Should Non-profits Compete or Collaborate?

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Competition works pretty well in the business sector if it’s fair and business plays by the rules. Competition in the non-profit arena is a problem, as it puts enterprise value over mission.

Many are understandably confused by the necessity for non-profits to show a profit to survive. The reason is that the IRS distinguishes between the two sectors around purpose and intent not profitability.

In spite of this, a good non-profit is run like a business, although its purpose is not the enrichment of owners and shareholders but delivering on the organizational mission under which it was established. That mission may be social, environmental, educational, religious, health-related, or cultural.

I am occasionally asked by Vermonters, “Are our billion dollar medical center and our half-billion dollar university non-profits in more than name? The legal answer is yes but the honest answer can only be determined by looking at how well they fulfill their non-profit mission. A significant factor is how much they choose to compete or collaborate. In practice they usually do both.

In healthcare, we’re seeing our clinics, community hospitals, and medical centers move from competition to collaboration in preparation for impending changes in state and national healthcare administration. There’s nothing to keep us from trying the same in education.

Competition is fed by marketing information rather than mission and, for years, colleges and universities have been competing furiously for a declining number of American students and the growing number of international ones. Competition is now international with China building over 100 colleges modeled after Stamford.

I worry that the competitive construction strategy at many colleges will, in fact, make them less competitive in the future landscape of higher education, as they struggle to cover the costs of buildings and maintenance.

The future of higher ed will be marked by three cost-reducing changes: lower campus residency, sophisticated online courses backed up by one-on-one mentoring, and the addition of an off-campus practicum or experiential learning opportunity. This should make for a more focused and intense learning experience. The practicum will weld together academic and real world learning, the online component will replace costly and perpetually outdated textbooks with digital libraries.

But this is not enough to make the current higher ed institutions financially viable. Paradoxically, to compete, they must look at collaboration. Imagine if 8-10 of Vermont’s 26 colleges combined forces, say, in food systems, each offering a certificate in what they do best. It would include a brief residency, augmented with a farm or facility-based internship. Graduates would compile certificates towards a Vermont-branded undergraduate degree in food systems.

College and post-graduate enrollments are declining except at the Tiffany colleges. Students the world over are looking for affordable learning opportunities that meld academics and experience and don’t burden them with debt. It’s time to try something different. Vermont has the opportunity to deliver on both by building on the assets of many or all of its 26 colleges` and universities.

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