Abstracts Category : Other

Why Revenue Diversification Matters

by Fredrik Carl Leuhusen

<i>Revenue diversification</i> is a term that becomes more relevant as higher education institutions are confronted with increased regulation, competition, declining enrollments, and strained finances. A challenge that many institutions face is that expenditures are higher than revenues and increase faster than them. The term <i>Revenue diversification </i> seems obvious to higher education administration professionals, although they do not all define it the same way. For that reason, it needs a precise definition so that the industry genuinely can embrace the concept and thereby seek to generate more revenues to drive existing and innovative agendas. Indeed, a common understanding will allow universities to develop strategies to reduce the reliance on traditional tuition and fees. The study examines three not-for-profit institutions with a student population less than 5,000 that already are diversifying their revenue streams. The definition of leadership at each institution is compared with the strategies that have been implemented or proposed in order to understand whether there is alignment. The three casesStevenson University, Franklin & Marshall College, and Oglethorpe Universityrespectively have the following story lines: 1) growth is the only possibility; 2) the current situation is one of stasis, and the way forward is unclear; 3) efforts must be undertaken to improve financial viability. In addition to the qualitative research, the study also encompasses an analysis of IPEDS that reflects how each institution is changing its revenues in comparison to a similarly situated group of institutions. The findings reveal that <i>Revenue diversification</i> is on everybodys mind, but the definition of the term is inconclusive. Leadership teams are trying to determine what revenue-diversification strategies will work for the institutions and its stakeholders to be able to offset expense increases. Identifying new revenue sources will entail pursuing non-historical revenue sources, which includes academic programs, services, property, institutional advancement, and more. The higher education environment is concerning to many of its member institutions, and by diversifying revenues, long-term viability can be secured.