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HBCUs Explore Ways To Move Beyond Tuition Dependence

Mary McLeod Bethune was determined to see her dreams of educating Black Americans to fruition, even if it meant supplying the fruit herself.

Bethune and her students sold pies and fish sandwiches to local construction crews to finance their fledgling school for girls in Daytona Beach, Fla. Their entrepreneurial instincts supported the formation and expansion of what became Bethune-Cookman University.

More than a century later, historically Black college and university leaders are hearkening Bethune’s example to move their institutions from a model of tuition-dependency to opening alternative revenue streams that will ensure their institutions’ financial future.

“HBCUs are heavily tuition-dependent,” says Dr. Marybeth Gasman, a University of Pennsylvania higher education historian. “When enrollment goes down, the schools are vulnerable. They serve some of the neediest students in the country who have a difficult time paying. It’s great to have other revenue sources.”

With most of higher education grappling with the effects of a weak economy, the National Association for Equal Opportunity in Higher Education (NAFEO) explored ways that under-resourced HBCUs can gain financial independence at a session at its annual conference in Washington, D.C., last month.

Discussants identified economic development, alumni giving and online education as areas where HBCUs can strengthen their financial security, grow their endowments and expand their student base.

It’s not just financial solvency at stake. Dr. John Wilson, executive director of the White House Initiative on HBCUs, says these institutions must be innovative and entrepreneurial to compete.

“There is a lot more competition for our students, and we need to pay attention. Half of all African-American students are being educated at community colleges. The competition is stiffer, so schools need to be more innovative,” Wilson says, noting that HBCUs “would do well to tap (into the online) market” of students that has served the University of Phoenix so well.

Required adjustments include recognizing new delivery platforms for education and diversifying that vehicle for delivery, says Wilson, who singles out Hampton, Jackson State and Mississippi Valley universities as innovative institutions that are headed in the right direction. 

“If you try to run your institutions only on tuition, that won’t make it,” says Hampton University President Bill Harvey. “Quality costs, and we have to provide quality for all.”

Tuition generates just 35 to 40 percent of Hampton’s operating budget. The Council of Independent Colleges considers an institution that relies on tuition for more than 60 percent of its budget tuition-dependent.

Under Harvey’s leadership, Hampton has used the school’s endowment to build hotels, a shopping center and office buildings on the Virginia coast. Partnering with financial firms and businesses like JP Morgan and Sun Trust, Harvey says it’s important to assess a venture before risking an institution’s capital.

“You take what you have and you make what you want,” Harvey says. “You must do your due diligence in getting the information first and do as much research to assess the risks and rewards.”

Harvey says the projects can be economic drivers, providing an additional source of revenue for the institution and jobs for the community. The university owns Hampton Harbor shopping center, which generates $1 million in profits each year, an apartment complex, and an office building in Richmond, Va., among other properties.

Even if development is not in an institution’s future, Nelson Bowman, director of development at Prairie View A&M University, says every HBCU can improve its fundraising infrastructure and get alumni involved in giving.

“Across the board HBCUs garner about 5 to 8 percent participation on average from alumni,” says Bowman, noting most alumni report they don’t give because they have never been asked. “There is so much more to be gained from those who benefited from the education we provide.”

His institution recently completed its first capital campaign, exceeding its goals by raising about $32 million. Bowman credits its success to shifting priorities and training help from the Thurgood Marshall College Fund, which provided grants to help Prairie View staff earn certifications in fundraising management from the Center for Philanthropy.

Disastrous economic times only spur the need for generating revenue outside of federal funding, says Dr. Benjamin Chavis, president of Education Online Services Corporation. Online education has exploded into a multibillion-dollar industry with thousands enrolling in schools like the University of Phoenix, a top producer of Black graduates. Chavis’ company has recently partnered with NAFEO to build online degree programs at member schools.

“The online higher education business would be a way for HBCUs to gain greater financial sustainability,” says Chavis, who has developed an online degree program for education at Jackson State University. “We take the great work (HBCUs) have done on campus and extend that academic reach to students not only in the vicinity of the college but around the world.”

No single effort will generate the much-needed funds to help HBCUs thrive, but resolve to recapture Bethune’s enterprising spirit might. At the heart of their futures are “leadership and entrepreneurship,” says Wilson.

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