Commercial Activities

Are you maximising your other income?

Many schools are suffering from rising costs and pressure to limit fee increases and so are seeking alternative sources of income. Tracey Young reviews other options for funding

Lettings have proven lucrative and, for some schools, have meant the difference between a deficit and surplus. In the current climate, it is worth reviewing these activities to make sure your school is not missing out on opportunities.

Boarding schools
The options available to a school are dependent on the facilities at your disposal, and often boarding schools are at an advantage. During the holiday periods when the school would otherwise be empty a number of boarding schools provide their facilities to language schools, summer schools and conferences generating significant levels of income and are often recurring year on year. In some cases, schools run summer schools although this can be more complex due to staffing requirements but does enable you to have more control. Some boarding schools also host weddings which can include full catering and accommodation.

These activities do not come without their costs. It is important to consider the additional wear and tear on your site. There will also be staff costs associated with the lets, whether that is cleaning, catering or management. It can also mean the bursar is forced to take their holiday during term-time to ensure they are available during lets.

Holidays are the prime time for a school to complete those little (or large) repairs, redecoration or building projects. Your external lets will not be happy to work to the sound of hammering and neither will your pupils, so it is important to manage the process carefully.

Boarding schools generally have more restrictions over their ability to let their facilities during term-time due to the requirements of pupils and consideration needs to be given to child protection issues.

Day schools
Day schools have the advantage of only having pupils onsite for a limited time each day and not at weekends. To supplement income and to meet the demands of parents, many schools provide breakfast, after-school and holiday clubs. A number of day schools let their swimming pools, sports facilities, theatres and halls to local community groups and classes in the evenings and at weekends. However, for a day school the income is far lower and it is important to monitor costs to ensure you are not losing money. In fact, for many schools the main motivator can be integration with the local community rather than income generation.

Promotion
Effective advertising of your school, its facilities and availability for lets is extremely important. For many lets, once they are established they continue week by week or year on year with little additional work but obtaining the initial let can be a challenge.

Schools with significant levels of lettings may employ a letting/business manager or equivalent. This ensures there is an individual who is focussed on ensuring income is maximised and will manage the process, but income must be at a reasonable level to cover the cost and provide sufficient work for this individual. In many cases, lets are managed by the bursary staff who are often already extremely busy and have to fit this in with their other duties.

Restrictions
Many schools have planning restrictions in place which limits their ability to let certain facilities and so it is important to check this before embarking on a programme to generate additional income. Also, when obtaining planning permission for a new facility it is important to limit any restrictions where possible so that you have flexibility of use in the future. Although this is easier said than done.

Other common areas
Other areas where both boarding and day schools generate additional income is by providing catering to other schools which do not have sufficient facilities of their own, and school shops. The latter often do not generate large profits, a significant amount of cash can be tied up in stock and they can be extremely problematic from an accounting perspective. For many boarding schools, the school shop is extremely useful to pupils but many schools have opted to outsource to an external provider and instead receive a commission.

Public benefit
We also can’t forget public benefit. For many schools there will be competing demands on facilities, firstly from the pupils, secondly to demonstrate you are providing public benefit and lastly to generate income. In many situations, the school may feel it is more appropriate to provide the school’s facilities to other organisations free of charge or at a discounted rate rather than to charge a full fee.

Conclusion
Generating additional income is essential for many schools in the current climate, but it is important to maintain a balance to ensure that overall costs do not outweigh the benefits. It is also important to be aware of the tax and VAT implications of such activities or you could incur unexpected costs.

Tracey Young is a partner at haysmacintyre. Tracey can be contacted on 020 7969 5654 or tyoung@haysmacintyre.com. 

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