Business AdvisoryEducation

Schools are businesses too

13 March 2019
3 min read

The education sector continues to be the domain of Governments and not-for-profit organisations while other industries that have been traditionally dominated by similar business models, including the aged care and health sectors, are undergoing accelerated transformation through increased competition from for-profit enterprises, while the education sector has largely remained not-for-profit.

Because of this traditional status, there’s a failure to appreciate that a school is like a business and in many ways can operate as such. Recent events have shown even not-for-profit organisations within the Education sector face similar challenges to any other business, including issues like:

  • Declining revenues and increased competition – from loss of student numbers and changes to Government funding

  • Privacy breaches – concerning student data along with cyber bullying

  • Financial dealings and compliance issues – involving both staff and board members

  • The challenge of retaining executives due to increased liabilities (i.e. GST).

Schools were originally tasked with the role of educating children in a safe and caring environment, unburdened with the concerns of profitability. But with expectations to provide benefits outside the classroom, schools have evolved into integrated service providers, not only to students, but the wider community too.

Examples of this include:

  • Accommodation – for staff, parents and third parties.

  • Hospitality – operating community facilities, holding functions, as well as hosting tours.

  • Food catering – providing meals to staff, students and parents for functions.

Like commercial businesses, schools struggle with generating ‘surpluses’ critical for future investment (i.e. new or upgraded facilities), on top of managing current pressures including:

  • Rising Costs – in the form of services (i.e. electricity and staff), limiting the ability to find savings.

  • Employees – attracting and retaining quality staff.

  • IT – the increasing need to ‘be connected’ and educating students using the latest tools while still protecting students and data security.

  • Reporting – increased transparency (ACNC) and understanding what that means.

  • Governance – compliance with Government regulations.

  • Tax – collectors of GST, FBT, and taxes for employee (PAYG and SGC).

  • Pricing – Maintaining a surplus with rising cost pressures, student demographics, and grant funding.

Recognising the challenging business environment schools are faced with, Crowe Horwath (Aust) Pty Ltd (Crowe Horwath) has become one of the largest providers of assistance to schools across Australia. Examples of recent help to schools has included:

  • Performance consulting reviews for (i) cyber security and recovery planning, (ii) strategic reviews of governance procedures and board structures, and (iii) reviews of budgets and costing models;

  • Financial guidance through (i) audited reports and grants acquittals and (ii) adoption of new reporting systems and standards; and

  • Advisory services on (i) tax obligations for employees (SGC), GST and FBT, and (ii) reviews of employee benefits and packages.

As part of our ongoing commitment to schools, Crowe Horwath is pleased to announce the release of the 5th edition of its GST Manual for Schools. At over 600 pages, this is the only school specific resource on GST in Australia, and represents the firm’s 18‑year involvement in providing GST support to the school sector.

For further information on the manual, please click here.