For Profit v.s. Not for Profit UAE Schools

For Profit v.s. Not for Profit UAE Schools
By David Westley
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In my twenty-five years of experience as an educationalist in the UAE there has never been a time when the for-profit and not-for-profit debate has not solicited strong and opinionated responses. Although the majority of my experience has been in the not-for-profit school sector, I have had the opportunity to lead schools covering both business models.

Also see: Why do some schools charge so much?

Fundamentally, for a school to become a sustainable business model it must make a profit and this applies equally to both the for-profit and not-for-profit models. This makes perfect sense to most parents but it is the perceived motives and drivers behind the ‘profit’ element that often leads to misunderstanding and heated debate.

This debate is not unique to the UAE as many an educational institution around the world is a for-profit business. Well established successful proprietary schools owned by a family or business, are a good example of this. Often parents are not aware of this and are happy to give their youngsters the opportunity of an excellent schooling in these schools, paying the fees without question. We must, therefore, ask why is there a more negative and suspicious attitude towards the for profit schools here?

Apart from those children entering the local state school system where the medium of instruction is in Arabic, the majority of expatriates pay for the schooling of their children. This may not be the case if they were in their home country and for many expatriates this may be their first venture into private schools and the burden of school fees.

Gone are the days when the school fees were part of the company package. Now, some or all of the costs impact on the ever shrinking family budget. Bearable fees for primary children, but more of a shock to the budget as the youngsters move into secondary school and beyond.

Have you ever heard a parent say they think that school fees in the UAE are cheap? I suspect not. Generally, however, fees are reasonable and reflect the nature and quality of the institution: its school accommodation, ICT provision, level of resourcing and the cost of its teaching staff.

In any school there are huge upfront operational costs at the beginning of the academic year which can severely impact upon a school’s cash-flow. In a new school without the economies of scale found in an established full school, the upfront operational costs are enormous. This explains why schools are quick to chase up late fee payments. Something all schools should do whether they are for-profit or not.

You would not complain if your lawyer or doctor removed their services for non or late payment. Why is it so different for schools where the more efficient fee chasers can be tagged as ‘money grabbing’?

A second point often raised is that the new schools have such high fees. This is easily justified with increasing building costs. It is, therefore, reasonable to expect a new school to have a higher fee structure than a similar well established school built some years ago.

The UAE needs private investment in developing the school system where, basically, no new investment means no new school.

However, in a climate of quick returns on most investment vehicles, it must be noted that there is a limited appetite for school investment. This quick return investor mentality has softened over the years when it comes to school investment. This mentality can still appear and, when it does, it places higher demands on the new school to move to operational breakeven in a shorter than normal timeframe. Understandably, this adds pressure to the finances of the school and its subsequent resourcing: both physical and human. The outcome can be seen in less experienced teachers, larger class sizes, limited resources and so forth. It is important, however, not to tarnish all new for-profit schools with this characteristic as many investors are now far more patient and realistic about their financial returns than in the past.

A new school needs to earn fees as soon as possible to pay off the initial loans. This can lead to unrealistic opening deadlines and enrolment forecasting. It can also move a school from a phased opening strategy to one that is focused on just filling the student places. So many new schools fall foul of this with delayed openings, incomplete systems appearing as disorganisation, some perceived indiscipline of students, a high turnover of teachers. This adds to the perception that ‘they are only in it for the money’ with the for-profit tag appearing to be the sole reason; not the reality that practically every building project in the area is delayed and that schools do not have the luxury of a flexible completion date such as housing.

The students at these schools often receive a good education thanks to the professionalism of the teachers. Importantly, many of these schools go on to become successful well run establishments.

There are good schools in the UAE offering a choice of curricula to fit the full range of personal budgetary needs, the majority of which are for-profit reflecting the need for private investment to expand the school system. It is very easy to compare like for like but all-too-often parents compare upwards and out of the fee structure. In this, it is important to remember that a traditional rote learning approach with larger class sizes does not require the level of funding and resourcing that a learner-centric school does.

In the UAE there are a range of salary levels often reflecting the country of origin of the employee. Whether we agree with this or not, it is a fact of life here and schools reflect this demographic in their staff and in their student enrolment. Schools recruit from a competitive pool of teachers that could be focused on a particular country and staff nationality or, as in many cases, from an international pool where salaries are a factor. Top teachers cost ‘top dollar’ and this too is the biggest impact upon a school’s fees where teacher costs can be as high as 80% or more of the operational budget. It does not matter whether a for-profit or not-for-profit school, as each is still competing for staff in the same marketplace.

Ten years ago a school investor once said to me that these not-for-profit schools are just putting money in the pockets of the teachers by paying high salaries. Implicit in this was that this money was not going to into his pocket. In this ongoing debate we know that the not-for-profit schools here in the UAE are aiming to do the best by each child and offer the best facilities, resources and teachers they can. The real question to be asked of the for-profit schools is, what are the motives that drive the business of this school. More-often-than-not it is to create a value for money good school, perhaps not a great one, and to protect the initial investment in a sustainable way with realistic returns.

Over time as school investment increases and new schools open, parents and market forces will weed out those for-profit schools with greedy motives and little thought to the students who are merely a commodity in their investment game.

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WhichSchoolAdvisor.com’s Dr Michael Biggs is an educator, senior school leader and lifelong learner with research interests in education. He has worked in primary, secondary and higher education in the UAE over a twenty-five year period and was the principal of one of Dubai’s leading secondary schools.

 

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