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Nov 21, 2012

Ideas for a new nonprofit model for independent schools

When I talk about the need for  nonprofits to develop a dual business model in order to be sustainable in the coming years, most people think of social service nonprofits and arts organizations.  They also think about higher education and its many ways to raise revenue outside of tuition.  But too few extend this thinking to pre-college educational institutions.  A client of mine, John Farber, is the head of Old Trail School near Akron, Ohio.  He has written a spot-on article about how the dual business model can be applied to independent schools.

He notes that demographics suggest that the number of people able to afford a private education is contracting.  He also notes that the traditional non-tuition efforts go “back to the same well” since summer camps, auctions, extended-day programs, facility rental, and parents’ association events usually attract the same, tuition-paying players. He starts out by suggesting that purchasing consortia provide an important channel for cost savings.  He cites the Independent School Benefits Consortium (ISBC) which has united 52 schools in six states in achieving goals of choice, price, and service in their healthcare benefits.

But most importantly he adds to my list of nonprofit organizations which have taken their core skills and resources to develop profitable new activities, whose profits are used to support the educational mission and to supplement fundraising and tuition in covering the cost of the educational program.  Here is his list.  Check it out.  Kamehameha Schools (Hawaii); Calvert School (Maryland); Elmwood Franklin School (New York); Lexington School (Kentucky); The School in Rose Valley (Pennsylvania); Sandy Springs Friend School (Maryland); Wasatch Academy (Utah); and Shattuck-St. Mary’s School (Minnesota).

If this concept of a dual nonprofit business model—a key mission activity that must lose money if done well supported by additional, less-mission-oriented activities which are operated to make a profit to support the key mission activities—is not familiar to you, here a some resources.  A quick TEDx talk, a book.  And I will be happy to come talk to you and your board to help you to get started thinking strategicially about what sustainability will require in this decade and the next.