The P3.edu conference hosted last week at Mason turned out to be remarkably informative and thought-provoking. The conference brought together a high-level group of leaders from higher education and the private sector to explore how universities and businesses can build better partnerships.
These types of public-private partnerships have long been common in areas such as food services, transportation or landscaping. In the last few years, though, new partnerships such as online program management contracts are bringing private companies closer to the core activities of a university and making some folks nervous. No one seems to have a problem accepting the fact that Panera’s shareholders will expect to make a profit from serving us lunch in the student center, but when it comes to recruiting and advising students, or supporting online delivery, not everyone is comfortable with the profit motive.
In higher ed, we have learned the hard way that the combination of abundant public subsidies and student loans with the profit motive of private corporations may lead to abusive and fraudulent recruitment practices by some actors. Excesses during the last decade led to increased regulatory pressure on for-profit universities, severe damage to reputations, declines in enrollments, and even bankruptcies and major restructurings.
But let’s not throw the proverbial baby out with the bath water. The fact that some forms of private sector solutions have proven problematic does not mean that business has no useful role to play. On the contrary, the private sector holds the key to solving many of the challenges public and non-profit universities face. For one, private companies have virtually unlimited access to capital–as long as they can provide competitive returns to shareholders. They can make bigger bets in developing new technologies and solutions. And if they don’t, the merciless engine of creative destruction will make sure others do.
Public and non-profit universities on the other hand tend to be cash-strapped and can ill afford risky investments. They are better aligned with student interest. And their time-tested shared governance and tenure practices, though often misunderstood by the private sector, are essential to scientific and intellectual independence and progress. But universities are also caught in complex and rigid webs of practices that often preempt experimentation and innovation.
There’s no doubt that the combination of resources from the public and private sector, while by no means a silver bullet, has the potential to bring about much needed innovation and investment. As Senator Tim Kaine expressed during the conference, there are good deals and bad deals in private-public partnerships. The question is how to tell one from the other and how to learn to make better deals.
These four basic principles, which I draw from insightful conversations during the conference, may provide a good place to start:
- Articulate a clear value proposition for the student: How is the partnership going to help solve important access, affordability or student success issues?
- Distribute economic value fairly: Are the financial returns to the private partner commensurate with the risk it assumes in the relationship?
- Maintain sufficient control: Will the university retain sufficient control in the relationship to preserve its academic independence and protect student interest?
- Be transparent: How will the university community and the general public be able to evaluate whether the relationship is indeed a good deal?
The bottom line (no pun intended) is that both higher education and business leaders must be able to show that, by working together, they will be able to serve students and our broader society better, that they can remove barriers to access, reduce cost or improve learning and career outcomes. The challenges and opportunities we face are too great to think we can deal with them alone.