Six limitations of the nonprofit education model



I love working in the not-for-profit higher education sector.

A mission driven institutional orientation aligns well with my values.

I take pleasure in the thought that the campus that I work will endure for the decades and hopefully centuries to come, just as it as endured and prospered in the decades and centuries past.

The goal of creating social value above profits provides a sense of purpose.

The culture of openness, transparency, and sharing within the not-for-profit education sector is the basis for the relationships that I\’ve developed with colleagues at other institutions.

We believe that the market is not the only method that should organize and motivate group behavior and individual action, and see our institutions as a countervailing forces to the dominant free-market paradigm.

Not-for-profits seem to be good at taking a long run approach, of investing for the long-term.

Having worked in both the for-profit education / publishing sector and not-for-profit higher ed, I can say that the not-for-profit model aligns most closely to my values and long-term professional aspirations.

Still…..I see that the not-for-profit education model is not without its problems.

Too often, we in non-profit education have failed to learn what our colleagues in the for-profit can teach us. We have been vocal about our critiques of the for-profit model of higher ed, without bothering to think critically about where the not-for-profit model falls short.

6 Limitations of the Not-For-Profit Education Model:

1. A Lack of Risk Taking:

We have less incentive to take big risks because our upside is limited. None of us working in non-profit higher ed enjoy stock options or will get big payoffs if we are acquired. The personal career consequences for taking big risks and failing are very scary, where the potential pay-offs almost non-existent. This structure that discourages personal risk taking in our careers filters up into a bias against institutional risk taking. It is the rare leader in higher ed (they do exist) who is willing to make big long-term bets and absorb the risk of failure.

2. A Love of Tradition:

Many of us (myself included) love the tradition that comes with higher ed. We love the ceremonial aspects inherent in the rhythm of university life. Our traditions tie us to the past and connect us with future generations. The downside of all this tradition is that change management is particularly difficult.

3. A Tendency to Protect the Status Quo:

A university is a very complicated place with multiple goals and overlapping priorities. All of us have an interest in protecting our corner of the enterprise. We might want the institution as a whole to change, but we don\’t what we are doing in our small corner threatened or altered. The structure of the not-for-profit university is often built around ideas of autonomy and local control. This autonomy provides flexibility and often encourages excellence, but is not conducive to systematic or coordinated institutional change.

4. An Orientation Towards Job Protection Over Job Change:

Would you say it is fair to say that the not-for-profit higher ed workforce has not changed as quickly as the labor composition in the private sector? Do you see a distribution of employment on your campus that you would not replicate if you were designing an institution for higher learning in 2013? How often do higher ed employees move across the different sectors or departments of the university? Do you have a system in place to identify your top 20% of high-potential employees, while simultaneously committing to moving your bottom 20% to positions that are more suitable to their talents?

5. A Tendency Towards Unchecked Organizational Complexity:

How often do we see an office or unit close on a university campus? How many initiatives, centers, or new committees get started each year vs. how many that stop operating? When we add new processes, regulations, or requirements do we take an equal number away? Organizational complexity always starts with the best intentions. We see a strong need for some service or process, and we create a new organizational structure to meet that need. The challenge is that almost nobody has the incentive or the power to stop something once it is entrenched.

6. A Reluctance to Invest in Productivity Measures:

It is no secret that not-for-profit higher ed has not enjoyed the same productivity gains as the other information industries. Part of this is no doubt a function of Baumol\’s cost disease, as wages have risen for the highly educated employees that makeup a university workforce. Some of our lack of productivity gains seems to be a function of a lack of focused effort to increase productivity. We often have many goals on campus, goals around quality improvements in all aspects of teaching, research and student life. Rarely do we make investments with the explicit goal of increasing quality simultaneously lowering costs.

Can you dispute, critique, demolish, or add-to this list of the limitations of the not-for-profit education model?

Do you have examples of higher ed leaders who have been able to transcend the limitations in the not-for-profit sector?

Can you point education leaders who have been able to remain true to the strengths of a not-for-profit model, while embracing the advantages of a for-profit orientation?