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Exploring income generation in schools - capacity is key

9 June 2014

Download a full copy of the report here

Read another section of the report:

defining income generation

necessity v distraction

leading from the front

capacity is key

sweating your assets

sharing good practice

One crucial element in embracing income generation, assuming that the vision and governance support exists, is that of capacity. The issue of the right people doing the right jobs was raised repeatedly at the round table. It was felt that successful schools generally could make capacity and these were the ones that were likely to be successful when it came to income generation.

If a head teacher is spending 30% of their time on their core activities and 70% of their time on administration/ finance or crisis management then the capacity is there but not being used effectively. Efficiency matrices are available from the Department for Education, enabling schools to look at comparative data, providing benchmarking information and enabling schools to measure efficiencies against each other.

It is also essential that schools work together to make best use of their resources. Through a co-operative approach schools can off-set any individual capacity issues by pooling resources to enable management of a range of activities. This might be managed through a specific trading company set up for this purpose, ring fencing liability and enabling a separate manager to be employed, possibly linking a percentage of their income to turnover generated.

Whilst a number of schools have trading companies it would seem that not all of them are actively using them or perhaps using them to best advantage. Schools that choose to run business operations in this way need to make sure they can show clear audit trails with the income going back into school improvement and having a beneficial effect on pupil outcomes. However where a school does not have its existing financial house in order this may be a challenge too far.

A co-operative approach can off-set individual capacity issues by pooling resources to enable management of activities. However, if the existing financial house is not in order this may be a challenge too far. Two distinct markets - internal and external – are identified for generating additional income.

Internal market

The internal market involves selling services to other schools. This is where schools are generally more comfortable but raises the issue of chasing the same market which is inevitably limiting although it has the advantage of shared best practice and up-skilling within the sector. For the internal market to remain profitable, it is essential that new ideas and products need to be developed. This can be time consuming even though it is a natural and acceptable part of any commercial product life cycle. Where trading in this market is not financially lucrative, a cost and a value will need to be identified at the outset.

External market

The external market is the area of trading that benefits the school, a group of schools or possibly the whole sector by bringing outside money into the system. This requires an understanding of the market being targeted but, in common with the internal market, the school first needs an understanding of what it is looking to achieve.

By developing a vision in a particular area it wants to maximise, (for example where the school has state of the art catering facilities) the question of identifying the USP that drives innovation and development becomes clear and the school becomes visible to the market.

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The content on this page is provided for the purposes of general interest and information. It contains only brief summaries of aspects of the subject matter and does not provide comprehensive statements of the law. It does not constitute legal advice and does not provide a substitute for it.

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