Nonprofit colleges have a mission to do the common good. In turn, they don’t pay taxes on their earnings for which some surpass $100 million each year. Nor do they pay taxes on their miles of property.
It made me wonder, are colleges actually businesses? My answer was a resounding yes.
Look at Boston University (BU), Boston College (BC), Harvard, and Massachusetts Institute of Technology (MIT). If they were corporations, they would be among the best revenue earners in the state. How is it that nonprofit colleges with a mission to teach rival major corporations? What do we as citizens who support these institutions stand to gain or lose?
No doubt, we benefit from the financial strength of colleges and universities.
The gains translate into sizable payrolls. BU supports 10,000 workers among the highest payroll in Boston while Harvard and MIT together have the biggest payroll in Middlesex County.
These colleges also are a major player in the real estate market supporting many in the building trades. Retail shops and entertainment venues cluster close to campuses.
However, there are significant losses as well.
Why You Need to Think About College as a Business
Evolving into a business from a traditional college drives up costs for students. These colleges now support hundreds of high-priced professionals in real estate, finance, and fundraising.
They earn salaries in the $250,000-$400,000 range, much higher than professors. Their high salaries create an environment designed to justify million-dollar payouts. These payouts go to college presidents who live in extravagant quarters.
Most of this comes from tuition which colleges increase every year. Meanwhile, parents wonder what makes colleges so expensive.
While the management of colleges has become corporate, the teaching staff remains diligent. They continue to support the original cause to serve and benefit society.
This has created a cultural chasm between professors and corporate employees. Professors resent that they have lost so much ground to front offices. Those front offices dictate the budgets and priorities that guide the college.
The result is a lack of trust among the faculty and administrative staff.
Today’s college president is a money raiser. If he or she is an accomplished academic, that’s extra. The “vision thing” has morphed from academics to finance.
Presidents are salesmen on the road. A doctorate is still a prerequisite to winning a presidency. But any candidate must have chops in fundraising and a finely honed corporate mentality.
In the face of the present existential threat of COVID-19, higher education requires a top to bottom rethink. Colleges have yet to do anything more than to ask for money. All the while, college presidents hunker down trying to balance budgets.
This brings me back to my initial question. Are colleges actually businesses and if so, why does that matter?
The answer… the existing corporate leadership fails to convince a skeptical nation. With an eye on money-making, how can they convince a nation that higher education is the door that opens the future?
We need a strong leader to emerge from behind the moat built by college lobbies. This crisis could result in the exact change we need.
If colleges want to better serve their students, they must return to their sacred calling.