The Independent school market is facing a storm of pressures. Costs and customer expectations are going up yet there is a deflationary pressure on fees, international markets are challenging and there is a scarcity of capital funding.
These mean that, at best, development and alumni relations teams are under more pressure than ever to demonstrate their worth, and at worst are considered as luxury overheads.
Yet challenging markets present opportunities for talented development and alumni relations professionals to show how they are part of the solution – that their work is vital to the long-term sustainability of their schools.
Costs are going up, but fees can’t keep going up (and the potential of VAT on fees).
At a time of increasing costs, independent schools are facing deflationary pressure on fees from UK pupils. Families are facing similar constraints on their budgets and are less willing and less able to pay higher fees.
The years of fee increases outstripping inflation seem to be coming to an end. There are signs that the market won’t bear further inflation-busting increases, as this Independent article reports.
And it’s not just UK fee income that’s under pressure. Whilst the weak pound may have been attractive for international families, the uncertainties of Brexit, hostile immigration services and increased competition in other countries (some from UK schools overseas) mean that its harder than ever to predict international income.
Schools marketing and brand position will surely become a hot topic and an area in need of investment (as those of you who have marketing and fundraising in your brief will know).
All in all, a tough landscape. And I haven’t even mentioned political interest in charging VAT on fees….
This downward pressure on fees and uncertainty in the market will make it harder to maintain or build reserves. This makes capital projects harder to fund.
So how do independent schools navigate this tough terrain?
Cost-savings must be on the agenda. But there are few places in which savings can be found.
It’s very hard to cut costs without affecting customer satisfaction. In a highly competitive market, schools have to demonstrate RoI not only against other independent schools but against some excellent state schools too. Independent schools have to maintain their added value – small class sizes, diverse curriculums, great extracurricular activities, top notch facilities etc. Protecting all this means that there are few areas to cut.
So, what does all this mean for development offices?
The good news is that the money you raise is more important than ever, as school leaders look to diversify income away from fees so that they can protect what makes them great. Bursaries and scholarships (to soften the impact of fees) and capital projects (where reserves are scarcer) are likely to be at the top of any wish lists for fundraising. As fundraisers you really can now, more than ever, play a vital role in protecting what is great about your school.
The bad news is that the pressure to demonstrate and predict RoI will be higher than ever. Some schools will find it very hard to invest in development without seeing a swift return, so you will have to work hard to model how income will come in over a 3-5-year period. Where there are existing development offices who are not yet delivering RoI, questions will be asked and cuts may be a reality.
For fundraisers reading this I would advise you to:
- Be extremely well-informed –understand the school’s market strategy and financial position. Make sure you have a seat at the table as the school’s finances and strategy are being discussed – if you don’t have one, ask for one.
- Have a strong 3-5-year plan with clear KPIs and RoI
- Ensure that your operations are as focused and efficient as possible
- Be a team player – If marketing isn’t part of your portfolio then working as a team with the marketing department will be key. Make sure you work in partnership with your bursar/finance director.
For heads and bursars reading this I would advise you to:
- Review the performance of your fundraising team – benchmarking data will help with this. Try to develop a realistic picture as to what you should expect from the investment you put in, and how long it takes. Look at the KPIs that show you are heading in the right direction as well as the cold hard cash numbers. If you don’t know what these are, get advice… my offers some insight here.
- Ensure your fundraiser is party to all strategic discussions and financial planning – they can’t do their job without being part of these discussions.
- Ensure you are giving sufficient time to fundraising. If it’s not a comfort area, then get some coaching. The money won’t come in without you asking for it and putting time into building great relationships with your donors and potential donors.
- Make sure your governors/trustees are supportive and have a reasonable understanding of fundraising. Ensure fundraising is regularly on their agenda. See my earlier post on what trustees should ask their fundraisers.