September 6, 2017

How to Decrease FE Funding Dependency

How to Decrease FE Funding Dependency with comercial activity

Is French polishing a viable commercial business for a provider wanting to Decrease FE Funding Dependency?

FE Providers are Very Largely Government Funding Dependent. Arguably They Don’t Control Their Own Destiny; The Funders Do. So We Need to Understand How to Decrease FE Funding Dependency

Since the Further and Higher Education Act of 1992, and the resultant Incorporation the following year, colleges have ostensibly been free of external control. They allegedly had the freedom to do their own thing!

However, the majority of providers are significantly beholden to government for their funding. So arguably have much less freedom than the 1992 Act might imply. This cannot be a sustainable way in which to run an institution that is allegedly independent. I would argue that any organisation that is more than 40-50% funded by government is very similar to a government controlled body. I accept that education is not a business in the commercial sense and that some form of government oversight is necessary. Especially when tax payer s money is being used.

 

How to Decrease FE Funding Dependency: Being More Commercial

But there is a counter argument that says that providers need to be more commercial if they are to prepare students for the commercial world. If the board and senior team are to control the business they need to free themselves from a high level of government funding dependency.

In the past we saw attempts to do this when many colleges set up college companies. Most failed.

We also saw a lot of European money being bid for and used in colleges. This was largely successful but ended in tears for some providers when the rules were interpreted in a way that lead to jail for a few.

So decreasing reliance on government funding is not without its risks. However, I would argue that relying on government funding also has its risks. Funding can be withdrawn at any time. In may cases this is where quality standards have not been achieved e.g. a failed Ofsted Inspection.

But even where funding is not withdrawn (and sometimes it should be withdrawn), most providers would prefer a high level of independence.

 

How to Decrease FE Funding Dependency

The simple answer is to increase any activity that increases non-government funding. The landbased colleges have been doing this for a very long time. They have traditionally run commercial farms as part of their activity. This has brought in significant profits when done well. When agriculture takes a downturn it can however become a burden in theory, though I’ve seen few signs of outright failure. In many cases we have seen farm estates expand the providers’ course portfolio. An example would be Plumpton College. They planted a vineyard some years ago and now has a superb reputation for the production of wine. A new Wine Research Facility was opened a few years ago. Plumpton is now the UK centre of excellence for wine courses and attracts national and international students.

To say that providers have cracked How to Decrease FE Funding Dependency would be wrong. We are a long way from that!

Many providers run restaurants and/or hair and beauty salons and consider them to be commercial enterprises. Certainly they make a financial contribution in most cases. But I would argue they are essentially training facilities that make a surplus rather than commercial arms that make a profit and offer training placements. There is a world of difference between these concepts. Some providers fail to understand the difference and fail to capitalise on commercial opportunities. They fail to understand How to Decrease FE Funding Dependency by becoming more commercial.

Commercial ventures can be undertaken alone, in partnership or as joint ventures (JV).  There are many advantages to the partnership and JV models, not least the fact they often inject commercial expertise that is missing in a more academic environment.

 

What Type of Commercial Activity Will Decrease FE Funding Dependency

Simplitically the answer is any activity that is legal and makes a profit. It might be catering or hair and beauty. these are the first palces many organiosations start looking simply because they are familair with them. But how about construction, French polishing or, say, environmental consultancy? Not many providers will think of French polishing or environmental consultancy. That might be a reason to consider them! But a better reason wil be to ascertain need and potential profitability.

There are no hard and fast rules here. The first question has to be what will work for you? The second is how do you run a business? It isn’t the same as running a provider. Sometimes the FD can help a bit but often their background isn’t in startups and their experience is limited. This is where external help or a JV can help.