Which Revenue Streams Can Colleges and Universities Actually Grow Next Year?
College Presidents Brace for Steep Revenue Declines
My colleague and former chancellor of the Oregon University System, Melody Rose, and I put our heads together to try to identify many of the potential revenue streams that colleges typically look to for budget funding each year.
Here is the list we came up with:
State Appropriations
Tuition
Auxiliary Enterprises
Athletics
Partnerships
Fundraising
There are others, and some of these don’t apply to all institutions, but this list helped us get our minds around the fact that almost every revenue stream is under severe threat because of the pandemic and the consequent economic slowdown.
With sales tax revenues decreasing, state appropriations are likely to be severely cut much as they were after the Great Recession.
With predictions of enrollment declines by as much as 20%, tuition from new and returning students is likely to be much lower next year. In addition, many institutions are increasing discount to meet the extraordinary financial need in the market. If residential colleges are forced to teach online, expect even more downward pressure on enrollment and pricing power.
Traditional auxiliary enterprises have CFOs tied up in knots right now. With calls for partial refunds for spring 2020 and social distancing threatening room and board models for next year, one of the most robust sources of cash for institutions is, at best, unpredictable for next year.
And football? With players six feet away from each other? Most athletes playing the sport they love generate aerosols in close proximity to others. If seasons are canceled again, will student-athletes return? What happens to gate receipts if fans are limited or shut out? Game over.
The two areas we saw glimmers of hope were in Partnerships and, development presidents won’t be surprised to learn, Fundraising.
Now is the time to think about what your college has that other businesses and organizations don’t. That may have changed in the last few weeks. Do you have unused spaces that are too small for your uses but large enough for businesses now needing 2-3 times the workspace to comply with social distancing guidelines? Rent it out.
Are there quality value-add services or programs that providers can offer your students or alumni for a revenue share? Make the deal. It’s time to look at all of your sunk costs and relationships as revenue-generating assets.
The one needle that really can move without much of a departure from normal operations is fundraising. Luckily, the stock market has started to recover. Hopefully that will continue. The donors who can make the biggest and quickest difference next year are asset-givers not income-givers.
Those who have accumulated wealth will be able to give even as those who are dependent on salaries cannot right now. Focus on empowering alumni and other income-givers with reskilling and upskilling educational services so they come out of the recession stronger. Concentrate your asks now on those who can give from a position of relative strength.
It is unlikely that fundraising and partnerships will completely overcome all the deficits anticipated for next year. But we’re ready to share a number of other long-term and short-term strategies that, as Melody put it, can “put a floor” under the losses.
Join Melody and me for AGB’s Ask the Expert session on Revenue and Enrollment Growth Strategies on Wednesday May 13, 2020 at Noon Eastern Time. Register Now. It’s Free.
As always, when you are ready to maximize next year’s gift income, call me.
In the meantime, Download: 3 Things Every College President Should Know About Fundraising.
…and please share this post with another current or aspiring Development President!
With over 25 years of education leadership experience, B. David Rowe served as the president of Centenary College of Louisiana and of Lake Highland Preparatory School after holding senior level positions in university advancement and strategic planning. He currently advises college leaders and trustees as a senior consultant with the Association of Governing Boards and as principal at The Development President.
ENCORE: Join me again on Thursday May 14th at 3 pm Eastern Time for AGB’s Ask the Expert session on Governing Private Institutions Amidst COVID-19.
