Financial Planning

Fundraising

If you grow a solid community of supporters who are excited about this innovative approach to education, see the Communication and Promotion section for help with organizing successful fundraising events or crowdfunding campaigns.

Setting a Tuition Scale

Most ALCs are private organizations mostly supported through tuition or fees, rather than grants or public tax-based funds. We recommend looking at the prices of other private schools in your area. An ALC should be able to operate at a lower cost than most local private schools, but generally can’t operate as cheaply as church-sponsored schools since they are subsidized by the church.

In this scenario, you are really managing your number of students times your AVERAGE tuition which will probably need to be higher than half of your target tuition to have the school be financially viable. This will allow you to admit students who are good fit to grow the school’s culture rather than just those who can pay the top end of tuitions. You will still need to attract families that can pay tuitions at the high-end of the scale to balance making access available to families at the lower end of the scale.

Determining a Family’s Tuition

Many private/independent schools offer aid by using a third party service to dig into each family’s finances. The service then provides a recommended tuition amount to the school. We have found it more useful to interact with families directly about their financial situation. Being able to speak openly about tuition sets the tone for the family's relationship with the school.

This conversation turns the money talk away from what we are used to: competition between buyers who are trying to get the most of the least amount, and the seller, who is trying to get the most for the least work. The goal for each family is to find a tuition amount that feels both generous (adequately values the education) and responsible (does not make a family resentful about the costs or threaten their ability to meet other needs).

Utilizing your Finance Workgroup in this process is essential; a sliding scale tuition agreement is a pledge to support your ALC community and to foster an experience of fairness. This policy should be agreed to by more than a single administrator.

We have set up the tuition-setting process to look something like this:

At the end of the Admissions Application (and a necessary step to complete it), the family completes a Tuition Worksheet. They input the family’s total gross annual income and it returns a recommended tuition based on that figure. Then the family completes the worksheet by making a tuition offer which may be above, below or the same as the recommendation.

The completed Tuition Worksheet is emailed to the members of our Finance Workgroup for approval. The workgroup reviews the recommendation and the offer from the family. It is critical to see how the offer fits into the larger financial landscape. For example, too many minimum tuition offers brings the average tuition down and makes the school unsustainable.

The goal is for the family to feel like they are giving generously and responsibly, and for the Finance Workgroup to make sure the school is making sustainable financial agreements for the school.

If you are a member of the Agile Learning Centers network, we will provide a Tuition Worksheet and Tuition Slider to help you determine sliding scale tuition for your families.

Tuition Payments Schedule

After collaboratively determining a family’s annual tuition amount, you’ll need to present them with their payment schedule options. These details should be clearly laid out in the Enrollment Agreement (more on that later).

We recommend offering a couple simple tuition schedule options for families. Remember: the more administrative processes you can simplify and streamline, the more time/energy you’ll have for developing culture, supporting facilitators, recruiting more students, etc.

The best, most effective standard tuition payment schedule looks like this:

• A deposit of 20% of the annual tuition amount is due with the signing of the Enrollment Agreement.

  • Suppose it is March and you’re preparing to open the doors of your ALC in September 1st. Ideally, you’d sign enrollment agreements and collect 20% deposits between March and July.

• Monthly tuition payments of 10% of the annual tuition amount for 8 months beginning before the first day of year.

  • After collecting a 20% deposit in the spring you would begin collecting 10% payments beginning August 1st. The final payment of the year would be due the following March 1st.

This tuition schedule helps startups get some working capital at the beginning, when it is really needed. More established ALCs are able to plan and budget with some degree of consistency.

In addition to the 20% deposit schedule, we recommend offering families the option to pay their annual tuition in one lump sum or two (bi-annual) installments. You may be able to offer a small (5-10%) discount to anyone willing/able to pay the annual tuition in one payment. Be very clear (in conversation and writing) that any and all tuition payments are non-refundable. The more of your annual tuition agreements you can collect upfront, the more reliably you can budget and make financial plans for the year.

Budgeting

Budgeting is a necessary and tricky process when operating an ALC, especially in the first few years. How you structure your enrollment agreement and tuition payment schedules will go a long way in determining how reliable and effective your budgeting process will be.

In an ideal scenario, you would have all students for each school year enrolled 3 to 6 months before the school year begins. In this ideal scenario, you would also have no families move mid-year, or new families decide self-directed learning isn’t quite right for them -- everyone would stay and everyone would be able to pay tuition on time.

When you’re first starting out this scenario is not very likely. It’s very common to have your projected income (tuition agreements) fluctuate throughout the year. Even when your ALC is well-established, families will move and others will determine they’re not ready for self-directed learning a few months into a school year. Creating a budget is really a process of prioritizing the various elements of your ALC’s financial operations.

The biggest pieces of the budget are the fixed costs. Prioritize facility, utilities, and other monthly bills (insurance, internet, payroll taxes, etc.) Once these are established, look at what is left and have transparent conversations with your staff and Finance Workgroup to determine salaries.

It’s also recommended that you determine what each staff role should be earning, even if you know you can’t pay that right away. This "projected salary" helps the Finance Workgroup know where to allocate funds later on. As an unfunded startup, you may not be able to pay everyone as much as you’d like, so making the full financial picture visible to these stakeholders is important. Those who are holding the vision and growing the ALC with you must understand what resources are available and how they’re used. This level of transparency will also assure more support for fundraising efforts when there are financial gaps to be filled.

After establishing a budget that covers your fixed costs, salary requirements, and other financial priorities, your focus through the rest of the school year will shift to managing cash flow. A budget only deals with the amounts by looking at the whole year at once. A cash flow projection deals with the timing of when money comes in and when it goes out, which is a different challenge to manage.

Opening Bank Accounts

Banks require a bunch of documentation and paperwork for organizations to open accounts. You will generally need:

• Articles of Incorporation to show you are a legal organization and possibly a current Certificate of Good Standing from the state

• Minutes from a board meeting which authorize who can open a bank account for the organization, and who is authorized to sign checks. Your board may also want to place a check signing limit (like $5,000). Checks above that amount require two signatures (to keep someone from removing all the school's funds with a single check).

• Tax ID Number or Federal Employer Identification Number (EIN). Bring a copy of the document the government gave you when they gave you that number.

• Government IDs for the signers who come along to the bank to provide their signatures for checks