Creating a Nonprofit Board in a For-Profit School

In 2008, our school began as a preschool licensed child care center, a for-profit business, with no ability to fundraise. This restriction forced us to maintain fiscal responsibility so as to ensure business sustainability. As a small licensed center, our mission remained strong in the face of challenges.

 

In 2016, we decided we were poised to grow. We extended the preschool program for one school year, and later opening an elementary division. The demand was high; the school went from 35 students to 91 over one summer break! Things got real, and fast.

 

The school needed a financial plan, a source of sustainable funding; hard-core decisions needed to be made. The important piece was ensuring that the mission stayed true and steadfast and that it would not be blurred in the face of financial need, growth or loss. To do this, we required a long-term projections that included staffing, physical space, benefits, and other common costs. We created a 10- year plan with a three-tier projection: high, likely and low.

 

Using this process, we arrived at a figure for a minimum number of students needed to offset these costs. Any additional students would bring revenue that would move to the capital account for long-term goals of adding a gymnasium, science lab and other wish-list items. The important piece in this model is that no financial aid can be offered; rather, actual funds of scholarships dollars must be put into the account in order to ensure that each student has the full tuition amount on the payment plan. Funds for the scholarships are raised through an annual drive and kept solely for the purpose of providing funds for families committed to the school and in need of financial assistance. Determinations of such are discussed with a small tuition committee consisting of a board member, accountant and faculty member. This model guarantees that the budget remains sustainable, since tuition fees do not need to rise to cover the shortfall from financial aid.

 

CREATING A NEW BOARD

 

At the beginning of the pandemic, we established a task force to determine what was needed to make the leap from a small program to a community school. The task force recommended that we become a nonprofit led by a board of directors. The task force team discussed the importance of a board of directors for representing the school within the community, generating strategic planning and providing financial stability. Three lay leaders undertook board training to carry out the transition from a small, private program to a budding Jewish Montessori community school.

 

The board in formation faced a steep learning curve, exacerbated by Covid. For starters, they need to craft a mission statement that captures the new school while staying true to its original vision. As one of the new members explains, “It is both exciting and frightening to join a board of a fledgling school with powerful ideals and lofty goals. It is also a complicated task for non-educators to understand and address the needs of teachers and administrators as well as students and parents.” Additionally, board members need to gain experience and comfort in their multiple roles of sounding boards, advisors, fiscal planners and marketers.

 

Even as the school has become a nonprofit organization, it continues to utilize the model it created originally to work to maintain its stable financial plan. While Covid has created a need for dramatic and vital fundraising, the goal is to get back on track with full tuition covered by each family whether from scholarship, government funding plans or other resources, thus keeping the school primed for long-term financial responsibility.

Author
Yossi Scheller, Board Chair, and Brocha Baum-Margolese, Head of School, Darchei Noam Montessori, Baltimore
Issue
Leading Together