Non Profits and Sports: Are You Paying Attention?

I spent a good portion of my career in higher education in the “for profit” sector.  As such, I was frequently criticized for the funding model of institutions where I worked, especially as compared to public non-profit higher education, where education is supposedly a public good and not a commodity.  For the publics, of course, budgeting is a zero-sum game, where the expenses and revenues balance out.  On the other hand, for profits rake in huge sums of money that go mostly to investors, at the expense of academics and student services, right?

Wrong.  Thanks to a restrictive regulatory environment, for profits are accountable for reporting where all the money comes from and where it goes.  My institutions regularly filed reports detailing how (and how much) money came in and how it was allotted to various areas, including marketing, academics, etc.  Oh, yes, and the reports included the amount of state, local and other taxes we paid.

Of course, non-profits don’t pay taxes.  But they do pay fired football coaches millions of dollars that come from…where?  I’m probably a little vexed about this because Arizona institutions have recently agreed to pay out some 18 million dollars to coaches who failed.  Not to worry, we are told, the millions in question will not come from tuition or university coffers, because the sports programs are self-supporting units.

OK, wait a minute.  Let’s look at this.  Are sports programs part of the university or not?  Does the athletic program operate as part of the university, or as a separate business?  One can only wonder what good the 12 million dollars being paid to Todd Graham might do to improve academics and student support services.  And one can also only wonder how big the undisclosed pot of money is that can now afford to hire a Graham replacement for more millions.  Wonder is all we can do, since the kind of transparency demanded of for profits does not apply to the publics.

So, non-profits, how about showing us where these funds come from, where they go, and why they are separate and apparently untouchable and unavailable to the university community.  Where do the funds appear on your ledgers, and how do they figure into a zero-sum budget?  Do they generate interest?  If they are not part of the university budget, are they taxed?  Just asking.

ASU recently revealed that it is reviving its tennis program thanks to generous infusions of start-up capital (expected to total five million dollars) from at least one individual investor (oh, sorry, “donor”) an athletic gear sponsor, and other nameless supporters.  The program had been discontinued, we are told, because of financial problems in the athletic budget. Would that be the same budget that is now paying out millions to someone not to work?  And by the way, the millions still flow even if the two fired Arizona coaches get other jobs.

The point here (well, one of them) is that the term “non-profit” higher education is increasingly hard to defend.  We need to stop pretending that institutions with substantial portfolios (aka endowments) and programs with deep but hidden pockets are not businesses.  If it looks like a duck, walks like a duck, and quacks, well….