In 2014, recognizing that the financial sustainability of colleges and universities was challenged by internal and external forces, the NACUBO Board of Directors commissioned the Economic Models Project. They realized that reductions in public funding and endowment returns, changing demographics, and increasing cynicism about the value of higher education, coupled with reliance on traditional missions and structures, required institutions to actively engage in examination of their existing business models and envision new ones.
To assist our members in their efforts, the NACUBO Project first developed a series of white papers. Two, written by NACUBO staff, examine the current economic model and explore how colleges and universities are innovating. Five additional authors provide perspectives on issues ranging from recognizing the public good contribution of academic labor to measuring productivity at the course and institution levels in a series on academic productivity supported by the TIAA Institute.
The Economic Models Project Journey
Most recently, NACUBO has developed a tool, the Economic Models Project Journey, to assist chief business officers and other college and university leaders in engaging in the critical, and sometimes difficult, discussions at their institutions about their current and future economic models. Key to these discussions is understanding that all functions and activities, all inputs and outputs, of an organization contribute to its financial well-being. Thus, discussions about financial sustainability are not limited to the business office or accounting function; they must include all aspects and cross all silos of the college or university.
The Journey guides the user through the four key areas of the business model: mission, structure, strengths, and resources. It provides lists of questions for institutional members to use to assess the current state and define their desired future. The Journey focuses on topics that colleges and universities must discuss; it does not provide solutions, as the solutions will be as unique as the institution and must reflect its collective thinking about how best to serve its students and community.
At the end of the Journey, the institution should have identified the dimensions of its economic model that are non-negotiable and those that it will focus on to transform itself, having answered the “What Are We?” and “What Should We Be?” questions. Then the critical work of development and implementation of strategy begin.
Ideally, this work will be integrated with other assessment and planning work the institution is engaged in such as program review, strategic planning and accreditation self-study. As depicted, the process will be iterative; given the rapid pace of change in the environment external to higher education, colleges and universities will need to regularly review their economic model and adjust to current and pending changes. The Journey’s “Guidance” page offers suggestions about how college and university leaders can set the stage for change, and provides metrics that they can use to monitor and evaluate progress.
Hundreds of college and university leaders have contributed to the development of this Project. Particular acknowledgement is due to the TIAA Institute for its support of related research on academic productivity and to the following individuals who have served as project advisors:
Senior Fellow, Finance and Campus Management (retired), NACUBO
Senior Vice President for Strategy, Arizona State University
Vice President for Academic Affairs and Dean of the College, Pomona College
Executive Vice President for Finance and Administration and University Treasurer, Rutgers, The State University of New Jersey
Former Chief Operating Officer, Delaware State University
Executive Vice President Finance and Administrative Services, Johnson County Community College
President, University of LaVerne
President, Capital University
Vice President of Finance and Administration and Chief Financial Officer, Augsburg College
Vice President Finance and Administration (retired), Middlesex County College
Department Head, Educational Policy Studies & Practice, and Professor and Director, Center for the Study of Higher Education, University of Arizona
Vice President for Business, Finance and Technology, Elon University
Provost, American Public University System
President, Teibel Educational Consulting
Vice Chancellor for Finance and Operations, Washington State University, Vancouver