It's a fact that a non-profit college or university is not a business. But it does not follow that business management practices should not be applied to nonprofit higher education -- especially to private colleges and universities which must survive on their tuition and endowment revenues. The article excerpted below about the "turnaround" at Dickinson College reveals the value of appointing a president who is an "academic entrepreneur" with business experience. President Durden understands the academic enterprise and, being evidence driven from his business experience, has applied sound business practices to the leadership and management of his alma mater. It probably would be inaccurate to claim that he "Sylvanized" Dickinson, but probably accurate to assert that he adapted sound business practices from Sylvan Learning Systems (now Laureate Education) to Dickinson College.
Academic Entrepreneurship at Dickinson College
Alvin P. Sanoff, Chronicle of Higher Eduction, June 2, 2006
If Dickinson College were a corporation, Wall Street would view it as a classic turnaround story. Less than a decade ago, the liberal-arts institution was struggling. Applications were down. Enrollment was declining. Net tuition revenue — the amount a college is able to keep after subtracting money spent on financial aid — was plummeting, as was the college's bond rating. To make matters worse, Dickinson's endowment was dribbling away. "We were spending 6 percent of the endowment on running the college, and that was not sustainable," says Annette S. Parker, the college's vice president and treasurer. Yet the college was doing relatively little to build the endowment, which was a modest $150-million. Dickinson was not in danger of going under. But if these trends were not reversed, the venerable institution, founded in 1783 by Benjamin Rush, a signer of the Declaration of Independence, was heading for a major crisis. Flash forward to this year, and the picture is vastly different. Applications are at a record high, topping 5,000 for the first time. Enrollment is up by more than 350 students and now exceeds 2,260. Net tuition revenue is rising, and the discount rate — the proportion of tuition revenue the college gives back to students in the form of grants — has plummeted from 52 percent to 34 percent. Some of the grants were merit awards designed to lure certain students to the college and were not necessarily based on need. For Dickinson the future now looks promising, thanks in large part to the college's rapidly growing endowment. It rose by almost 30 percent from fiscal 2004 to 2005, placing Dickinson 16th in rate of growth among 746 institutions, according to a survey by the National Association of College and University Business Officers, done in conjunction with the pension funds TIAA-CREF. The survey puts Dickinson's endowment at $206-million, a figure that excludes pledges and deferred gifts. The college calculates that its endowment at the end of June 2005 was almost $251-million and now stands at $283-million. A substantial increase in alumni contributions has played a major role in the endowment's growth. Equally important has been the college's impressive return on its investments. For the past two years, Dickinson has significantly outperformed its peers. In fiscal 2005, its return on invested endowment funds was 12.6 percent, compared to a national average of 9.3 percent, according to the Nacubo study. The previous year, its return was 19.3 percent, topping the national average of 15.1 percent. As a result of the turnaround, Standard & Poor's has upgraded Dickinson's bond rating by two notches to A, the highest rating in the college's history. "It is difficult for an institution of higher education to accomplish the kind of financial progress Dickinson has made," says Mary Peloquin-Dodd, a credit analyst at Standard & Poor's. "That type of improvement is not common." The changes at Dickinson were set in motion in 1999 with the arrival of a new president, William G. Durden, a Dickinson alumnus. Mr. Durden, who holds a doctorate in Germanic languages and literature, brought a blend of academic and business experience to the post. For 16 years, he was an administrator at the Johns Hopkins University. He left there to head the online higher-education business of Sylvan Learning Systems Inc., now called Laureate Education Inc. Mr. Durden, who describes himself as "an academic entrepreneur," was reluctant to take the Dickinson presidency. As a member of a college advisory board at Dickinson, he kept hearing that the college was never in better shape, but that assertion was not supported by data. "There was no transparency," he says. When he arrived, Mr. Durden brought a jolt of energy to a community anxious to move Dickinson out of its doldrums. "The faculty were ready to shift from the status quo to change," says Provost Neil B. Weissman, who has been at the college for three decades. A strategic plan that had been languishing in a college committee for several years was completed in one semester. "We needed a catalyst, and that was Bill," says Mr. Weissman. Chronicle subscribers can read more ...