I had the privilege of attending the 2024 NBOA Annual Meeting & Business Solutions Showcase in Atlanta alongside my colleagues this past February. One clear takeaway from this valuable time together was the pressing need for independent schools to adapt to a changing environment by improving efficiency, reducing costs, and tackling emerging challenges such as rising operational costs, declining enrollments, and difficulties in recruiting and retaining business office staff.
Addressing Staffing Shortages
The need for outsourcing may arise during times of change, like when there are new leaders or staff transitions, or when the retention of skilled personnel becomes a significant concern. This need is particularly pronounced amid a shortage of accountants and a surge in retirements due to the aging workforce.
In the face of these challenges, outsourcing can provide access top-tier talent and processes without incurring prohibitive costs; providers bring expertise in complex areas like audit preparation and endowment management, which is vital for schools that might not need or afford such specialization in-house.
Linda Dennison, CFO of Glenelg School in Ellicott City, Maryland, brought in an outsourced accounting firm when the school experienced staff shortages due to retirements and turnover. Their support extended to tasks such as account reconciliations, implementing an automated bill payment system (Paymerang) integrated with their cloud accounting software system (Blackbaud), and facilitating the conversion of the tuition management system among other responsibilities.
When the long-time business manager at Nativity Preparatory School in New Bedford, Massachusetts, retired, the school was not able to quickly make a full-time hire for the position. A member of the board suggested that they consider outsourcing, so they reached out to the local office of a well-known firm. The outsourced firm quickly identified opportunities for automation and increased efficiency, migrating Nativity Prep to QuickBooks Online, and implementing a bill payment and expense management system (Bill Spend & Expense) that integrates seamlessly with QBO. Head of School Jay Goldrick said, “We now have timely and accurate monthly financial statements, including a cash forecast that enables us to have more transparency and stronger decision-making processes than we've ever had.” The plan is to hire a full-time business officer once other leadership changes have been settled.
Focusing on Higher-Level Priorities
In the dynamic landscape of independent schools, financial leaders often find themselves juggling multiple roles, including overseeing financial reporting, human resources, facilities, technology, school stores and more, which can be overwhelming.
Outsourcing can be a strategic solution for business officers looking to focus on higher-level financial and operational issues within their school, such as modernizing legacy accounting systems or streamlining inefficient processes. In other words, outsourcing allows financial leaders to avoid getting bogged down in day-to-day details, thus improving financial transparency and operational effectiveness.
This approach involves entrusting specific functions to external partners when the school doesn’t have in-house capacity or lacks specialized expertise. Mabel Williams, CFO of The Country School, in Easton, Maryland, encountered such a dilemma where the scope of her responsibilities began to impede her ability to focus on essential tasks, including the timely preparation of month-end close and monthly financial statements.
The part-time controller comes in one day a week and works remotely other days as needed, communicating through texts, emails and calls.
"I've been able to dedicate more time to operational matters,” said Williams. “We've been actively engaged in strategic initiatives aimed at enhancing our financial operations, which includes analyzing certain programs to adapt to changing environments, refining our financial assistance program, and conducting comprehensive analyses to optimize staff benefits and retention.” By entrusting tasks such as reconciliations, audit preparation, and monthly financial reporting to the outsourced provider, the CFO and head of school were empowered to refocus their energies on strategic initiatives. The part-time controller comes in one day a week and works remotely other days as needed, communicating through texts, emails and calls.
Enhanced internal controls and regulatory compliance are also crucial considerations, as outsourcing firms stay current with the latest changes in accounting standards and education-specific financial regulations, helping to safeguard against errors and fraud.
While outsourcing provides a solution for addressing capacity gaps and enhancing operational capabilities, it is essential to note that it does not require schools to relinquish control, sacrifice their on-campus culture, or compromise their institutional identity. Instead, it’s about making the most of available resources to focus on the school’s main goals.
Selecting a Provider
Choosing the right service provider is critical. Independent schools should look for firms with expertise in independent school financial management, and a deep understanding of the nuances of school budgets, fundraising, endowments and compliance with accounting regulations.
Once the need for outsourcing is identified, the selection process should revolve around several key criteria:
- Expertise: Seek service providers that specialize in working with nonprofits.
- Reputation: Verify their reputation by requesting referrals and conducting thorough background checks.
- Quality: Prioritize service providers known for delivering high-quality services tailored to the unique needs of independent schools. Look for evidence of their ability to meet and exceed client expectations.
- Cost: While cost is an important factor, it should not be the sole determinant. Consider the value proposition offered by each service provider in relation to their expertise, reputation and the quality of services provided.
- Communication and Support: Emphasize effective communication channels and support systems offered by the service provider. Ensure they are responsive, accessible and capable of addressing questions and concerns promptly.
- Technology: Evaluate the potential for leveraging innovative technologies to enhance efficiency and accuracy.
By following a tailored selection process that prioritizes expertise, reputation, and effective communication, independent schools can establish successful partnerships with outsourced providers that enhance operational efficiency and support long-term organizational objectives. Scalability and flexibility are further benefits, as schools grow or contract, outsourced partners can adjust their support levels, accordingly, ensuring financial operations match the school's current scale.
Room for Growth?
For independent schools, where business officers often wear multiple hats, outsourcing can provide much-needed relief and operational support. Business officers can concentrate on strategic planning, academic resource allocation, and other high-level responsibilities knowing the financial details are in expert hands. It can free up key personnel to focus on what schools do best — educating the next generation — while ensuring that the financial backbone of the institution is strong and resilient. As financial stewards in the education sector, it's an approach worth considering for its potential to transform operations, strategic focus and educational outcomes.
