The Higher Education Scene in America by Gitlow Abraham;Gitlow Howard; & Howard S. Gitlow

Author:Gitlow, Abraham;Gitlow, Howard; & Howard S. Gitlow
Language: eng
Format: epub
ISBN: 1813059
Publisher: UPA

Chapter 6

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Other Aspects of Fundraising

A. Enhancing Revenues through Executive Education

Executive education programs can be profitable and generate surpluses. Beneficial results include supplemental compensation for full-time faculty, especially as support for research. Funds become available also for the use of qualified adjunct faculty In addition, these programs enable productive use of otherwise idle plant—a significant financial feature because there is almost zero marginal cost associated with that usage. Of course, a successful and expanding program would require investment in additional plant, but that would be a positive outcome that would enhance the other benefits.

Harvard University’s Business School is an excellent illustration of the benefits just claimed. Its traditional MBA and doctoral programs are world famed. What is usually not realized is that its executive education and publishing operations far exceed, in revenues and staff, its traditional graduate academic degree programs. It is a simple observation of reality that these operations help support the academic programs, and the school’s leadership does not hide that fact (as the 2009 annual report of the school makes plain). It needs to be understood that the support is much more than financial, because the executive education program provides raw material for faculty research and case development. Some data make the case more striking.

In 2009, the B school’s revenue totaled $472 million. Tuition from executive education amounted to $107 million, and publishing revenue added another $137 million. In aggregate, these two revenue sources accounted for 51.7 percent of total revenue. If we add endowment distribution of $113 million, the three items account for 75.6 percent of total revenue. In sharp contrast, 2009 revenue from MBA tuition and fees amounted to $84 million, or 17.8 percent of total revenue. Clearly, executive education is an integral part of the mission of the school. With total 2009 expenditures of $438 million, operations yielded a surplus of $34 million. Looked at from another aspect, in 2009 the executive education program enrolled 9,345 students, compared with 1,809 MBA students and 120 doctoral students. The full-time faculty numbered 228, while the entire FTE (full-time equivalent) staff numbered 1,187.

A glance at the school’s publishing operations is also instructive. At $137 million in 2009, they were the largest single source of school revenue (29 percent). In physical terms, they consisted of 8.3 million cases sold, 1.5 million books sold, a circulation of the Harvard Business Review amounting to 0.24 million, and 2.9 million reprints of HBR articles sold. But there is a danger lurking: academic leaders may be carried away by the lure of the revenue potential and overlook or, unhappily, compromise their dedication to the primary academic mission of their institutions. Awareness of the danger can prevent its occurrence.

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