Overview

 

Most colleges and universities are non-profit organizations whose primary goals include developing students, creating knowledge, enhancing their reputation, and serving society. They are not seeking to make a profit but are instead simply seeking to generate enough money to cover the costs of the activities they wish to conduct. That simple goal of supporting themselves, however, is proving to be quite a challenge. As this lesson will explain, the financial challenges facing colleges and universities are growing, which has important implications for these organizations, the people they employ, and the students they serve. For those planning to work in higher education, those implications can be daunting when viewed from certain angles but they can also be viewed as opportunities from other perspectives as they increase the value of individuals who can do more with less and have a willingness and talent for engaging in entrepreneurial activities that advance mission while improving finances.

This lesson will enhance your understanding of where colleges get their money, how they spend their money, and the reasons why colleges are increasingly facing financial challenges. As you will see, the answers vary dramatically across institutions. Some institutions primarily pay their bills using tuition dollars from students, others rely primarily upon governmental appropriations, and others rely equally upon a number of different revenue sources. The assignment for this lesson will require you to learn more about the finances of your institution. As this lesson emphasizes, an understanding of finances is important because financial considerations permeate almost every decision.

 

Essential Questions

As you explore the lesson commentary and assigned reading materials, consider the essential question(s) below. They will help guide your learning and ensure that you have mastered the key concepts of this lesson.

1. Where do higher education institutions get their money?
2. How do higher education institutions spend their money?
3. Why is the challenge of balancing budgets becoming increasingly difficult for higher education institutions?

 

Objectives

Upon conclusion of this lesson, learners will be able to:

• match revenue profiles to institutional types;
• match expenditure profiles to institutional types; and,
• be aware of the financial challenges, driven by declining revenues and increasing costs, facing colleges and universities.

 

Lesson Activities

By the end of this lesson, make sure you have completed the assignments and readings found in the syllabus.