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Northeastern University is a private higher education institute in Boston, Massachusetts that serves over 14,000 students. The university’s mission is to: “educate students for a life of fulfillment and accomplishment and to create and translate knowledge to meet global and societal needs. Northeastern is a global, experiential research university, grounded in its signature cooperative education program” (Northeastern University, 2019).
The organization provides private benefits to its students because a college degree gives them new knowledge and professional opportunities (Weikart, Chen & Sermier, 2013).
Students pay tuition to the university for this service and a limited number of students can attend the school each year (Weikart et al., 2013).
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However, the university also provides group benefits because after students have graduated they can continue to gain professional benefits if the school maintains a positive reputation (Weikart et al., 2013). Finally, the university provides public benefits that benefit society as a whole. For example, research done by labs at the school has led to new innovations that protect the environment (Sustainability, 2019) and a healthy environment is something that certain people cannot be excluded from taking advantage of (Weikart et al., 2013). The university also trains future leaders, like doctors and law enforcement who can have a positive impact on society in the future. The school also helps to uphold a value held by many that people should be educated to for society to operate to its highest potential (Christ, 2015).
In the 2018-2019 fiscal year, the organization received $120.3 million in gifts and pledges and $178.8 million in external research funding augmenting the revenue that is generated by tuition and additional government grants (Northeastern University, 2019). The current tuition cost for undergraduate students is $52,420 per year. The school also receives investment returns from its $847.8 million endowment (Northeastern University, 2019). Northeastern is a Beneficiary Builder because tuition is a major source of revenue that comes from students served. Alumni, who have already benefitted in the past, also contribute via donations. Alumni continue to benefit from the success of the university which motivates them to donate.
This current revenue strategy is effective, the university already has a fairly diverse revenue stream because it offers both a paid service and collects donations. It also gets funding from the government and from other external sources to fund research. Since the organization receives significant funding from all of these sources, it will be more resilient during an economic downturn (Weikart, 2013). However, the rising number of students that graduate with significant loans to pay off has suggested that there may be a shift in the values surrounding education (Christ, 2015). While higher education is a private benefit, more and more people see it as one that should be accessible to all. As this thought shift progresses, the school may be forced to rely less on tuition and more on donations and government grants.
One way in which the university could diversify its revenue stream to protect against risk is through patent licensing. Often, research done at universities leads to patents for certain inventions. These patents can be licensed to allow other companies to use or sell the invention for a given period of time while paying the university for access (Lederman, 2019). Universities cannot go into business to sell every invention created through its research, but this provides a way for the university to still make revenue off the work. Many other universities have been successful in capturing this income stream. For example, in 2011 Northwestern University issued 67 new patents and received $191,541,162 from patent licensing (Lederman, 2019). If Northeastern were able to reach the same level, this would exceed the income that comes from private donors.
References
Christ, C. (2015, May 26). Higher education: Should college be free for all? Retrieved January 21, 2020, from https://blogs.berkeley.edu/2015/05/23/higher-education/
Lederman, D. (2012, August 28). Licensing Income Edges Higher. Retrieved January 17, 2020, from https://www.insidehighered.com/news/2012/08/28/university-licensing-in come-rose-slightly-2011
Northeastern University. (2019). A University Like No Other. Retrieved January 17, 2020, from https://www.northeastern.edu/#_ga=2.155698555.11446980.1579278543-1 076928333.1565133760
Sustainability. (2019). Retrieved January 17, 2020, from https://research.northeastern.edu/about /themes/sustainability/
Weikart, L. A., Chen, G. G., & Sermier, E. (2013). Budgeting and financial management for nonprofits organizations: using money to drive mission success. Los Angeles: SAGE.
A College Degree. (2022, May 23). Retrieved from https://studymoose.com/a-college-degree-essay
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