The Lick-Wilmerding endowment has always been somewhat of a mystery to students.
“I know nothing about it,” said Paul Finn ’23. “It is this thing we refer to as this all powerful entity.”
So how big is the LWHS endowment? Who manages the fund? How is it used? What is its history? And how does it impact the students?
The current endowment is about $70 million. Of that amount, about 5-10% is allocated each year to operate the school. The school’s operating budget is around $20 million.
The rest of the school’s operating budget comes from tuition dollars and donations. The school received about $2 million in annual giving last year.
To put into perspective the size of the endowment, University High School’s endowment is $38.4 million dollars.
The history of the school’s endowment begins with the founding of the three separate schools — James Lick endowed the California School of Mechanical Arts, Jellis Clute Wilmerding endowed the Wilmerding School of Industrial Arts and Miranda Lux endowed the Lux School for the Industrial Training of Girls.
James Lick left a hefty $540,000 dollar endowment for the California School of the Mechanical Arts to educate a total of 150 students, 90 boys and 60 girls. In an article written about the school on December 31, 1894, it was estimated the school had about $420,000 of accessible endowment, yielding about $20,000 a year through investments.
James Lick’s fortune came from investing in real estate. He had also been a carpenter and piano builder, both in this country and in South America. He was a land baron and patron of the sciences. He also left $750,000 in his will to build the James Lick telescope.
Jellis Clute Wilmerding left $400,000 to the University of California to found a school for boys to be trained in the industrial arts. According to a 1919 document in the LWHS archives, the money was “to purchase a site, erect a building, install equipment, and set aside a fund sufficient to maintain the school.” Wilmerding amassed his fortune in the whiskey trade and banking interests.
Miranda Lux died in 1894 and left $750,000 dollars to establish a school “for manual training and industrial training and for teaching trades to young people of both sexes in the State of California,” according to a 1918 document titled “The Lux Endowment.” The school did not open until 1912, and by then, its endowment was $1,000,000.
The Lux school was for girls only. When it opened its doors, the girls from the Lick school shifted to Lux. Lux’s fortune was amassed by her husband, Charles Lux, a businessman and cattle rancher, who owned the Miller and Lux Ranch, the largest cattle operation and landowner in California. Miranda Lux was a philanthropist interested in education. Her husband had died in 1887.
Since the Lick and Wilmerding schools merged, their now combined endowments have continued to grow. Records in the LWHS archives show that in 1990 the Lick-Wilmerding endowment had ballooned to a hair over $10 million. The funds at the time were managed by Barry, Hartell, Evers & Osborne Investment Counsel. The money was invested in a vast range of sectors.
Over $5 million or 51% of the endowment at the time was invested in “cash equivalents, government obligations and corporate bonds” according to a 1990 diversification summary given by the investment bank. The other 49% of the endowment was invested in stocks ranging from energy, utilities, healthcare, consumer goods and technology.
Current information about how the endowment is invested is much harder to find. The school does not publish this information. Phone calls to the foundation that manages the school’s money were not returned.
As far as how the endowment affects students on a day to day basis the short answer is not that much. However, what the endowment does allow is stability in the school. LWHS is able to operate without financial concerns because of the $70 million dollar cushion they have. According to Jeannette Moore, Chief Financial and Operations Officer of LWHS, “Because of our endowment, we do not need tuition to cover all of our operating costs.”
Even during the pandemic, LWHS did not take out any additional funds from the endowment to support the school. According to LWHS Board Member and member of the investment committee, Charlie Wyman, “We were able to fund our operations in full thanks to the tuition revenue and thanks to support. The annual fund actually had a record year — giving was over $2 million last year.”
Moreover, the school did not use any of the endowment fund to finance the construction of the new building finished in 2019. The building was financed through a capital campaign and a loan, together totalling $40 million dollars.
Who manages the endowment today? The funds are now almost 100% managed by outside advisors. The investment firm, Investment Fund for Foundations (TIFF), manages the majority 82% of the endowment.
TIFF describes itself as a “A network of foundations with the express purpose of serving the investment needs of the non-profit community.” TIFF invests LWHS’ endowment fund in publicly traded stocks, bonds, private equity, venture capital and real estate.
Under this management structure, LWHS trustees have not established any ethical provisions pertaining to what kinds of investments the school can or should make — including investing in the fossil fuel industry, which contributes greatly to worsening climate change.
“Currently, there are no restrictions on what can be invested in,” said Wyman. ”The school does have exposure across all of the investable sectors including some exposure in energy investments.”
It’s possible the school’s attitude towards its investment strategy could change, according to Wyman. “There is discussion underway about implementing what is called an ESG or environmental social and governance standards into the portfolio. And that dialogue is ongoing. It’s actually a new initiative of our investment committee that we’ve decided to undertake this year. We’ve had one full board level discussion about it and expect to have multiple more before we come to a decision.”
Wyman explained why it is difficult to cut out an investment in fossil fuels: “It’s a really challenging topic…there’s a lot of different constituencies. So people have different concerns, like some people might be really concerned about energy investments and their impact on the environment. Other people may be concerned about how diverse a particular company is, or even a whole sector is in terms of being inclusive of people from diverse backgrounds and having gender diversity. So we want to be really thoughtful around the levers that we decide to pull.”
LWHS Co-President Indigo Mudbhary ’22 got the chance to sit in on a board meeting regarding how LWHS invests their endowment money. “The board heard from an investment expert about ESG investing,” Mudbhary recalled. “Lick is trying to move toward ESG investing, meaning investing in companies that match their social values and using their stake as a shareholder to advance meaningful change in different companies.”
“In my personal opinion, I think divesting is something that should be explored thoughtfully before being advocated for,” Mudbhary said. “We know what divesting looks like on the university scale, but not on the high school scale. Though I’m very curious about it, I’d want to look into the differences between a collegiate endowment and a high school endowment before forcefully advocating for it. Though ESG investing is great, I wonder if divesting could be the end goal, some day in the future.”
