The Hat Trick: Aligning Your School’s Three Revenue Teams
In sports, a “hat trick” is when a player scores three goals in a single game. The phrase dates back to a cricket match in 1858 when jubilant fans presented one such player—H.H. Stephenson—with a hat to celebrate his success. Over the years, many other sports adopted the term “hat trick,” and it is now used colloquially for any achievement—athletic or otherwise—accomplished in threes.
Mr. Stephenson did not play that game on his own. Successful matches require strategic coordination among players, and a successful financial strategy demands a well-executed approach. In private and independent schools, three teams impact revenue: admissions, development, and finance. The hat trick occurs when these teams synchronize and are aligned on game plans and goals.
Victory is a balanced budget.
While net tuition revenue makes up the majority of a private or independent school’s revenue—typically 70 to 80%—most don’t charge what it actually costs to educate a student. Thus, many schools depend on the development team to close this “gap” via fundraising. As the school-aged population decreases, admissions teams reach further out geographically and demographically to meet their enrollment and strategic goals. This includes recruiting more middle- and lower-income students who require financial aid, which increases fundraising dependency.
This is why strategic alignment between the admissions, development, and finance teams is essential. Without everyone moving in the same direction and working towards the same goals, admissions could over-award financial aid, or the development team may accept a restricted contribution that can’t be used to support the strategic plan, putting the school’s financial sustainability at stake.
School fundraising is often centered around the annual fund—traditionally unrestricted and used for operational expenses. That worked well for many years, but the new generation of donors is more cause-driven. They want to direct their philanthropic dollars to areas that are meaningful to them, and they may feel that funding a student’s education is more impactful than paying the electric bill. Therefore, schools need to be very strategic about how they communicate their fundraising needs.
One successful strategy is to create buckets in the annual fund that give donors options, with categories such as:
- Area of Greatest Need (General)
- Scholarships & Financial Aid
- Campus & Classroom
- Faculty & Staff Development
Agility breeds success, and it’s important to create those buckets with flexibility in mind. The “Area of Greatest Need” designation lets donors know the school has expenses beyond what is contained in the list, and highlighting that option increases the odds of the school receiving unrestricted funds. “Campus and Classroom” can cover learning resources, technology, facility maintenance, or those pesky electric bills. “Faculty and Staff Development” could mean everything from teacher credentialing to salaries and benefits. Each school should create buckets unique to its priorities, but “Scholarships & Financial Aid” is an essential option.
Stick to the game plan.
Much like a player maintains focus when going for the goal, the school must carefully track where those donations go. A well-rounded team of any sort relies on diversified skills and experiences. Development raises funds, finance allocates the appropriate funds toward financial aid, and admissions awards financial aid based on projected enrollment. In Blackbaud Financial Aid Management™, the admissions team can create multiple budgets based on their needs and update those as enrollment contracts come in—either securing the suggested award amounts or freeing funds up to be used by another student if the original one does not contract. Once the school hits its enrollment projection, any new contracts will increase the initial financial aid budget. Thus, higher-than-projected enrollment creates more funds for additional financial aid. With Blackbaud’s Total School Solution, contracts and financial aid feed from the enrollment management and financial aid software directly into the tuition management system and then to the accounting system. This means all team members have the same data and reporting.
How Silos and Redundancies Impact Financial Sustainability in K–12 Schools
Using the dashboards in Blackbaud’s Total School Solution, school leaders in all offices can dynamically track financial aid, enrollment, net tuition revenue, and the percentage financial aid takes from their total revenue goal. A connected system makes it much easier to track these critical components as tuition dollars increase and decrease throughout the enrollment season.
While development officers advocate for less restricted donations, some donors will designate their scholarships to support students in a particular program, from a specific neighborhood or demographic, or other subjective criteria. With Blackbaud Financial Aid Management, the admissions team can create multiple budgets with unique parameters for each. Once the system allocates suggested financial aid awards, development and admissions can review the donor restrictions on named awards, confirm the recipients are a good fit, and then work in tandem to communicate with the recipients and the donors. Teamwork among school offices empowers everyone to manage the budgets, maximize the use of funds to increase enrollment, fundraise to cover the gap or send funds straight to the bottom line, and steward donors.
Teams don’t only practice in season, and teamwork among school offices is essential year-round. For example, many finance teams create the school’s annual budget in December for their next fiscal year, which begins July 1. That budget includes fundraising and enrollment goals created in collaboration with the development and admissions teams. When all three offices are aligned, development has six months to lay out the annual fund plan, identify gaps, and begin cultivation. Admission officers have that same time to initiate new recruitment strategies. They can all work together to defend against financial setbacks and celebrate together when they hit financial milestones.
Winning Team. Winning Finances.
When admissions, development, and finance teams work together—and their systems are on the same software platform—there is far less chance of going over budget and a far greater chance of adhering to the school’s strategic plan. Whether it’s the Cricket World Cup or the Super Bowl, every championship requires consistent effort, strategy, and determination. A school wins when it can improve the educational outcomes of its students, support its faculty and staff, and achieve its long-term financial goals.
Join us in Denver at #bbcon2023
We’re presenting at bbcon in October! Please join us as we delve deeper into financial strategies to propel schools forward now and prepare them for the future. bbcon is LIVE in Denver, October 22-24, 2023. Join other change-making leaders from K–12, higher ed, nonprofits, and more for three days of sharing, learning, inspiration, and innovation.
This blog was co-written by Katie Turner and Jenn Haley.