214 Strategic Leadership
tuition has reached a structural limit in families’ financial capacities. If the trends
continue, it is just a matter of time before students from all but the top 5 percent
in family income will receive ever-enlarging discounts, progressively diminishing
net tuition income and slowing starving many institutions.
Many institutions with the right locations, programs, and innovative capacity
have responded strategically and creatively to the new limits by finding new
revenue streams that build on existing administrative and faculty overhead.
They create professionally oriented graduate programs, open centers for adult
education around the region, and expand offerings and enrollment in low-cost
fields with a practical turn, often using distance learning to expand their reach.
In many cases, these programs produce income on which the academic core of
the institution has come to depend, even as the core itself shrinks in size. The
situation is not unlike the patterns in large research universities, where under-
graduate tuition, research overhead, and programs with high net revenues fund
the research and teaching in the arts and the humanities (cf. Zemsky, Wegner,
and Massy 2005).
In some cases, however, the new financial engine will not be sustainable,
since it is subject to intense competition from other institutions and low-cost
educational providers, and rapid shifts in demographic and economic trends.
Strategic leadership forces these issues into the open and tests financial models
for their staying power and durability. The “brutal truths” and structural vulner-
abilities have to be confronted before the best options can be chosen. It will take
changes in structural elements, not just budget reallocations, to address these
issues. Options such as the three-year degree, collaborations between community
colleges and four-year institutions, alternating work and study programs, new
educational services for a growing retirement population, and more educational
alliances with organizations in workforce education and management develop-
ment are examples that change the financial model in more structural terms. In
addition, the ever-present need for new capital to initiate and sustain programs
and scholarship budgets has to be filled through large doses of philanthropy,
which brings us to our next topic.
FUND-RAISING
No matter how successfully a campus implements a system of strategic priori-
ties to manage its expenditures, it will constantly need to enlarge its resources.
Inflationary pressures in salaries and benefits can only increase over time, and cost
increases for facilities and financial aid are inexorable, especially in the highly
competitive world we live in today.
As new strategic needs and goals are developed and approved, they will always
require funding. When these priorities are formulated according to the disciplined
processes of strategic planning, they connect directly to the institution’s capacities
to generate large sums of capital and operating funds from sponsors and donors.
This capacity is a defining element in the institution’s strategic position and