How your endowment gift works

Unlike an HPA Fund gift (which is spent on immediate priorities), an endowment gift is not spent but invested permanently to generate income each year. When you make an endowment gift, you are looking toward the future and providing long-term support that will touch future generations of Ka Makani.

You can make an endowment gift toward general operations, or you can focus your gift on a particular purpose that has meaning for you, such as financial aid or faculty support. Gifts to establish a new endowed fund range from $25,000 to $250,000 or higher.

Because they tend to be large, endowment gifts are often paid in five-year installments, or with similar arrangements. You can use an asset such as stock or real estate to establish an endowment gift. HPA can also help you explore planned giving options that allow you to create an endowed fund through your estate or a trust.

History of HPA’s endowment

HPA’s first endowed fund was established in 1969 to award scholarship support to young women from the Big Island. Since then, other donors have helped to build a modest coalition of endowed funds that generate roughly 12% of HPA’s operating resources each year.

HPA’s endowment is made up of three sources:

  • externally-managed endowed trusts
  • funds designated by our board to function as a permanent endowment
  • and 76 individual restricted funds established by alumni, parents, and friends to provide permanent support to the school.

The total value of HPA’s endowment is approximately $48 million. Of this, $26 million is controlled by HPA and its board of trustees, and $22 million is managed externally. HPA is also one of four designated beneficiaries of the Parker Ranch Foundation Trust. The annual distribution from the Parker Ranch Foundation to HPA is typically in the $375,000 range.

When viewing figures in the millions, it is tempting to think that HPA has abundant resources at its disposal. However, the purpose and condition of an endowment is to remain unspent, and thereby generate relatively stable revenue year by year. In reality, HPA’s endowment is only able to generate about 12% of the school’s financial need each year. The HPA endowment is significantly smaller than many competitor schools, which means HPA is often at a disadvantage when it comes to offering financial aid or recruiting faculty candidates. Our long-term goal is to partner with generous donors who care passionately about HPA’s future and who wish to help HPA build an endowment that can better support the ambitions of our students, teachers, and programs.

Investment and management of gifts

Your endowment gift will generate annual income for HPA. Every year, a portion of the annual investment return will be spent to support your area of interest. Another portion will be re-invested to ensure your fund keeps pace with inflation over time and remains an effective reflection of your goals for HPA.

Along with the rest of the HPA endowment, your endowment gift will be overseen by HPA’s investment committee, which is made up of trustees with significant investment and financial expertise. HPA’s endowment spending policy and investment strategy share a goal of minimizing the volatility of endowment revenue available to fund operating expenses. The amount spent in any one year is based on the market value of the endowment (as determined by a twelve-quarter trailing average) multiplied by our endowment draw rate of 4.5% but within a range not less than 95% of the amount spent in the prior year, or greater than 105% of the prior year spending. This formula slows down or buffers the effect of any market rise or fall on what is spent from the endowment to support operations.

 


 

Help HPA reach its full potential

As we move forward, donors to the HPA endowment will strengthen financial aid, faculty development, sustainability, and curricular innovation. To learn more, contact Hannah Hind Candelario ’01, director of advancement, hcandelario@hpa.edu.