The money tree—alternative revenues for community colleges

Abstract

Community colleges depend primarily on revenue from four sources: (a) tuition and fees, (b) local funding primarily from property tax, (c) state support, and (d) federal funding. As state support has waned, and funds from federal and local sources have stagnated, community colleges have followed a typical pattern to attract funds: increase tuition and fees, reduce the number of full-time faculty and staff, defer maintenance, and reduce equipment, supplies, travel, and other expenditures. Community colleges have found that they cannot continue to depend on state support for a substantial portion of their revenues, and increases in tuition must be balanced between student ability to pay and program costs. Community colleges must seek alternative revenues to fill the funding gap. The purpose of this study was to determine the range of methods that two-year, public community colleges use to obtain alternative revenue (i.e., other than traditional tax based and tuition-based revenue). The results indicated colleges are using several methods to obtain alternative revenues. Survey participants indicated receipt of revenue from (a) grants and contracts (89.7%), (b) individual financial donors (84.9%), (c) investment income (80.7%), (d) private foundations (66.7%), (e) private grants and contracts (62.7%), (f) corporate charities (61.1%), and (g) alumni (60%). Survey participants indicated pursuing revenues from (a) alumni (54%), (b) grants and contracts (51%), (c) private foundations (51%), and (d) individual financial donors (50.1%), (e) corporate charities (49.9%), (f) private grants and contracts (43.4%), and (g) investment income (28.7%). Survey participants indicated both the revenue source and how funds were used. The funding of scholarships received the most revenue from (a) individual financial donors (82.3%), (b) alumni (66.4%), (c) corporate charities (58.6%), and (d) private foundations (58.2%). Revenue from grants and contracts were used for current expenditures by 51.3% of survey participants. The results contribute both theoretically and practically to the development of methods for community colleges to obtain alternative revenues.