Colleges Spend Like There’s No Tomorrow. ‘These Places Are Just Devouring Money.

[Hibush]

Ok, but at least doing this gets Prof. Sanchez a good endowed chair salary.

And endowed professorships may be what keeps the Kay Center for Basketweaving a viable department.

[Wahoo Redux]

Ok, but at least doing this gets Prof. Sanchez a good endowed chair salary.

And endowed professorships may be what keeps the Kay Center for Basketweaving a viable department.

And you don't need a $42M loan to do it.

[lightning]

Ok, but at least doing this gets Prof. Sanchez a good endowed chair salary.

And endowed professorships may be what keeps the Kay Center for Basketweaving a viable department.

And you don't need a $42M loan to do it.

Maybe.

As long as the university $ that used to fund Prof. Sanchez's position doesn't get subtracted away from the unit.

I've seen this happen at my place. A big donor finally funds a faculty position, but really all the big donor is doing is paying for a faculty member's salary & benefits, in order for the freed up money to disappear into the ether.

[dismalist]

I've seen this happen at my place. A big donor finally funds a faculty position, but really all the big donor is doing is paying for a faculty member's salary & benefits, in order for the freed up money to disappear into the ether.

It doesn't disappear into the ether, it disappears into what the administration wants. Or, the ether is the administration.

This lies in the nature of non-profits. In for-profits, the owners take home any surplus. The discipline of competition is what keeps the surplus from getting too large. In non-profits, there can still be surplus, but nobody can take it home. Instead, the administration has control over that surplus, making for its ability to determine what it is spent on -- sports stadia rather than tuition drops, whatever.

And though competition could equally discipline non-profits, the cartels of the Accreditation agencies restrict that. 

Just about everything one doesn't like about higher education is attributable to those incentives.

[jimbogumbo]

So, how do you explain the abject failure of for profit universities?

[dismalist]

So, how do you explain the abject failure of for profit universities?

I knew that was coming!

Some for profits still exist. Colleges come and go. Not for profits fail, too. We have a whole thread about them!

Rather than first worry about who benefits from surplus [Joey's slice of cake is bigger than mine, Mommy], worry about the accreditation cartel. Why accreditation is necessary at all is beyond me. Schools would have to build reputations on their own without it. That, by itself, would keep out short-run profit makers while leaving room for long-run profit makers. Higher ed is a long run business. Bologna (maybe 1088), Oxford (maybe 1096), Heidelberg (1386), Harvard (1636), but Humboldt reinvention (only 1810) don't need accreditation! And after all, those failed for-profit schools were accredited.

Think incentives to figure out money flows.

[Kron3007]

This seems a little oversimplified.  From what I have seen, s alot of spending comes from various sources tied to specific projects.  For example, a university may get a large gift to support a new university centre, and has to spend it on that. It is very possible to be Ina. Financial pinch overall, and yet still have dedicated funding to do specific projects. 

Yes.  We can get funding from the state to build new buildings, and recently we got private donations for a couple new buildings.  However, we can't get state funding to maintain the buildings we already own.  That's a problem.

Yes, this is a major problem and outside of most university's budgetary decisions.  There may be funding available for a new fancy building, but it isn't sexy for public entities or private donors to upgrade windows or fix a leaky building. 

I would also add that everywhere I have been has insanely inflated prices for this type of work.  If I want a job that should cost $500, I have come to expect at least a few grand, likely more.  This is crippling, and a big part of why so many in universities are in the state they are.

[dismalist]

Taking money for buildings but not having money for maintenance is something only a non-profit would countenance. No one cares if, how, or when maintenance monies arrive. The administration is happy!

If there are unwanted gifts, just refuse them.

[lightning]

I've seen this happen at my place. A big donor finally funds a faculty position, but really all the big donor is doing is paying for a faculty member's salary & benefits, in order for the freed up money to disappear into the ether.

It doesn't disappear into the ether, it disappears into what the administration wants. Or, the ether is the administration.

This lies in the nature of non-profits. In for-profits, the owners take home any surplus. The discipline of competition is what keeps the surplus from getting too large. In non-profits, there can still be surplus, but nobody can take it home. Instead, the administration has control over that surplus, making for its ability to determine what it is spent on -- sports stadia rather than tuition drops, whatever.

And though competition could equally discipline non-profits, the cartels of the Accreditation agencies restrict that. 

Just about everything one doesn't like about higher education is attributable to those incentives.

Not "whatever." Non-profits are mission-driven. There is no "surplus" that can be taken home by owners. Administrators are supposed to follow & abide by the non-profit's mission. They are not supposed to have complete control. The mission controls (should control) the decisions The only reason they seem to have complete control is because of the erosion of governance and a Board of Directors that is asleep at the wheel.

You talk of incentives. Yes, incentives. Incentives are important. When a donor that funds a faculty position & sees that their donation did not strengthen a program or center or event or curriculum but rather instead was part of a shell game that allowed admins to have the capacity to re-direct money at their discretion (money that otherwise would have been directed to that line for that faculty position) to whatever they want, donors have no incentive to fund programs and the people in this programs. At least with new buildings, a donor knows that their money is being used as intended, and that they are reminded of it when they drive by it.

Incentives, indeed. Nothing disincentives a donor more than that donor seeing that their money did not help the cause that they were trying to help.

[dismalist]

Not "whatever." Non-profits are mission-driven. There is no "surplus" that can be taken home by owners. Administrators are supposed to follow & abide by the non-profit's mission. They are not supposed to have complete control. The mission controls (should control) the decisions The only reason they seem to have complete control is because of the erosion of governance and a Board of Directors that is asleep at the wheel.

This is precisely the nature of a non-profit.

[ciao_yall]

Taking money for buildings but not having money for maintenance is something only a non-profit would countenance. No one cares if, how, or when maintenance monies arrive. The administration is happy!

If there are unwanted gifts, just refuse them.

In California, capital bonds can be used for building new, or massively renovating old buildings, but not on repairing or maintaining existing buildings.

So everyone takes what they can and hopes there are enough operating funds to maintain and repair.

[dismalist]

All this does remind me of C. Northcote Parkinson's infinite wisdom [Parkinson's Law, 1955 in The Economist] about bureaucracy, and specifically buildings in the bureaucracy. Now, higher ed is an arm of government, so everything carries over.

He observed that as the number of vessels declined in the Canadian navy, the number of admirals went up. No surprise there anymore to anyone in higher ed -- administrators vs. faculty numbers.

Specifically, about buildings, he notes that when institutions start devoting time to improving their buildings, the end is nigh. The British Colonial Office was spread in buildings all over London until 1913, when they got a central building of their own. Needless to say, that was the apogee of the British Empire, all downhill thereafter.

Of course the United Nations started out with a beautiful building! And thereafter ... .

All this sounds like universities to me, surely public, but even private.

[lightning]

Not "whatever." Non-profits are mission-driven. There is no "surplus" that can be taken home by owners. Administrators are supposed to follow & abide by the non-profit's mission. They are not supposed to have complete control. The mission controls (should control) the decisions The only reason they seem to have complete control is because of the erosion of governance and a Board of Directors that is asleep at the wheel.

This is precisely the nature of a non-profit.

Exactly. It's not too hard to come to agreement on that.

The dissonance happens when non-profits and higher ed admin ranks get these "business" types who strut around saying they will run things like a business--and that's when things start happening like donations and grants disappearing into the ether (via shell game), when mission becomes secondary to business process and business narrative and business personae.

It's really easy for anyone and everyone to come to agreement on the nature of a non-profit. But with erosion of governance and BODs who are asleep at the wheel and/or still want to run a non-profit like a business or worse are aligned with the mismanagement of the non-profit, we end up with non-profits and universities whose stated mission becomes secondary, so it's no surprise that donors don't want to fund people & programs because they know the admin shell game will negate the impact of their generosity.

Research faculty at my place are exhausted with what happens to the big $ grants that they bring in, with much of it disappearing into the ether (the worst is when research faculty brings in a big grant, soft money is used to create staff and faculty positions but then admins take away the equivalent and previously dedicated lines). Is it any wonder, then, that the internal fund-raisers, the STEM faculty who bring in grants, have donor exhaustion as well? And, now, they no longer have incentive to raise money through grants.

Incentives, indeed.

[dismalist]

Not "whatever." Non-profits are mission-driven. There is no "surplus" that can be taken home by owners. Administrators are supposed to follow & abide by the non-profit's mission. They are not supposed to have complete control. The mission controls (should control) the decisions The only reason they seem to have complete control is because of the erosion of governance and a Board of Directors that is asleep at the wheel.

This is precisely the nature of a non-profit.

Exactly. It's not too hard to come to agreement on that.

The dissonance happens when non-profits and higher ed admin ranks get these "business" types who strut around saying they will run things like a business--and that's when things start happening like donations and grants disappearing into the ether (via shell game), when mission becomes secondary to business process and business narrative and business personae.

It's really easy for anyone and everyone to come to agreement on the nature of a non-profit. But with erosion of governance and BODs who are asleep at the wheel and/or still want to run a non-profit like a business or worse are aligned with the mismanagement of the non-profit, we end up with non-profits and universities whose stated mission becomes secondary, so it's no surprise that donors don't want to fund people & programs because they know the admin shell game will negate the impact of their generosity.

Research faculty at my place are exhausted with what happens to the big $ grants that they bring in, with much of it disappearing into the ether (the worst is when research faculty brings in a big grant, soft money is used to create staff and faculty positions but then admins take away the equivalent and previously dedicated lines). Is it any wonder, then, that the internal fund-raisers, the STEM faculty who bring in grants, have donor exhaustion as well? And, now, they no longer have incentive to raise money through grants.

Incentives, indeed.

Absolutely!

Looks like there's plenty of money. Just not going to the right places. Why? 'Cause they're non-profits!

[lightning]

Not "whatever." Non-profits are mission-driven. There is no "surplus" that can be taken home by owners. Administrators are supposed to follow & abide by the non-profit's mission. They are not supposed to have complete control. The mission controls (should control) the decisions The only reason they seem to have complete control is because of the erosion of governance and a Board of Directors that is asleep at the wheel.

This is precisely the nature of a non-profit.

Exactly. It's not too hard to come to agreement on that.

The dissonance happens when non-profits and higher ed admin ranks get these "business" types who strut around saying they will run things like a business--and that's when things start happening like donations and grants disappearing into the ether (via shell game), when mission becomes secondary to business process and business narrative and business personae.

It's really easy for anyone and everyone to come to agreement on the nature of a non-profit. But with erosion of governance and BODs who are asleep at the wheel and/or still want to run a non-profit like a business or worse are aligned with the mismanagement of the non-profit, we end up with non-profits and universities whose stated mission becomes secondary, so it's no surprise that donors don't want to fund people & programs because they know the admin shell game will negate the impact of their generosity.

Research faculty at my place are exhausted with what happens to the big $ grants that they bring in, with much of it disappearing into the ether (the worst is when research faculty brings in a big grant, soft money is used to create staff and faculty positions but then admins take away the equivalent and previously dedicated lines). Is it any wonder, then, that the internal fund-raisers, the STEM faculty who bring in grants, have donor exhaustion as well? And, now, they no longer have incentive to raise money through grants.

Incentives, indeed.

Absolutely!

Looks like there's plenty of money. Just not going to the right places. Why? 'Cause they're non-profits!

There are enough successful non-profits out there. The model works. The ones that don't work, don't work because of (and I'll say it again for the 3rd time)

erosion of governance and BODs who are asleep at the wheel and/or still want to run a non-profit like a business or worse are aligned with the mismanagement of the non-profit