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Errors In Thinking About School Affordability

A major problem facing a majority of Christian schools is affordability. ​Hard economic times examine the field and reveal those schools that have a strong financial plan. Much of what we do in Christian schooling, we do because that's the way we've always done it. I'm sure you agree - that is not a good reason for why we ought to do things at all. On the contrary, there are several things that are critical to understand in order to determine whether or not your school is financially affordable.

This article will visit a few distinct errors Christian schools fall into that can easily bring financial fracture or ruin to their organization. ERROR #1: Raising Money the Wrong Way Almost every Christian school at one time or another has held events to raise funds., such as candy sales, gift wrapping, fruit sales, magazine subscriptions, and more. These fundraisers are extremely labor intensive for a limited return. Compare the man-hours you put into a single event, for example a golf tournament. 25 volunteers, maybe 60 hours each, on average. That's 1,500 man-hours of labor spent on one event. Your event does well and makes $25,000. That's about $17 an hour you've raised -- and that's if your event does better than most. Event-based fundraising is not very self-perpetuating. From year to year, the school must get the volunteers to put in the hours to produce the event to make a specific (usually very limited) amount of money. Additionally, many of these fundraisers see a large percentage of the proceeds go back to the vendor of the event (the candy company, for instance). Instead, the focus on any funding activity should be on building relationships, not trading goods. In order to have a robust annual fund, you must regularly develop and cultivate relationships and share your vision. Relationships are not limited in the way events are. If someone is sold out on your vision, they will communicate that excitement to others. How many people get so excited about your pizza sale that they tell people they know, "hey Joe, you just have to try out this pizza fundraiser my kid's school is doing ... it's great!" No, it's more like, "Joe, look, I bought a magazine subscription from your kid, now I'd appreciate it if you'd buy a pizza from mine." People get excited about a vision, not fundraising. If they do get excited about fundraising, it's because they are excited about the vision that the fundraiser supports. To sit down with someone and ask them to support your vision is a much more ethical, cost-effective, and rewarding approach to funding.

ERROR #2: Raising Money for the Wrong Things Which is the more valuable dollar to you, one that is designated for needs-based scholarship or the designated for the operational deficit? The answer is universally - both dollars have equal financial impact. However, ask the person in charge of fund development which dollar is easier to raise. Universally, the answer is needs-based scholarship. Gifts to needs-based scholarships will allow a child to attend your school who otherwise could not afford to do so. Many schools raise money for the general operating budget through events. However, donors generally don't want to give to an organization to "keep the lights on." Organizations that need this kind of help year after year have not developed a meaningful, nor sustainable, annual giving philosophy. Donors generally want to see their funds used in one of two ways: 1) to help students get a quality Christian education that otherwise would not be able to afford it or, 2) capital improvements. The worst dollar you can try to raise is for “the pot." Your deficit is not an incentive to a donor.

ERROR #3: Ignoring True Affordability Most Christian schools really don’t have a good plan or strategy (in most cases) to be able to effectively reach out to families up and down the economic ladder. Some schools have figured this out, but most schools that want to be affordable need to refocus their efforts to accomplish this wisely. ​So, what is true affordability? It is made up of two components:

  1. Tuition priced to cover the cost of your service,

  2. Robust financial aid to assist families that need it.

Indiscriminate aid is typically not helpful, if not unethical and borderline illegal. Schools must use the same financial aid verification process for all applicants. This approach allows the families that can afford the full cost to pay for it. This is important because your families most likely assume that the tuition they are paying is the full cost, unless you have consistently implied otherwise. "The problems we face cannot be solved at the same level of thinking that created them.” ~ Albert Einstein

ERROR #4: Segmenting Economically Pricing strategy is a profound statement of ministry philosophy. Conventional wisdom is that the lowest possible tuition is the most compassionate and ministry-minded, because, seemingly, more lower-income families will be served. However, if we set a tuition without adequate financial aid, we are targeting a certain income level, whether it is low, middle or high, and effectively segmenting our market accordingly. If tuition is set too low the more affluent parents might question the quality of the program. "If we raise tuition, we will lose families" becomes the drum beat of the school board. Set tuition too high and now you are only reaching the affluent, the rest are shut out without proper financial aid help. There is no reason why your tuition pricing needs to be central to either your vision or values. The essence of your school is a changed life. Everyone needs what you have to offer. Market this value over your tuition rate.

Conclusion These types of changes are very difficult to implement because most of them cut against the grain of many schools' organizational culture and assumptions. However, they are crucial to the survival and health of Christian schools. If you want what you’ve always had, keep doing what you’ve always done. Otherwise, now is the time to get serious about changing --- and then truly follow-through with that resolve. Authored by Clint Holden © SchoolRIGHT, LLC., unless otherwise specified. All rights reserved.


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