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JulAug2015

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JULY | AUGUST 2015 BizEd 35 The One-Time Investment How can a school create activities that keep going strong even without an- other infusion of cash? Pace Univer- sity's Lubin School of Business in New York City maintains two very di£erent initiatives that are each, in their own ways, self-sustaining. The gift that keeps giving. For most schools, marketing is an ongoing expense, but the Lubin School has found a way to pay many of those costs out of a $1 million "revolving fund." The money is a small portion of a $30 million endow- ment from Alfred Goldstein, a descen- dant of the school's namesake. The donor agreed to let the school use the revolving fund to market itself as long as it repaid the fund every year with the money brought in through increases in enroll- ments. So far, the school has achieved this goal over three enrollment cycles. This is the way it works: The Lubin School spends between $250,000 to $500,000 annually promoting specialty programs that the university doesn't market separately. Any incremental gain in net tuition over the previous year goes to replenish that revolving fund up to its original $1 million. Says dean Neil Braun, "The number of in- cremental students necessary to break even is calculated by the total expendi- ture divided by our average net tuition per student." It's key, therefore, to design an e£ec- tive advertising plan. "Most of our money is spent in direct marketing," says Braun. Working with a service provider, the school sends multiple tailored messag- es to prospective students; it also buys keywords to conduct pay-per-click cam- paigns that drive potential students and their parents to dedicated landing pages. All of these e£orts are tracked digitally. Less e£ective have been radio commer- cials and banner ads with click-through links, though Braun says the school will continue to test di£erent marketing plat- forms and refine its message. The critical component for the revolving fund is having a donor who believes in it, says Braun. "The key point from our donor's point of view was that he was making an investment that would be self-sustaining," he says. "He never would have given us the $1 million if we hadn't worked out the mechanism for replenishment so the fund could be used over and over." The center that supports itself. Lubin's Center for Global Governance, Reporting, and Regulation sponsors research and discussion on global finan- cial reporting. It's also the first center on the Pace campus that covers all of its expenses through specific programs. The most profitable program is the one that provides regulatory certification via the Certified Compliance and Regula- tory Professional (CCRP) designation, a joint venture between Lubin and the As- sociation of International Bank Auditors. The school also o£ers customized "boot camps" and distance learning programs that can qualify for continuing profes- sional education credits. Braun notes that occasionally center initiatives need a "jump start," and in those instances he can provide working capital from restricted funds. "But we always recoup those funds from the next revenue generated," he adds. What makes the center so adept at turning a profit? One compelling reason is that the executive director is paid out of the revenue that's generated, so he must cover all costs before he receives compensation. In fact, that's a strategy Braun would recommend to any ad- ministrator looking to turn specialized centers into self-sustaining entities. Says Braun, "Find people who are pas- sionate about creating the centers, give them strong personal financial incen- tives for generating revenue, put clear parameters in place up front, and put yourself in a position to have their hard work achieve your institutional goals." SUMMING UP As educational costs rise and state funding shrinks, business schools will continue to look for creative ways to pay for their new buildings, their new and ongoing programs, and the experience of their incoming and current students. Whether administrators are running massive capital campaigns or small crowdfunding events, one thing is certain: They'll need to continue to build close connections between their schools and their stakeholders so they can develop passionate supporters for their programs. 0 0 £

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