On January 1, we bid farewell to “the naughts,” a decade many would choose to forget. Terrorist attacks, global warming, mounting casualties from war in the Middle East and economic turmoil dominated the news headlines. The last fiscal year has been gruelling for most educational institutions—even those with deep pockets. Due to investment meltdown, Harvard University saw its endowment decline by 30 per cent to $26 billion (U.S.) by June 2009. Yale University and many other elite universities were not far behind. The decline in McGill University’s fund was in the 20 per cent range. Building projects have been mothballed, tuitions increased, salaries frozen and layoffs made.
At independent schools, particularly those that board students, enrolment has become more precarious; annual and capital giving campaigns are experiencing tough sledding; and operating costs continue to rise. Exacerbating the challenge facing independent schools, most of which receive 75 to 85 per cent of income from tuition, is a downturn in the school-age population throughout much of North America.
Financial aid budgets have been stressed as never before, as parents anguish over whether they can afford private school education during the recession. According to a 2004 survey by the National Association of Independent Schools, almost 60 per cent of respondents cited affordability as the most critical issue facing schools. Meanwhile, day tuitions have increased more than 30 per cent and boarding tuitions almost 25 per cent during the past decade.
Not all schools experienced the same financial challenge in 2009. Some were championed by charitable patrons. Hillfield Strathallan College in Hamilton, Ontario, for example, received $10.5 million—the largest single gift to a Canadian independent school—from industrialist and philanthropist Michael DeGroote.
Of course, most independent schools cannot wait for a benevolent “big kahuna” to enrich their coffers but must take stock of their resources—physical, human and financial—and chart a prudent course. School governors must be mindful of their fiduciary, strategic and generative responsibilities as they consider traditional income sources such as net tuition, annual giving and endowment, along with emerging income from entrepreneurial ventures. Some innovative income sources developed by schools are detailed below.
Summer camp
What is the most comprehensive and lucrative summer program in Canada? My money is on Upper Canada College in Toronto, Ontario, which after 32 years offers 24 summer camps, based on age, sports, arts, tech and leadership themes, for youth aged five through 16, partnering for many with the nearby all-girls’ Bishop Strachan School. UCC also offers sports camps during March break, a summer academy offering Ontario Ministry of Education and International Baccalaureate credit courses, as well as SAT preparatory courses and enrichment courses.
Events and services
Matthews Hall, a private co-educational elementary school in London, Ontario, serves as the venue for Canadian Chess Promotions, a program that enhances education through the game. The school hosts several well-attended, lucrative events, including a city-wide elementary school chess club, tournaments and a summer chess camp. Matthews Hall also promotes an annual holiday fair, which hosts the work of artisans and other vendors. Other sources of non-tuition income for the school include before- and after-school child care; onsite private music lessons; a school store that sells uniforms, supplies and spirit wear; a hot lunch program; and a bus service.
Fundraising gala
Mulgrave School, an independent non-denominational school set on West Vancouver’s North Shore in British Columbia, hosts an annual gala that has raised more than $400,000 during each of the last three years. w
After-school and weekend classes
St. George’s School in Montreal, Quebec is developing a school of expressive arts that offers after-school and weekend music and drama classes, generating significant income and introducing potential new full-time students to St. George’s. This summer, a summer camp will offer media and dance programs. A feasibility study suggests the school could raise a further $100,000 by renting space to events appropriate to the school’s mission.
Lease campus land
In 2003, an analysis identified that Georgetown Preparatory School in North Bethesda, Maryland needed almost $70 million (U.S.)—three times the school’s endowment fund—for athletic and academic facilities, maintenance, salary increases and student aid. In response, the school launched a $30-million Vision Campaign, and agreed to lease almost four acres of its campus to a development firm, which constructed a 473-unit luxury apartment complex in 2005. Georgetown Preparatory School received $1.6 million in rent during the first full year of the lease, with revenue increasing annually by 3 per cent. Over the course of the 99-year lease, the school is set to receive payments of more than $888 million. The school did not have to increase its tuition levels or student body.
Tutoring and test preparation programs
Elmwood-Franklin School in Buffalo, New York drew on demographic research, competitive analysis and focus group input to create Achieve, a tutoring, test preparation and enrichment program offered to students within and outside its school community.
Develop education products
The San Francisco School in California partnered with University Games Inc. to develop board games with input from students, parents and teachers. One game was carried by Walmart and Toys R Us. The school receives 5 per cent of sales revenue, and so far has earned more than $150,000 (U.S.).
A top-tier education does not come cheap, and independent schools must continually strive for a balance between operating costs and tuition fees affordable to a broad range of families. For those who think with an entrepreneurial spirit, and draw on a school’s intellectual, social and physical capital, opportunities abound to generate funds for endowment, financial aid, special projects and annual operations. Don’t discount alternative revenue programs. They also provide marketing and public relations opportunities to build your brand, parent and community involvement, and impact positively on student recruitment.
Revenue-enhancing principles suggested by NAIS:
- Ensure endeavours are consistent with the mission and values of your school.
- Differentiate offerings with “outside the box” programs, but don’t neglect obvious revenue generators such as facility rentals and summer camps.
- Develop a business plan that examines return on investment and collateral benefits, and includes an inventory and evaluation of your resources:
- intellectual (exploiting the talents of your school community);
- social (using networks of people affiliated with your school to create partnerships); and
- physical (income from campus facilities).
- Dedicate sufficient budget dollars for adequate staffing.
- Be patient as the programs develop.
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