquerque Academy network becomes stronger. As a result, an Albuquerque Academy diploma is more than proof of graduation — it opens up a lifelong network poised to help its members at every level. In short, when Albuquerque Academy is successful, all of our alumni and friends benefit.

When your gift is combined with the donations of others, we accomplish great and lasting improvements. We encourage all members of the Academy community to participate in giving to the school, modeling for current students the responsibility of giving back to the community from which they are receiving so much. Because tuition and fees do not cover the true cost of an Albuquerque Academy education, making an investment in the school is vitally important. Every gift, no matter the size, helps close the gap between tuition and the real cost of educating a student at Albuquerque Academy. All gifts are needed to sustain and preserve the vitality of the Academy.

On behalf of the greater community, we hope that all of our families and, eventually, our students, have personal philanthropic plans that benefit nonprofits throughout greater Albuquerque and beyond. Giving to the Academy, along with these other organizations, makes a difference in the life of our community. In particular, though, a gift to the Academy changes the lives of children and prepares them for success on a national level. Measured by the outcomes we've seen in our graduates over the years, philanthropic support of the Academy is powerful and effective. We hope you will consider your gift an investment in the education of our world's future leaders.