We will start with Harvard, which is an outlier as it tops the rankings of largest endowments, with a figure of $38 billion in 2018. As a result, investment returns comprise a major share of revenues at Harvard, with the university also drawing substantial funds from private gifts, governmental grants, and tuition and fees. Other private research universities would also rely upon these four revenue categories, but the share coming from their endowment would be much smaller than it is for Harvard.

Figure 3.1 - Revenue Profile, Harvard University, Source: IPEDS (U.S. Department of Education. Institute of Education Sciences, National Center for Education Statistics.)

Let's now compare a private research university like Harvard with a public research university. We present data below for Purdue University, which is similar to Harvard in that it obtains a substantial amount of its revenue from investments, tuition and fees, private gifts, and governmental grants. The three primary differences between Harvard and Purdue are differences that are common between private and public universities: (1) Investment returns at Purdue comprise a smaller share which is caused by public universities having smaller endowments than private universities. (2) Tuition and fee revenue comprises a larger share at Purdue which can occur because despite charging lower tuition, public universities enroll a much larger number of students than private universities. (3) Purdue University receives 18% of its revenue from state appropriations while Harvard University, as a private institution, does not receive state appropriations.

Figure 3.2 - Revenue Profile, Purdue University, Source: IPEDS (U.S. Department of Education. Institute of Education Sciences, National Center for Education Statistics.)

Let’s now turn to private liberal arts colleges, for which we will use revenue figures for Bethel University. As you can see, the school receives no state appropriations (at it is a private institution) and very little governmental grants and contracts (as liberal arts colleges engage in little grant-funded research or training-based contracts). Bethel receives most of its revenue from tuition and fees, and schools in this situation are often referred to as tuition-driven institutions. The only other meaningful revenue categories are private gifts and endowment returns. Liberal arts colleges with very large endowments, such as Williams College, can rely on investment returns and gifts for major portions of their revenue, but most colleges are like Bethel in that they rely primarily upon tuition and fees to pay their bills.

Figure 3.3 - Revenue Profile, Bethel University, Source: IPEDS (U.S. Department of Education. Institute of Education Sciences, National Center for Education Statistics.)

We now turn to revenue figures for Eastern Michigan University, a public institution with a Carnegie classification of a Master’s university. Eastern Michigan differs from Purdue in that it receives a small amount of investment returns and private gifts, grants, and contracts, as these funds are typically small at publics that are not well-known research universities. Eastern Michigan primarily receives its revenue from tuition and fees, state appropriations, and private gifts, grants and contracts. Michigan is a state with relatively low levels of state appropriations and high tuition and fees, so schools in some other states would have a greater share of state appropriations and a smaller share of tuition and fees than you observe below.

Figure 3.4 - Revenue Profile, Eastern Michigan University, Source: IPEDS (U.S. Department of Education. Institute of Education Sciences, National Center for Education Statistics.)

Let’s now examine a community college by examining the below figure for Cuyahoga Community College (OH). Public community colleges are different than other institutions in that they meaningfully rely upon appropriations from their local government, which reflects their emphasis on their local community. Community colleges also receive appropriations from their state, funding from governmental contracts, and tuition and fees dollars. The latter category will never be especially large for community colleges as these schools traditionally have lower prices than other institutions.

Figure 3.5 - Revenue Profile, Cuyahoga Community College, Source: IPEDS (U.S. Department of Education. Institute of Education Sciences, National Center for Education Statistics.)

The final institution we will examine is the University of Phoenix, a for-profit institution. As you see below, the revenue profile of for-profits differs radically from not-for-profit institutions. For-profit institutions receive almost all of their revenues from tuition and fees and sales and services of educational services. (You should remember that tuition and fee revenue includes dollars from governmental financial aid programs that students use to cover tuition, so even though governmental funds are not named in the below revenue categories, they are an important provider of funds for for-profit institutions.)

Figure 3.6 - Revenue Profile, University of Phoenix, Source: IPEDS (U.S. Department of Education. Institute of Education Sciences, National Center for Education Statistics.)