On the wall outside the dining hall of our school is a plaque commemorating the donations of “Major Corporate Benefactors” of the school’s “Building Our Second Century” capital campaign held in 2002. Giving levels range from gifts above ¥50,000,000 (about $400,000 in 2002) down to ¥100,000 (about $800 in 2002).
Evidently, there was a time when corporations were supportive of the financial needs of non-profit international schools. However, if I am wondering if those golden years of corporate largesse are largely gone, it’s probably worth wondering about the circumstances under which those contributions were made.
In a purely unscientific study conducted by myself, I asked several multinational corporate decision makers what might have changed over the last twenty years that would change (for better or worse) the willingness of companies to financially support international schools. And here’s what I heard.
Autonomy
Back then, the regional offices of multinational companies were much more autonomous. Rules regarding Corporate Social Responsibility (or most anything else) simply didn’t apply overseas. Regional managers had enormous leeway in deciding how best to operate in their market. The need for high quality education for the children of executives (and access to that education) required a company-school relationship that simply had no comparison in the home market. If the regional office felt it was important to financially support their local international school, so be it.
To be blunt, those days of near-absolute autonomy are gone in most mature markets, not least of which for the reasons below.
Competition
Due primarily to the increase in for-profit institutions, the number of international schools has grown tremendously over the past twenty years. While many markets still have a dominant (more desirable) player or two, there is now often intense competition amongst international schools, especially for the younger students.
Companies that previously felt it necessary to improve a particular school in order to make it a selling point for their expat executives (and to ensure space at the school for the children of those executives), now have a range of shiny institutions that they can highlight. If education is still part of the compensation package, companies (and even governments (embassies)) now feel more comfortable offering a fixed amount for a child’s education; if the parents want a more expensive school, it comes out of their own pocket.
Expat Executives & Packages
Twenty years ago, a common practice amongst multinational corporations was to ensure that the leadership (and even mid-level management) of the regional office reflected the culture and sensitivities of the home office. This resulted in companies providing expensive expat packages for dozens of their executives, and needing to find space at good schools for 50 or more children. Those expat packages included not just education for the kids, but relocation costs, the finest housing, club memberships, private health insurance, annual (if not more often) repatriation flights, cars, drivers, etc..
In addition to the eye-watering cost of these expat packages, there was the friction caused by the glaring difference between the compensation packages of expat versus local hires… not good for company morale. So, accelerating after the financial collapse of 2007-2008, companies began experimenting with hiring more and more high level local hires who wouldn’t need these packages. By and large, this push has been successful; the number of executives requiring gold-plated expat packages has decreased. Ironically (and anecdotally), many of the successful local hires for these companies are citizens of the host country who were alumni of these international schools.
Taken together, this tells us that companies gave in the past in order to help improve one of the limited schools available to them, which would then help the company to attract the best executives to the country; in addition, that school would be expected to accept the children (often numbering over 50) of those executives. If your school is operating in an environment where there are now more options for international education, and the average number of expat executives has decreased dramatically, you can expect that the chances of securing large “donations” from corporations has also decreased dramatically.
That’s not to say that there aren’t other ways to secure financial support from companies beyond tuition. However, if the expected amounts to be raised are ever going to be more than nominal, I would suggest that any reference to philanthropy be abandoned. This is sometimes a difficult concept for non-profits to adopt, but similar to how the price of tuition and fees is developed, a value must be put on whatever else the school may have to offer. What do you have to offer that is of value to a company?
Advertising
What we call, “recognition” in the nonprofit world is known as “advertising” in the for-profit world. It is true that the demographics of our school communities can be attractive to the right company, so there is perhaps the potential to open a new revenue stream by selling advertising. But I’m thinking that anyone reading this right now is already recoiling in horror. If I had pitched it as a company altruistically supporting our programs, and that we, as a school, insist on thanking them for their support, that would have sounded better. But between us, please let’s just call it what it is so that we’re not surprised by the amount of work we end up having to do to support this “donation”. If a company has a line in their budget for philanthropy, it is unlikely to include donations to an expensive private school. So if they’re going to participate, they’ll probably justify it as an advertising expense, which will then require them to analyze their ROI… and all of a sudden, the school is a marketing agency that has to demonstrate results (and form new connections every time there’s a turnover at the company). Leaving aside the community reaction to seeing corporate logos around the school, the required investment to provide ongoing support to sustain this advertising revenue just isn’t there.
Having said all of this, the one program that may attract real corporate donations is need-based scholarships; while not a guarantee, supporting local children who couldn’t otherwise afford an education from our school is the closest our schools are likely to come to fulfilling any CSR requirements a company may have in place. I highly advise any school that doesn’t yet have such a program to consider it as soon as possible; I personally believe that it is the morally correct thing to do, but it also adds a very attractive Case for Support not only for companies, but all constituent groups. It also helps the school to come closer to achieving its own DEI goals, and provides a buffer against economic downturns that might cause tuition revenue to drop. To see the appeal of donating to need-based scholarships, one need look no further than the $1.5b endowment of Phillips Exeter Academy, where by far the largest restricted purpose (34% of the Endowment) is for need-based scholarships.
Debentures
Rather than soliciting donations that may involve unwritten expectations, debentures put those expectations in writing for a specific price (like this program from HKIS). In order to guarantee a place for a qualified candidate, companies (and individuals) can purchase a debenture. In order for this to work, the school needs to be full, and be regularly turning away qualified applicants.
Variable “Capital Assessment Fee”
Finally, in an earlier post (where I wrote about the role of wealth in admissions, here) I proposed the idea of schools allowing applicants to state (during the application process) how much they would be willing to pay for the required “Capital Assessment Fee”. The minimum may be $10,000, but applicants would be free to enter their own amount. To be clear, I haven’t reconciled myself to this, and I don’t know of any school that is considering it, but it’s intriguing.
Regardless of which revenue streams we pursue, we must always remember that we are nothing without our community; we must feel utter confidence in being completely transparent with our business practices, placing them on our website for the world to see (as HKIS did with their debenture program).
In the end, additional revenue from companies may still be a possibility (especially for those with desirable, limited spaces), and may supplement donations that we receive from our other constituents. But given the effort required to secure and maintain certain types of corporate support, and the inevitably limited bandwidth of tiny Advancement offices at international schools, leadership must question whether these resources wouldn’t be better utilized developing cases for support, philanthropic traditions, and lasting relationships with individual community members who have a long term passion for supporting our mission.