Most For-Profit Solutions Don’t Threaten Universities’ Core Missions | Inside Higher Ed

In a recent piece, Edward Maloney and Joshua Kim lament the “rush of big money into higher education,” which portends the “outsourcing” of “core capacities” to for-profit companies. The piece, while compelling, leans on a few tired assumptions about partnerships between for-profit companies and universities.

First, a definitional quibble: Drawing clear moral stakes between “nonprofit” and “for-profit” outfits is a relic of a bygone era. Today, Team Nonprofit features many leviathans with endowments larger than the GDP of mid-sized countries. And Team For-Profit represents scores of tinkerers scrambling to meet next month’s payroll for a half dozen workers.

Yes, publicly traded online program managers occupy much of the oxygen in the “for-profit” space. But they’re a small slice of a pie that includes a host of innovators who more resemble, to deploy another weighted term, mom-and-pop small businesses.

In sum: I don’t see a rush of big money that threatens to subvert universities’ core missions. Most fruitful for-profit partnerships don’t require universities to outsource responsibility. And these collaborations rarely undermine universities’ ability to retain control of core capacities.

The “Rush of Big Money” is Smaller Than You’d Think

In my role at WGU Labs, I work with plucky edtech startups, most of which are built on lines of code designed to solve a particular problem. These lines of codes are written by dreamers, thinkers, and ambitious educators, most of whom could make more money elsewhere.

In 2020, U.S. edtech companies raised a total of $2.2 billion. This represents 1% of the $156 billion invested in U.S. startups last year. And core to the loftiest edtech valuations is investors’ assumption that the company will attract customers outside higher education. (Amusingly, this is viewed as the field’s failure to generate “hypergrowth.”)

The open secret in the investment world is that selling things to universities is a lousy way to get rich. The total addressable market is just too thin. “Big money” may be a threat to universities for other reasons — imagine Microsoft University  — but it won’t come at the hands of rapacious edtech investors.

“Outsourcing” is a Bug, Not a Feature, of Successful Partnerships

There are, admittedly, plenty of examples of universities outsourcing core capacities to third-party companies. Private dorms, for example, often exaggerate inequities on campus, and sometimes may be scams.

But the term “outsourcing” fails to draw a distinction between clumsy hand-offs to third-party vendors and thoughtful collaborations between edtech companies and universities looking to foster student success.

When a CTO partners with a company to plug automated nudges into its Learning Management System, or a Director of Continuing Education joins forces with a provider of digital skills microcredentials, students gain more than universities lose. And schools retain full control of the learning experience.

“Core Capacities” are Difficult to Define

In their piece, Maloney and Kim cite both “academic departments” and “football team(s)” as examples of “core capacities.” I’ve seen little evidence of waves of universities rushing to outsource entire undergraduate departments. (Graduate programs, to be fair, are a different story.)

And football teams just aren’t core to the learning experience. They’ll soon be outsourced anyway, and rightly so. The abrupt exodus of Texas and Oklahoma to the Southeastern Conference likely portends a departure of many programs from the NCAA itself.

I doubt this will have negative consequences for the median student. If anything, letting wealthy entities fund football will free funds for campus activities that don’t involve helmets. Major college football, in brief, should be outsourced.

The Future of For-Profit and Non-Profit Partnerships

I’m a teacher who works for a nonprofit organization that partners with for-profit companies. I often joke, with some sincerity, that students and companies alike view me as something of a “hack.”

But my candid view is this: (1) Edtech companies won’t soon dominate universities; and (2) when non-profit organizations keep a grip on the steering wheel, collaborations with for-profit companies can yield great results.

If I sound a bit defensive, it’s because I wrestle with this issue every day. As a teacher, I often loathe the intrusion of the next great edtech bell-and-whistle. Sometimes I just want to teach.

As a partner to edtech companies, I often cringe at default dismissals of for-profit solutions due to a misguided notion that the creators of these tools are swimming in vaults of cash. They’re usually not.

Maloney and Kim are right to recommend approaching edtech companies with “deliberation, prudence, and circumspection.” But the approach must also involve curiosity, openness, and humility. Students, not institutions, are the core stakeholders. And they have much to gain.

John Clark is a Senior Consultant at WGU Labs and Adjunct Instructor at Dominican University in River Forest, IL.