Cash reserves, coupled with low debt/no debt and endowment, have always ranked either first or second among the ISM Stability Markers. These indicators of institutional sustainability, in widespread use now for more than two decades, serve as fundamental points of departure in all private school leadership-level strategic conversations and plans. ISM suggests that you, as Board President, Finance Chair, School Head, or Business Manager, as a matter of basic organizational discipline, monitor the status of the three components in ISM Stability Marker No. 1.
Over the past year, ISM studied the interrelationships among executive leadership, well-being, and school performance. In the previous three articles in this series, we have confirmed:
- ISM’s existing measure of executive leadership and the Head’s level of flourishing correlate with key school performance variables (school stability, financial strength, enrollment demand, and faculty culture);
- that neither the School Head’s experience in the field of education nor cumulative experience as School Head is related to the key school performance variables. There is no evidence a school improves with the Head's experience.The Head’s current length of tenure, however, was correlated with the school’s financial strength;
- enrollment demand is related to the strength of leadership and well-being of the School Head; and,
- the School Head’s level of professional support and well-being significantly influences the faculty culture—a central construct that enhances the student experience and the enrollment management process.
A confusing element of a school’s accounting is the bald statement, “We have a million (or some other number) dollars in endowment.” What does that mean? In most endowments that ISM examines, that number includes different elements, each of which has distinct characteristics. In a previous article, we discussed true endowment. Here we think about quasi-endowment. As the Business Manager or Chair of the Finance Committee, how do you think about this money? How does the Finance Committee think about it? How do you educate the Board about it in its strategic planning process?