With endowments down, budgets growing tighter and alumni giving less, the region’s universities increasingly are turning to businesses to form academic partnerships in hopes of tapping new revenue sources.
Some instutitions are forging into uncharted territory with new non-degree programs and expanded customized education programs designed for employees at some of the region’s biggest employers. Others are partnering with companies to design classes for undergraduates in order to create a skilled pool of potential hires down the line.
“There has never been a time where colleges and universities are trying so many different things in order to generate new revenue streams,” said Stephen Gilfus, president and chief executive of Gilfus Education Group, a Washington-based education, technology and business consulting group. “Colleges and universities, given their current business model, are simply not sustainable, which is making many institutions across the country seriously rethink their business models. That includes almost every single college and university in the Washington D.C. area.”
Georgetown’s McDonough School of Business began expanding its customized executive education programs last year, co-developing programs with companies such as Booz Allen Hamilton, NII Holdings and Rolls Royce to teach specific skills based on the organizations’ needs. Companies pay between tens of thousands to several million dollars, depending on the program’s length and complexity, said Paul Almeida, senior associate dean for executive education.
The school has seen revenue from its customized executive education programs quadruple since the college began expanding them, and Almeida said many business schools have pegged executive education programs as a moneymaker for years to come.
“I have no doubt that in 20 years or 30 years from now, the majority of most business school revenue will be from executive education programs,” he said. “The image of learning and education has changed. It’s not just for young people anymore at the start of their career.”
Loyola University Maryland’s Sellinger School of Business and Management is launching two non-degree certification programs for cybersecurity and business intelligence in January aimed primarily at employees of federal contractors, including Northrup Grumman, Lockheed Martin and Booz Allen.
The year-long programs will offer courses on the school’s Columbia campus, and are on track to bring in about 30 students and between $400,000 to $500,000 in new revenue by the end of the first year, said Karyl Leggio, dean of the business school.
“That will be a future revenue generator for us,” Leggio said. “We believe the non-degree space ... will be an area that will be be quite profitable for us as we move forward.”
Loyola also plans to host its first technology incubator in Columbia by next summer, where up to 30 local startups will meet on campus and spend 90 days sharing ideas on how to secure funding, develop marketing plans and attract talent. At the end of the 90 days, the business school aims to bring in venture capitalists and angel investors — many of whom are alumni — to hear the entrepreneurs make pitches.
The idea is to generate new business growth in Virginia and Maryland while also giving the university and venture capitalists a small percentage of ownership of the companies they choose to invest in, Leggio said. Loyola will not collect rent from the companies during the 90 days, but if they want to stay after the program ends, they can pay to rent space at the school’s facilities in Baltimore.
It’s a model that has worked for George Mason University. The school’s Mason Enterprise Center has offered incubator space in Fairfax for several years as well as free consulting services to small businesses. The college recently partnered with investment firm Amplifier Ventures on the Mason Enterprise Initiative, an effort to turn university technology into viable businesses.
Mona Olsen is assistant director of George Mason’s small business development center. She said her program and others through the Mason Enterprise Center give students an opportunity to work directly with businesses while also cultivating relationships with companies that may then become “great sources of donations and great funders of programs.”
“There’s not only an intellectual giving back, but financially as well,” Olsen said.
Other universities may follow suit with incubators, said Frank Ganis, a general partner at the consulting group Gilfus.
“Even if there was no innovation whatsoever, just the fact that they can collect rent from companies brings a new revenue stream to the university,” he said. “Hopefully they will have innovation and receive more in return than simply rent.”
Universities say they’re developing academic programs and business initiatives in response to local employers’ demand for workers with specific skills — and to accommodate the increasingly entrepreneurial business culture in the region.
It’s no accident they’re coming to fruition at a critical time for colleges and universities. Although the value of endowments at the nation’s universities rebounded somewhat in 2010 — returning an average of 11.9 percent, compared with 2009’s negative 18.7 percent return — levels are still down in the long term, according to the National Association of College and University Business Officers, which collects data from 850 U.S. colleges and universities. Three-, five- and 10-year returns remained below the level needed for the long term after taking into account spending, inflation and expenses, the association’s January report on education endowments found.
Meanwhile, charitable contributions dropped 0.6 percent in 2010 compared with 2009, when adjusted for inflation, according to the Council for Aid to Education.
“There’s no federal bailout for colleges and universities,” Ganis said. “They’re very aggressively taking matters in their own hands.
“Schools have realized that bake sales, car washes, 5k races or even the annual alumni campaign is just not enough,” he added.
Last semester, University of Maryland’s Philip Merrill College of Journalism began working with Patch, AOL’s hyper-local news site, to offer a course for college juniors and seniors to produce print, video and photo content for Patch’s suburban Maryland coverage in exchange for class credit and a small stipend for travel costs. There’s no guarantee Patch will hire the students upon graduation, but the collaboration does open the door for career opportunities.
“The idea is students should be people who have an interest in covering community news,” said Penny Fuchs, the professor who teaches the course. “If they do really well and click with Patch editors and Patch feels like they have a love connection, they’re free to offer them jobs. But that’s never a promise ... It’s simply a class and if Patch wants to offer a job, so much the better.”
Amy Kovac-Ashley, the Patch regional editor who spearheaded the partnership (and a former editor and producer at The Washington Post), said pairing up with young journalists could plant the seed to one day develop a new model for the business of journalism.
“Because Patch is so new, we’re really introducing them to one of many new ventures out there,” she said. “It’s good for them to see the different kinds of models and understand the entrepreneurial side of journalism. Five years from now, we could look to them to come up with whatever the new [model for journalism] will be and exposing them early on to what the new things are now is a good way of sparking their creativity.”