Investments in board engagement, digital transformation and cost-cutting throughout 2023 are paying off in big ways for higher education institutions’ bottom line, according to the latest report by BDO, a financial consulting firm. Over half (56%) of all surveyed higher ed leaders stated their revenue increased this most recent fiscal year, a 12 percentage-point bump over last year.
“Higher education institutions are navigating uncertainty with remarkable resilience,” said Adam Cole, principal and national nonprofit and education practice co-leader at BDO. “By maintaining a focus on long-term stability, colleges and universities will be well-positioned to serve their communities, inspiring the next generation of leaders for years to come.”
However, institutions should act wisely and view this current period as a “lull in volatility” with the enrollment cliff destined to hit in 2025, warn Cole and co-author Andrea Espinola Wilson. While more leaders plan to increase spending in 2024, fewer plan to spend at levels predicted in 2023.
The survey, conducted by Rabin Roberts Research this past summer, snapshotted responses from 50 of the 250 nonprofit organizations that identified themselves as higher education institutions. Survey respondents predominantly self-reported as their organization’s CFO or director of finance (80%); the remaining were CEOs or COOs.
What are financiers thinking about?
Enrollment is now only a top concern among 22% of all respondents, an eight-point drop since last year. Economic uncertainty and budget constraints remain the top challenges, though more colleges and universities have at least seven months of operating reserves to work with (60%, compared to 54% last year).
Digital transformation was the most common top priority, capturing 30% of all respondents. Last year, financial leaders reported higher rates of “investing in technology to streamline operations” and “moving more classes online,” which, BDO suggests, shows that institutions are achieving their digital goals. Some 38% of this year’s respondents stated they were interested in reducing their real estate footprint, a 20 percentage point bump.
Furthermore, implementing new technology and change management became a top concern for 36% of respondents this year. Leaders are likely looking for tools to measure academic program impact and comply with President Joe Biden’s gainful employment and financial value transparency rules.
More from UB: With cyberattacks up, you need to know what poses the biggest security risk
Other means to increase revenue gaining traction include reducing employee count (30%) and eliminating degree programs (36%). Interest in adding new degree offerings fell by more than half to 14%.
“Colleges and universities are not just reacting to challenges but are also anticipating future needs,” said Espinola Wilson, managing principal at BDO. “This strategic foresight is critical for enhancing service delivery, streamlining administrative processes, and ultimately providing a better experience for students and faculty alike. Making these areas a continued priority—and finding ways to bolster progress with investments in technology and digital transformation—will contribute to a brighter future for all.”
Strengthening board relations
Last year, respondents were more focused on improving the skills of and retaining members of the board of trustees. Leaders now are more interested in establishing clear goals for each board member (54%).
