Why schools in Australia shouldn't go broke

The recent spate of independent school closures and/or going into voluntary administration concerns me. It concerns me that these schools have managed their way into such a financial mess, but I am even more concerned about the knee-jerk reaction that may be caused by such poor administration.

Schools are not and never will be businesses. I'll say that again. Schools are not and never will be businesses. The purpose of a business is to serve its clients and stakeholders and to make a profit. The purpose of a school is to educate and to provide a sense of community and belonging and while doing so, be financially astute and responsible.

There is a huge difference between running a school so that it fulfils its purpose to educate, than to run a school for the purpose of being financially viable or profitable. 

One of my Executive Coaching clients is a school principal who has been doing a magnificent job in taking his school from being good to outstanding. His school's recent review, coupled with a standing ovation that he received at a speech he gave to 200 of his peers as he spoke from the heart about his journey over the past 2 1/2 years at a recent conference, are indicators of the success of his journey.

He is absolutely passionate that the school he serves exists for the education of its students. The school does not exist to make money. Yet he uses business and financial management principles as tools to help him deliver on the purpose of his school - to educate its students and to provide them with a sense of community and belonging.

His understanding of how the system within which he operates from a financial perspective works is second to none. He uses that knowledge to ensure that the financial management of the school serves the purpose of the school.

In this context, understanding why the school exists is paramount to ensuring that financial management practices serve the purpose of the school, and ensure that the cart doesn't come before the horse. Schools do not exist to make money. This doesn't mean that they can't make money, but if making money becomes the purpose for the school, then education will suffer. Purpose is really that powerful.

The recent school closures are indicators that something has gone terribly wrong. School leaders need to have a strong understanding of finance and need to use that understanding for the benefit of schools. A closed school doesn't serve any purpose.

In closing I encourage better fiscal management of schools. But I urge those of influence to ensure that the school's finances don't become the focus and the reason the school exists, else our children will ultimately suffer.

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