Book contents
- Frontmatter
- Contents
- Illustrations
- Preface
- 1 An Introduction to the Higher Education Industry
- 2 The Higher Education Business and the Business of Higher Education – Now and Then
- 3 Is Higher Education Becoming Increasingly Competitive?
- 4 The Two-Good Framework: Revenue, Mission, and Why Colleges Do What They Do
- 5 Tuition, Price Discrimination, and Financial Aid
- 6 The Place of Donations in Funding the Higher Education Industry
- 7 Endowments and Their Management: Financing the Mission
- 8 Generating Revenue from Research and Patents
- 9 Other Ways to Generate Revenue – Wherever It May Be Found: Lobbying, the World Market, and Distance Education
- 10 Advertising, Branding, and Reputation
- 11 Are Public and Nonprofit Schools “Businesslike”? Cost-Consciousness and the Choice between Higher Cost and Lower Cost Faculty
- 12 Not Quite an Ivory Tower: Schools Compete by Collaborating
- 13 Intercollegiate Athletics: Money or Mission?
- 14 Mission or Money: What Do Colleges and Universities Want from Their Athletic Coaches and Presidents?
- 15 Concluding Remarks: What Are the Public Policy Issues?
- Appendix
- References
- Index
11 - Are Public and Nonprofit Schools “Businesslike”? Cost-Consciousness and the Choice between Higher Cost and Lower Cost Faculty
Published online by Cambridge University Press: 17 July 2009
- Frontmatter
- Contents
- Illustrations
- Preface
- 1 An Introduction to the Higher Education Industry
- 2 The Higher Education Business and the Business of Higher Education – Now and Then
- 3 Is Higher Education Becoming Increasingly Competitive?
- 4 The Two-Good Framework: Revenue, Mission, and Why Colleges Do What They Do
- 5 Tuition, Price Discrimination, and Financial Aid
- 6 The Place of Donations in Funding the Higher Education Industry
- 7 Endowments and Their Management: Financing the Mission
- 8 Generating Revenue from Research and Patents
- 9 Other Ways to Generate Revenue – Wherever It May Be Found: Lobbying, the World Market, and Distance Education
- 10 Advertising, Branding, and Reputation
- 11 Are Public and Nonprofit Schools “Businesslike”? Cost-Consciousness and the Choice between Higher Cost and Lower Cost Faculty
- 12 Not Quite an Ivory Tower: Schools Compete by Collaborating
- 13 Intercollegiate Athletics: Money or Mission?
- 14 Mission or Money: What Do Colleges and Universities Want from Their Athletic Coaches and Presidents?
- 15 Concluding Remarks: What Are the Public Policy Issues?
- Appendix
- References
- Index
Summary
COLLEGES AND UNIVERSITIES MUST BE COST-CONSCIOUS
A college or university faces powerful incentives to hold down its costs whether it is engaged in a mission-good or revenue-good activity and whether it is public, private nonprofit, or for-profit. As our two-good framework makes clear, though, the differing missions mean that the reasons for concern about costs differ. A traditional not-for-profit school has the incentive to hold down costs because the more successful it is at that, the more money it can transfer to its unprofitable mission. And when the school is providing its mission-good services it also has the incentive to hold down the production cost so as to be able to maximize the amount of the services it can provide. Thus, whichever activity the school engages in, revenue goods or mission goods, it faces the incentive to be efficient, choosing how to spend its resources – acting “businesslike.” It is clear that for-profit firms also have an incentive to hold down costs, as an element of their pursuit of profit.
Businesslike behavior extends in a number of directions in addition to cost-cutting. It includes the search for profitable markets, such as distance education or the leasing of the university's stadium or golf course for commercial use (which may be subject to “unrelated business” taxation if done “regularly” by a private nonprofit school).
- Type
- Chapter
- Information
- Mission and MoneyUnderstanding the University, pp. 196 - 205Publisher: Cambridge University PressPrint publication year: 2008