Assets for hire

There is a popular misconception that independent schools have endless streams of fee income. For a few, this may be true. For the others, Nick Durkin suggests boosting the coffers by increasing income from lettings

Affordability is a problem for both parents and schools. In an effort to reduce the lifetime costs of education, parents try for scholarships and/or bursaries, which place a growing burden on schools. Alternatively, some parents now opt in to an independent education at a stage when they believe that their child will receive maximum benefit: whether pre-prep, preparatory, lower school or A levels.

Commercial turnover
Ask any independent school bursar about turnover and he/she will know the income from fees fairly accurately, but may be less precise about income from commercial activities, such as from functions and lettings. Yet this is an area which deserves to be seriously reviewed by governors and senior management.

Many schools have sought to increase income from their commercial activities and have been successful with their trading subsidiaries, covenanting by gift aid significant sums to their school. Some, though, have neglected this area. This may be due to a number of factors: opposition from the school community, no person responsible for lettings and functions, facilities deemed inadequate, or inertia.

Governors’ responsibilities
The generation of income from commercial activities should feature in any governing body’s review of a school’s business model, since academic institutions should seek to maximise income from their assets. This additional income may be used in a variety of ways for the benefit of the school: increased numbers of scholarships and bursaries, public benefit initiatives or new buildings.

Schools have a considerable number of letting assets at their disposal: residential accommodation, music schools, art studios, playing fields, classrooms, sports centres, swimming pools, all of which may be used to generate income. Governors and senior management should consider the level of commercial income generated by their school and ask if it is possible to increase it. To maximise returns, the school should aim to manage all lettings. By letting facilities to third parties, schools forgo substantial additional income.

It is possible to construct a business model which shows the maximum potential income that can be generated when taking account of local competition from other schools and businesses. The business mix should be considered by balancing lettings, adding value, returns and risk. Due regard should also be given to the school’s ability to deliver the services to sustain an increased level of business.

Teachers and support staff will only be committed to the expansion policy if they can see the benefits it brings to the school to compensate for any disruption.

The key to generating a high level of income is to appoint a commercial manager. Schools usually have one or more of the following posts: bursar, domestic bursar, estate bursar and finance bursar, but few have a dedicated person whose sole function is to increase income from activities such as lettings, functions, school shops and sports centres. Quite often these functions are delegated to two or more members of staff who see it as being subordinate to their main roles in the school. As a consequence, the pursuit of income is low on their priorities.

The way forward
School governors and senior management should review their level of commercial activity as a matter of urgency and set an attainable rate of return.

Many schools assume that their educational success and profile will automatically lead to school holiday bookings. This is rarely the case. The availability of firstclass facilities for hire does not guarantee substantial income. Sound commercial plans are required and an objective approach and vision needed.

All parents, especially those who run their own companies, will recognise, support and thank governors, heads and bursars for increasing the use of school assets for the benefit of all.

Nick Durkin has 34 years of bursarial experience gained at state and independent schools, most recently at Charterhouse. He is now a consultant for Athis Ltd, specialising in helping schools maximise return from assets. Nick can be contacted on 01403 268143 or office@athis.co.uk

Return to Commercial Activities