Education is not only costly on the part of the consumer, but is also costly when one considers the various challenges that higher education institutions (HEIs) face. One such challenge involves ensuring that a school caters for the needs of students with diverse needs. For instance, following limited exposure to some learning resources such as technology, some students need extra attention before they develop the required skills. Operating higher learning institutions demands a rigorous assessment of numerous factors such as rate of enrollment, competence of faculty, current costs (salaries or updating technology) among others. The Illinois College of Optometry (ICO) is the largest in the United States and the oldest educational facility focusing on teaching optometry. Just like any other higher learning institution, ICO experiences challenges, which affects its operational efficiency. Thus, an assessment of the factors and how they determine the choice of funding is warranted. However, based on given information, ICO’s can benefit largely from capital funding.
Before delving into a discussion of the rationale for choosing capital funding for ICO, a review of the institution’s current state of being is recommended. In 16 years, ICO has experienced a drop in the rate of enrollment. Afriyie (2015) noted various factors which determine financial sustainability in an institution of higher learning. He explained that the higher the rate of enrollment, the higher the likelihood to achieve financial stability. Having more students means that the university is earning more through tuition and other fees. Bates and Kaye (2014) explored the impact of an increase in tuition fees on the experiences of staff in HEIs. The authors explained that higher tuition fees increase students’ expectations such as creating the expectation for apparent employment post-graduation. However, that is not always the case following constant changes in the job market. Nevertheless, Bates and Kaye (2014) confirmed that staff in HEIs experience work-life balance, job satisfaction and motivation among other outcomes. The rationale is that with such kind of effect, the faculty and other staff become even more competent following exposure to continuous training. In such a case, it is not certain whether an HEI such as ICO is experiencing the said effects due to a reducing rate of enrollment.
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Other factors that ICO needs to consider involve current costs such as updating new technology, maintenance of already existing facilities, new equipment, salaries, funding and sustaining programs among others. The said financial needs could affect operations in an HEI. With such information, the grant operating fund would be the best option for ICO. It could help sustain the said financial needs thereby ensuring that the institution remains operational throughout. The general operation support is mainly focused on ensuring that an organization’s mission is maintained through promoting continuity of day-to-day operations (“What is general operating support”, 2014). With such an understanding, one can notice why ICO could benefit from a general operating fund. While that is the case, it is important to consider that apart from the said financial needs, ICO has other financial needs which undermine the ability of the general operating support as a source of financial stability in such an institution.
The decision to seek capital or venture capital funding bases on the fact that ICO has ownership of property adjacent to the main campus. The property provides an incentive for the institution to venture into real estate. There have been suggestions that a surgical center could be established following partnership with the University of Chicago. Lerner and Tag (2013) discussed the potential for venture capitalism in boosting economic growth. The authors explained that in order to produce output, there is a need for both capital and labor. Most importantly, such integration determines the degree of output. In the case at hand, ICO is the target institution whereby the availability of capital in terms of funding for equipment, technology, maintenance, as well as staff and faculty salaries can help promote various positive outcomes. Through having a satisfied body of staff and faculty members, the most likely outcome will be competence when providing educational services. That being the case, the students at ICO will experience better performance as a consequence of the high-quality education given. As one of the oldest optometry institutions in the U.S., the United Kingdom (UK) and Canada, ICO has the topmost lecturers and faculty in various areas of specialty. Therefore, supporting these individuals with reasonable salaries alongside other benefits would act as an incentive for them to stay. Another likely outcome is attracting students from various regions hence increasing the rate of enrollment.
From a venture capitalist perspective, the idea is to have investors provide funding to support ICO’s projects and operations. However, ICO would be required to surrender a percentage of its shares or equity to its financiers. While that can be perceived as a disadvantage on part of ICO’s board, it would also create an opportunity to share risks. Lerner and Tag (2013) explained that investors, just like business owners, take-up part of the risk in a company in the event that losses occur. Further, they also anticipate the effect of new entrants into the market. A reduction in sales would affect the annual revenue generated thereby interfering with an institution’s operations. In the same manner, ICO would suffer similar consequences in the event that the institution does not invest to diversify its organizational structure such that it caters for the needs of all students. With a capacity of about 600 students, ICO could attract more students which would need further institutional development. An increase in the demand for new technology would also affect ICO’s ability to satisfy the needs of day-to-day operations. As mentioned earlier, ICO could enter into real estate as the institution claims ownership of a property adjacent to the main campus. Venture capitalists are likely to show interest in creating a business which is in line with optometry. For instance, the proposed surgical center could attract officials from health institutions for purposes of networking and establishing business relations. In such a case, ICO is likely to experience an increase in revenue thereby achieving financial sustainability.
Conclusion
Higher education institutions demand access to a reliable source of funding due to their wide array of financial needs. An institution ICO which is home to renowned professionals in various areas of specialty in medicine should have a stable source of funding. The general operating fund could help sustain operations but would not be sufficient when it comes to promoting growth and development for the institution. Therefore, the recommended funding option suggested is capital funding. Through venture capitalists, ICO is likely to engage in activities that would create a new pool of sources for generating revenue. The institution will not only manage to deal with the effects of low enrollment rates, but also allow for creation of facilities thereby enhancing students’ experiences.
References
Afriyie, A. (2015). Financial sustainability factors of higher education institutions: A predictive model. International Journal of Education Learning and Development, 2 (3), 17-38. Retrieved from http://www.eajournals.org/wp-content/uploads/Financial-Sustainability-Factors-of-Higher-Education-Institutions.pdf
Bates, E., & Kaye, L. (2014). Exploring the impact of the increased tuition fees on academic staffs’ experiences in post-92 universities: A small-scale qualitative study. Education Sciences,4 (4), 229-246. doi:10.3390/educsci4040229
Lerner, J., & Tag, J. (2013). Institutions and venture capital. Industrial and Corporate Change,22 (1), 153-182. doi:10.1093/icc/dts050
What is General Operating Support and Why is it Important? (2014). Retrieved from https://www.geofunders.org/resources/what-is-general-operating-support-and-why-is-it-important-678
