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Finding higher ed funding in unlikely places

Alternative revenue stream ideas worth modeling
University Business, November 2014
Advance planning: Dedicated alumni and friends of Hendrix College can purchase a niche in a campus columbarium.
Advance planning: Dedicated alumni and friends of Hendrix College can purchase a niche in a campus columbarium.

From cashing in on beer sales at football games to providing community members with a safe way to trash old electronics for a fee, administrators are looking beyond tuition and endowments to make up for budget shortfalls.

Typically, there have been three types of alternative revenue sources, says Shandy Husmann, managing director of Huron Consulting Group. One involves policy changes related to auxiliary services. Take parking, a traditional money-maker.

“If a school is subsidizing parking rates for students, they can eliminate the subsidy and make more money,” he says.

Charging more for expanded services is another option. Institutions can encourage dining vendors to invest in improving dining facilities, for example.

“This is a win-win-win; the vendor sees a continued relationship and increased sales from the resulting better dining, the school’s cut of the sales will be higher, and students will get a better experience,” says Husmann.

The third area relates to making strategic and programmatic impact, such as by increasing summer school courses or offering unique interdisciplinary programs. A school may even be able to secure a corporate sponsorship to fund the program, Husmann says.

He anticipates higher ed will also look toward utilizing spaces where large numbers of people can gather. “If I were an incoming university president, I’d be expanding revenue opportunities by developing conference centers and athletic centers, and seeing what spaces that already exist can be tapped for event money,” he says.

Here’s how some colleges and universities are raking in more money from unusual sources.

A place to dump electronics

Many people face the dilemma of where to trash old electronics. Yet, just a few years ago, there was no full-time e-waste dump facility in San Diego, says Paula Morreale, sustainability coordinator for the University of San Diego.

Organizing your institution for alternative revenue streams

Steven Bell, director of sponsorships for the University of Washington, offers these top tips for starting up an alternate revenue enterprise on the right note:

  • Consider hiring a consulting group: Before signing on for signature strategic partnerships with companies like Starbucks, the University of Washington retained JZWorks, a sponsorship consulting firm, to better understand sponsorships and what the scope should be on campus.
  • Consolidate all related streams: Student groups and events were already getting individual sponsors for one-off projects, but the university maximized funds for the institution and groups by making all sponsorship requests go through Bell’s office.
  • Find out what people want: JZWorks helped Bell’s team run discussion groups to see how students, faculty and the community felt about sponsorships and what the limits should be.
  • Decide where the funds will go: At University of Washington, the majority of funds go to the provost’s office to support academic initiatives.

“We wanted to make it easy for people to dispose of old electronics responsibly, so in April 2011 we opened the Electronics Recycling Center six days a week. [We] collect all electronics for free—computers, televisions, cell phones, microwaves, stereos.”

The ERC gains revenue by reselling electronics. (It also disposes of batteries and lightbulbs, but charges to accept these items because of the cost associated with hazardous materials.)

The center has so far totaled over $285,000, says Morreale, adding that two fiscal years were spent in the red. Net revenue for this past fiscal year, after operating costs, was about $47,000.

Some funds will be invested on the recycling center’s warehouse and more personnel, and then 50 percent will go into an improvements and unforeseen costs reserve. Ten percent will go toward community grants and 20 percent toward student scholarships. The rest will assist with sustainability projects on campus.

The goal is $500,000 in revenue in the next three to five years, Morreale says. “We will soon reach one million pounds of e-waste collected and want to celebrate that achievement.” They’ll do so by distributing more community grants and continuing to aid students interested in sustainability field research and work.

Staying on campus for eternity

As society becomes more mobile, many people feel they do not have a permanent home, says Rev. J. Wayne Clark, chaplain of Hendrix College in Arkansas. “But college is a place where life decisions are made, including careers and spouses.”

A columbarium, where cremation urns can be laid to rest, was first proposed by Clark to Hendrix’s board in 2007. The idea was that it would offer a special service to dedicated alumni and friends of the college. Construction began in fall 2013 and the columbarium was installed this fall.

The columbarium is octagonal and holds 96 niches. A niche, which can hold up to two urns, costs $2,500. Perpetual care, name engraving and memorial services at the campus chapel, based on availability, are also included in that cost.

Sales of the initial niches—30 percent of which were sold at a discount by the preconstruction deadline—exceeded expectations, covering construction of the first unit and providing a small surplus, Clark says. Space has been identified on campus for future units.

“Everyone I’ve spoken with said they were so pleased Hendrix was doing this,” says Clark. “One person said, ‘This had been worrying my husband and me for years, and when we saw this, we were so relieved.’ Another person said, ‘We met at Hendrix, got married at Hendrix, so this is the perfect place for us.’ ”

Tapping into alumni sentimentality

Wittenberg University in Ohio has been targeting alumni to buy school-branded clothing and memorabilia. The program, run through campus store operator Barnes & Noble College’s “Igniting the Alumni Connection” initiative, includes targeted emails about products specifically intended for alumni and available online.

“We upgraded our products to include nice brands with small Wittenberg logos on them that we knew alumni would wear in their daily lives,” says Linda Beals, director of alumni relations and parent advancement. “After the first email campaign, we saw a spike in orders of this type of product.”

The university gets a percentage of the sales in exchange for providing the company with alumni email addresses. Total sales reached almost $1 million as of last Cyber Monday. For now, the revenue goes in the general budget.

Tennessee Technological University opted into the Barnes & Noble College program knowing that alumni wanted to purchase campus gear not widely available outside its campus. The bookstore received over 100 orders during the program’s first week, and revenue goes into the alumni relations operating budget.

According to Barnes & Noble College, schools participating in the program have seen, on average, a 15 percent growth in general merchandise sales compared to before the program was put in place.

Improving the fan experience

In Troy University’s Sun Belt Conference for athletics, more universities than not permit beer sales. So this seemed like a logical money-making opportunity, says John Hartwell, athletic director at the Alabama school. “I also looked at it from the fan standpoint. People enjoy the opportunity to buy a beer at professional sporting events.”

Hartwell learned other institutions had seen a decrease in alcohol-related incidents after implementing beer sales—likely because less people sneak alcohol into stadiums when it’s available there—and moved forward in February 2014 at its 2,000-seat baseball stadium.

“We started at a small venue to get our management of sales in place,” he says. This season, beer sales began in the much-larger football stadium. Sales are cut off after the third quarter and there is an ID-checking station. Anyone purchasing, consuming or transporting beer must wear a colored wristband.

Hartwell predicts Troy will see $200,000 a year in revenue across all athletic venues. Troy receives 43 percent of gross beer sales from its concessionaire, Sodexo.

“The money will help fund the construction of a new endzone facility in the football stadium that will benefit all of our student athletes,” says Hartwell.

Jobs for students, quality employees for industry

Rising tuition and debt mean students are more anxious about finding jobs after graduation, says Daniel Newell, program manager of workforce and economic development for the Career Center at San Jose State University. “An employer called me and asked me to send him internship candidates—and he said he’d pay for that service.”

That sparked the idea for SJSU Spartan Staffing, which launched in June. It’s an employment agency model based in the university career center. Employers pay for qualified candidates that are vetted by two staffing agencies—SlingShot Connections and EXPANDability—which then take the lead in managing the program.

The candidate pool consists of almost 800 students and alumni, and jobs range from internships to entry-level to highly skilled. The staffing agency is paid by the employer only if a successful job match is made. The university gets a cut of that fee, which can be 10 to 20 percent of the employee’s salary, or $500 to $1,000, depending on the staffing model, says Jennifer Perez, a program recruiter.

EXPANDability works exclusively with people with disabilities, says Newell. “This program is a way to get our students with disabilities in front of employers without prejudice.” It’s also, he adds, a way for federal contractors to comply with Section 503, which prohibits discrimination against prospective employees with disabilities.

From June to September, the university earned $2,000 in revenue, which is allocated to career services. “We signed a five-year contract with the staffing agencies,” says Newell, “and over the life of the contract hope to earn $250,000.”

Kylie Lacey is an associate editor at UB.

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