Very few lifelong learning programs operate as independent, for-profit or nonprofit businesses, but many endeavor to employ business best practices. Most are part of an institution, district, or other organization (called in this article “governing body”); thus, lifelong learning programs may be accountable to adhere to rules, processes, and policies not always best suited to good business practice. Proactive and entrepreneurial lifelong learning programs can find this relationship challenging, especially as they strive to succeed as customer-oriented, market-driven programs.
The landscape has changed immeasurably for education across the board in both the US and Canada. Education is no longer unquestioned as an investment in the public good and economic success of society. Both politicians and taxpayers question the use of public funds to support education at all levels, forcing providers of education and lifelong learning to become increasingly entrepreneurial. While doing their best to succeed in providing education, lifelong learning programs must now also operate successfully as businesses in order to survive.
These two fundamental demands sometimes work at cross purposes. Mission requirements may include reaching new populations, offering programming at a reduced price, dedicating staff time to non-revenue generating tasks and committees, and so on, and this may make it more difficult to generate revenue or even drain resources. The demands of business may mean that some mission-based activities must be scrutinized, their value assessed, and if they are essential, subsidies must be found through revenue generating programs to support them–or the institution needs to accept that they will represent a cost rather than make a positive contribution to the bottom line. The challenge of balancing the need to make money while fulfilling the primary mission of the program brings three key considerations into focus:
Contributions
There is growing demand for lifelong learning programs to be financially self-sufficient, thus, not a financial drain on their parent institution. For some lifelong learning programs, financial self-sufficiency means covering all promotion, production, and administrative costs. For others, it may mean covering direct costs (promotion and production), but not administrative costs. Either way, there is pressure for lifelong learning programs to make smart business decisions regarding pricing, use of resources, and so on, so they can meet financial expectations.
A trend over the last ten years has been the expectation that lifelong learning programs will not only pay their own way, but also contribute monies back to their parent institution. As funding for all education has become less generous, institutions look to the entrepreneurial units within their organizations as a source to replace diminished support from traditional sources. Typically, lifelong learning programs will be assessed a share of “overhead costs” which may include paying for indirect costs such as staff positions outside of the lifelong learning program, e.g., facilities and maintenance personnel, or building space, or other day-to-day costs. For some lifelong learning programs, the contribution is a partial or full return of the program’s net while for others, the contribution might be the net plus a percentage or a flat fee for indirect costs. These contributions must be made while lifelong learning programs are still accountable to fulfill their stated mission.
Most lifelong learning programs are already hampered by policies within their parent institutions that are counterproductive to business success. Adding additional requirements for support of institutional overhead can significantly compromise their viability.
The industry standard for lifelong learning programs is to generate 0 to 5% net in income, i.e., 0-5% more than the cost to run the program. Given this small margin, it is unrealistic to expect lifelong learning programs to be self-sufficient AND contribute indirect costs to their parent institutions. The institution should be aware of the lifelong learning program’s need to meet both mission and revenue requirements, and understand that the indirect costs being charged to the lifelong learning program will exist whether or not the lifelong learning program exists. The lifelong learning program is an institutional asset, and the assets should be recognized and acknowledged. The loss of a program that pays all its own costs because of added demands for institutional overhead reimbursement represents overall lost value to the institution’s brand.
Every lifelong learning leader should devote some time to creating an internal communication plan to bolster the perceived value of their contribution to the institution and to the community. They should make sure that their hidden assets become visible, both internally and externally. Here are some of the many “hidden assets” that could be beneficial to highlight:
- Multiple studies have found that participants in lifelong learning programs have more favorable attitudes about the parent institution than non-participants and are more likely to support initiatives for increased funding. Although these were studies conducted in lifelong learning programs offered by public schools, it is reasonable to project that this phenomenon might be applicable to other types of providers, as well.
- Business and management expertise. The unique entrepreneurial skills found in lifelong learning organizations and the business and community connections of the leadership in lifelong learning organizations are tangible and valuable contributors to the institution as a whole.
- Hidden cost savings to business and industry. A study by Johnson and Johnson found that the company saved more than $225 per employee per year for those who participated in health and wellness programs.
- Direct cost savings to business and industry. There is a measurable increase in productivity among employees who participate in training offered by lifelong learning programs.
- Contributions to the health of the local economy. Consider doing an economic impact analysis of how your lifelong learning organization impacts the institution and the community. LERN can provide some guidance on how to start.
- Knowledge spillover. “Researchers have built sophisticated mathematical models showing that sharing knowledge and skills through formal and informal interaction generates significant knowledge spillovers. These knowledge spillovers are thought to be an important engine of economic growth for cities and nations.” (Enrico Moretti, The New Geography of Jobs, pp 99-100.)
Balancing Mission and Money
Many people who are hired to work for lifelong learning programs are fully dedicated to and skilled in serving the organization’s mission, but they may have fewer of the skills required to run a lifelong learning program as a successful business. Over the last five years, as revenue generation has become more critical and subsidies have declined, there has been a trend toward hiring staff with stronger business skills. In some instances, this division of focus among the staff has led to conflict between those who are more mission driven and those who believe that the organization’s primary goal is to generate revenue. Realistically, money is necessary to support mission, and both aspects of the lifelong learning program are critical. Skill sets to accomplish both program development and mission delivery as well as revenue and solid business practices are essential.
No one questions that the primary goal of a mission based organization is to meet the defined mission. The mission is the reason for the program’s existence. Notably, the programs that are most successfully meeting the goals of their mission are the ones who understand that without generating revenue, the mission will flounder. Two important concepts to understand are – “You can’t be everything to everybody!”, and “Numbers are your friends!” To succeed, it is important to make smart mission andsmart money decisions.
Leaders of lifelong learning programs must do a good job of educating staff about the importance of balancing mission and money. Having clear annual goals agreed on by all, as well as having measurable metrics reviewed on a weekly and quarterly basis can do this. The lifelong learning program must be focused on program goals as well as on the financial goals required to keep the program viable.
Unique Selling Proposition
A lifelong learning program’s unique selling proposition (USP) is defined as what its customers and/or clients appreciate most about them. A USP includes those attributes of a lifelong learning program that the competition does not have. Having a clear, customer/client determined USP is an important aspect of increasing a lifelong learning program’s repeat rate and lifetime value. Based on mission, it is a key contributor to financial success.
USPs vary from program to program, but key benefits identified most often are:
- efficiency and smooth operations
- a high level of customer service
- the ability to meet the needs of the audience being served
- high quality of content and instruction
Simply put, successful lifelong learning programs run like a business but understand the importance of meeting their mission by serving their customers and clients.
Both money and mission are important when setting your lifelong learning program apart from the competition.
Conclusion
Leaders of successful lifelong learning programs understand the importance of balancing the need to operate like a business with the need to satisfy their mission. Thus, they understand that more money –revenue generated by operating with sound business practices – supports the ability to fulfill mission more effectively.