No Margin, No Mission

We often hear quite a bit from mission-driven organizations in the higher education and non-profit sector that are conflicted about treating the operations of their organization as a business.  However, this mindset often results in extreme inefficiencies in how colleges and universities conduct business (i.e., market their offerings, manage communications, deliver services, etc.).  In turn, these inefficiencies (especially in a budget-strapped economy) not only are wasteful, but they could ultimately impact and erode the level of service provided to students and the number of resources dedicated to teaching, learning and research. 

Karlyn Morissette tackles this issue head on today and has sparked some interesting conversation on what she deems to be higher education’s biggest problem.

How can institutions balance the management of a business that isn’t a business?  Karlyn’s post reminded me of an article I read recently in Johns Hopkins Magazine that featured an interview with outgoing president William Brody.  During the interview, Brody talks about the challenges of running the business aspects of a higher education institution and the inefficiencies that could sometimes hurt the mission of an institution.  Here’s an excerpt:

We’re a mission-driven organization, and in a mission-driven organization, no margin no mission. It’s very simple. You have to figure out how to generate a margin so you can deliver the mission. Education, research, and service are all activities that intrinsically lose money. That’s why gifts and endowment are critical to make up the shortfall. At the same time, it’s incumbent on nonprofit organizations to make business decisions for business reasons and academic decisions for nonbusiness reasons. You shouldn’t confuse the two. I mean, if we were a for-profit business, we would close two-thirds of our departments. But we have to operate as efficiently as everyone else does in our society. So to carry out our mission, we need to make sure that whatever dollars we use are employed in an efficient fashion, but not using business metrics.

Ultimateley, Brody concludes, schools must find a balance between keeping up with the competition, attracting students with new services and amenities, and fulfilling their mission.

Here’s a link to the full article.

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