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Opinion & Essays - Aug, 1993 Issue #23 

FOR PROFIT VS. NONPROFIT
SCHOOLS AND PROGRAMS

by: Lon Woodbury

For years, we have been told nonprofit schools and programs have the advantage over for profit ones in terms of cost and service. Indeed, there are many people, especially in education, who refuse to deal with or support a school or program unless it is nonprofit. Some of these people have explained to me they believe a nonprofit program is freer to emphasize helping children, while for profit programs are forced to concentrate on making money. A few with even more extreme views have even gone so far as to claim that greed is the underlying characteristic of for profit programs, and public service is the underlying characteristic of nonprofit programs.

The other day I received a flyer from a program I had never especially thought of as being low cost (It is not one contained in my Directory). The flyer explained they were able to keep costs low by being nonprofit and consequently didn't have to distribute profits to owners. To me, this was a challenge to test the claim of the cost advantage of nonprofit programs.

I started with my Directory of Outstanding Special Purpose Schools and Programs since inclusion there was based on reputation and results, irregardless of legal organization status. Since there is a wide range of types of programs included, I settled on the backbone type of Special Purpose Program, the long-term, year-round school and/or program which focuses on structure and emotional growth experiences, with formal therapy being supplementary. This eliminated all the short-term outdoor and wilderness programs, as well as those which are a type of Residential Treatment Center (i.e. having an intensive care unit and/or emphasizes intensive disease model therapy).

I also eliminated Christian schools for the reason their tuition does not reflect true costs. i.e. staff often serve as missionary type volunteers, and church contributions are usually a regular and significant portion of their operating income. These are unique advantages that come from religious affiliation rather than from being nonprofit.

What was left was 33 schools/programs, operating year-round, working predominately with psychologically intact at-risk children, and surviving by meeting the needs and wants of individual families rather than an agency's guidelines or some other criteria.

True, this was only a quick survey, and factors such as add-on costs might change the results. Changing the criteria for selection of course might also change the results. Nevertheless, these results were interesting and food for thought.

The average daily tuition of the 24 for profit schools and programs was a little over $100.

The average daily tuition of the nine nonprofit schools and programs was a little over $105.

This quick survey did not support the idea that nonprofit status saves the families money. It does suggest the difference in cost to the family is minimal between nonprofit and for profit.

There was another interesting pattern. Using the same 33 programs, and arranging them by date of founding, there is an indication that Special Purpose School founders moved away from choosing nonprofit status after the year 1980. Eight of the nine nonprofit schools were founded before 1981, and only one was founded after 1981. On the other hand, 17 of the 24 for profit schools were founded after 1980, and only 7 were founded before 1980.

Many observers have claimed that a sea-change in American attitudes occurred during the eighties. This change seems to also be reflected in Special Purpose Schools and Programs. It is reflected in a tendency for new Special Purpose Schools and Programs to prefer for profit status since 1980.

Admittedly, this is only a cursory examination, and I would welcome comments or other observations, or even some detailed research on the subject of the differences between for profit and Nonprofit Schools and Programs.

Copyright 1993, Woodbury Reports, Inc. (This article may be reproduced without prior approval if the copyright notice and proper publication and author attribution accompanies the copy.)

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