Benedictine focused on education, not profit
Recently, I had the opportunity to serve on a panel at the annual conference of Credit Suisse, a multinational financial services company specializing in investing in companies that show promise. I quickly learned the conference was a playground for hedge funds. Hedge funds are funds about which I have little understanding. I felt a little out of place because the major participants were the for-profit institutions like the University of Phoenix, Capella University and DeVry University.
Yet my fellow panelists were from more traditional nonprofits like Boston University and Colorado State University Global Campus, the online campus of the Colorado State University System. Since this was our first conference of this sort, we wondered what was going on. Our panel was scheduled for early afternoon, and I found myself scheduled for a slew of one-on-one interviews with a lot of people whom I did not know.
As I entertained first interviewer, I was very honest and said I had no idea what I was doing at the interview. He quickly dispelled my lack of understanding by explaining that he was an investor looking for investment opportunities. As such, he wanted to know about Benedictine University. As I completed my 50,000-foot overview of the university, he began to drill down and ask specific financial questions. What are the university's margins? How much "profit" was made in the last few years?
As several more such sessions ensued with other "investors," the pattern of my giving an overview and the drilling down with financial questions continued. At one point, a question arose that baffled me. "With the kind of growth and margins that you have, why haven't you sold the university?" My abrupt and shocked answer was, "Benedictine University isn't for sale."
As it came time for our panel, the scenario just described for the interviews played out on the larger stage. Each representative was give two minutes to introduce her/his institution. The introductions were followed by pointed questions regarding the rise of online programs at traditional universities like Benedictine, and the real threat these programs were to the large for-profits like Phoenix and Capella. Clearly, the investors were worried by the nonprofits' emergence as a major threat to market share.
In response to some of these questions, I suggested that Benedictine's success and that of other similar institutions has to do with "home cooking." Benedictine University and Boston University are institutions that have been around for a long time. They are brands people know and trust. As these types of institutions continue to make their way into the online market, the recognition factor on the part of potential students may bode well for our success. In fact, initial queries of our almost 2,000 online students affirm that a major reason these students chose Benedictine was name recognition and trust.
Are online programs the future of private higher education? The answer is probably yes and no. For Benedictine, online programs are part of a carefully crafted strategy of program diversification. There always will be students for whom the traditional bricks and mortar presence is the way. However, there is another important segment of students who rely on online programs for their educational needs. Both populations of students will exist side-by-side far into the future. The successful university of tomorrow must figure out how to serve both.
As I left the conference, I left with a strange yet good sense that the "big guys" were worried about us. Since the emergence of traditional institutions into the online world, the growth of some of the larger for-profits has slowed. Their investors had clearly charted a steep path of increased revenues in the online world for the for-profit institutions.
This path seems seriously threatened with the continued emergence of universities like Benedictine entering the market. As one investor said, "No matter how you cut it, there are a limited number of students out there for online education. Every student the nonprofits attract are fewer students for the for-profits."
Returning to my one-on-one interviews with the investors and the strange question about selling Benedictine, it became clear to me that they are looking for opportunities and see the influx of the Benedictines into the market as a chance to refine their investment strategies. Good business sense goes with a winner. If universities like Benedictine continue to be successful, maybe investing in them is a wise move.
This strategy, however, is where the for-profit and the nonprofit institutions differ. For-profits are made to make money for their investors and usually have a clearly defined exit strategy to sell the company. The nonprofit institution, which may run like a business, provides no profit to shareholders. There is no exit strategy to sell the business. Institutions like Benedictine are in it for the long haul.
As we celebrate Benedictine University's 125th year, we look forward to celebrating anniversaries of this institution far into the future. Our goal is not to get out of business, but to stay in business as our founders intended.
While I was flattered by the offer, Benedictine University is not for sale!
• William J. Carroll is president of Benedictine University in Lisle.