9 Reasons Why You Should Develop Alternative Revenue Sources on Your Campus

To offset shifts in enrollment and government funding, colleges and universities are increasingly supplementing their core revenue sources of tuition and fees, endowments and investments, and grants and appropriations from government sources. The alternative revenue sources include a seemingly endless range of activity on campus and online. Common examples include dining services, bookstores, housing, recreation centers, and transportation. Many unique revenue sources exist, too, such as collecting entrance fees for an archaeology museum, selling permits to cut down firewood from a university-owned forest, and renting event space for weddings, conferences, and more.

There are many reasons why an institution should develop its alternative revenue opportunities. Tapping into alternative revenue streams not only raises funding, it can contribute to your campus through digital transformation, improved brand reputation, and more.

1. Alternative revenues represent a significant portion of college and university finances and need to be well managed

According to the National Center for Education Statistics, in the United States tuition and fees, investments, and government grants and appropriations averages 68% of total revenue for public institutions and 74% of total revenue for private nonprofit institutions. In other words, an entire quarter to a third of the total revenue of most institutions comes from alternative and “other” sources. Such a large portion of higher education finances needs attention to ensure it is well managed.

2. Generating and diversifying revenue streams helps to counteract financial volatility

Budgets in higher education are complex and, in recent years, frequently shifting and possibly declining due to the effects of the pandemic, demographic changes, trends in appropriations, and other pressures on institutions, such as cost inflation. Generating alternative sources of revenue can help to offset difficult budgets and defray rising costs. Diversifying sources also keeps you from being over-reliant on a limited number of sources that may also be outside of your control.

3. Alternative revenues allows you to control what you can control

Alternative revenue sources are an opportunity for self-reliance and self-determination, a chance to better shape your financial circumstances with your own hands. Alternative revenue streams empower staff and students to create their own funding and accomplish their goals.

4. Better management and more revenue from existing alternative revenue sources

For some groups, alternative revenue sources are the only sources available. Many ancillary or auxiliary services (such as dining, housing, and transportation) and student groups are 100 percent or mostly self-supported. The development of alternative revenues will bolster these groups, increase overall revenue for the institution, and create role models for other campus groups interested in generating revenue to support themselves.

5. Developing revenue sources is an investment in the campus and its communities

Providing the resources and processes to generate revenue is not a trivial benefit but a major, valuable contribution to the short and long term financial viability of numerous groups across campus. From units as large and established as an entire School of Liberal Arts & Sciences to groups as small and new as a student club, supporting alternative revenue sources is a direct investment in the activities and communities that combine to make a campus.

6. Partnering can offer more goods and services to the campus

Developing alternative revenue streams may involve partnering with off-campus, third-party vendors to provide goods and services. This can create more options, such as additional dining choices in terms of location, menu, and hours of operation. It can also introduce new goods and services that your institution is unable to provide, such as transportation, that a vendor could execute with greater expertise, resources, and scalability. In all cases, you can generate more revenue and satisfy students, staff, and campus visitors with an expanded array of goods and services.

7. Accelerates digital transformation and improves payments processing and experience

Alternative revenue sources involve payments, which are increasingly through digital and mobile channels, including credit and debit cards, APMs such as Apple Pay, and campus card declining balances. Moving to mobile and online payments is an opportunity to create the modern purchasing experience that meets students and the general public’s expectations for frictionless digital interactions. Accepting mobile payments and going cash less also has many benefits for security, accounting, data, and operations.

8. Commercial activity can stimulate community and culture that bolsters reputation

The things that generate alternative revenues can also bring interest and build a positive reputation for your institution. Purchasing merchandise, attending events, or having tickets to an art museum can engage and build connections with students and campus visitors as they encounter enjoyable, educational, and otherwise valuable goods, services, and experiences. Memorable and positive interactions encourage visitors to return, and reaffirms the pride and joy that students, families, alumni, and the community have for your institution.

9. Alternative revenue generation and diversification fulfills your institution’s mission

Alternative revenues are a means to an end, which is supporting the financial health of the institution and its many departments, offices, and groups. It is commerce not for commerce sake but commerce in service of a higher purpose.

Developing alternative revenue sources is a best practice for institutions of all sizes, types, and situations because any college or university can do it and do it in their unique way. If your institution is interested in generating more and diverse revenue streams, download our playbook, Empowering Alternative Revenue Streams in Higher Education, to learn more.