Importance of generating income are given below:
The educational sector in India is engulfed with the problem of severe financial inadequacy and will continue to face such a crisis.
In such circumstances, the need for mobilization of additional non-government resources is pronounced as the quality of education, to a great extent depends on the availability of adequate funds for buildings, library, laboratory, attracting and retaining good teachers with proper salaries and so on.
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Some of the strategies of generating income include:
(i) Increasing tuition fees. However, this should be accompanied by provisions for concessions, scholarships and/or freeships to meritorious but economically poor students. The rise in fees should be gradual and not steep.
(ii) Seeking philanthropic donations from private trusts, foundations and individuals for establishing and developing courses and facilities.
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(iii) Making available library services to external members/general public and charging a fee from them for this service.
(iv) Seeking financial aid from Alumni Associations and individual past-students. For this purpose, a detailed data-base of the alumni should be prepared. They should also be briefed about and involved in some of the plans, programmes, activities and achievements of the institution.
(v) Renting out facilities such as classrooms during the time when they are not utilized, playground, zymkhana, equipment etc.
(vi) Creating endowment funds by selling of unutilized land
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(vii) In case of universities, money can also be raised through sponsored research and offering consultancy ser- vices to the industries. However, this should not be done at the cost of teaching.
(viii) Providing need-based, skill-oriented, short-term continuing education programmes.
(ix) Improving the reputation of the school/college for teaching, quality of teachers, discipline management, quality of students, quality of co-curricular activities, participation in social causes – related activities and research (in case of universities).
(x) Earning income through interest on short-term and long-term investments. This should be managed professionally. Attention should be paid to the daily cash-flow of the institution before making investments.
For making short-term investments, the following things need to be studied and kept in mind:
(1) Adequate information about the amount available for investment, prevailing rates of interest and where the investments can be made safely.
(2) Dates of the month when the institution receives income such as fees, other deposits, rents, repayments, etc.
(3) Expected dates of receiving salary and other grants from the government. Similarly, expected dates of the year when, donation money will be received from trusts, foundations and individuals.
(4) Approximate amount of recurring and non-recurring expenditure such as salaries, refund of deposits, purchase of equipment and books, repairs and maintenance, bills of payments for telephone and electricity and so on.
This information will enable an institution to determine the amount available for investment so as to earn some income from interests.
Let us now study the third aspect in financial management i.e. preparing budgets and exercising budgetary controls.