Effective Financial Leadership for Seventh-day Adventist Schools:

Financial sustainability for private educational institutions is a challenge throughout the world. In North America, specifically, between 2000 and 2010, 49 Christian colleges and universities closed due to financial exigencies¹; in 2010, 149 private colleges failed the U.S. Department of Education financial responsibility test.²

Seventh-day Adventist schools are not spared from these issues. A special report by a group of North American Division (NAD) educators in 2016 highlighted financial challenges evident in all schools from K-12 through tertiary institutions.³ The magnitude of these financial challenges and the response to them differ, with those whose situations are severe and who feel they must take the drastic step of laying off some of their employees or even closing their schools. Because educational institutions in the Seventh-day Adventist Church are a part of the mission and life of the church, the decision to close them is often slow and painful; therefore, finding financially sustainable solutions is the best option.

The financial challenges facing Seventh-day Adventist schools and institutions are multifaceted, with declining enrollment being a significant factor in some divisions. As noted by several authors, enrollment decline leads to a reduction in operational revenue.⁴ Other contributing factors experienced by higher education institutions worldwide include escalating operational costs, driven by increasing administrative expenditures⁵; inflation, which has outpaced income growth in the U.S.A. and many other countries in recent years⁶; decreasing international student enrollment⁷; growing competition from public schools, which are almost always more affordable⁸; socio-economic factors and demographic trends, contributing to a decline in K-12 Adventist school enrollment in the NAD since the early 2000s ⁹; waning support from church members¹⁰; inadequate or ineffective marketing strategies)¹¹; and limited understanding among church members about the significance and purpose of Adventist education within the church’s mission and life.¹²

Effective financial leadership identifies and explores revenue sources, allocates and manages financial resources to achieve strategic objectives, and ensures fiscal responsibility and sustainability through careful planning, budgeting, risk management (including auditing), forecasting, and performance evaluation.¹³

This article explores the fundamental principles and strategies of effective financial leadership that enable Seventh-day Adventist schools and tertiary institutions to achieve financial sustainability and thrive. Several studies on financial sustainability in schools, especially among Christian schools, were analyzed to identify practices, principles, and strategies supporting financial sustainability. Additionally, general business principles and strategies for successful financial viability were identified, and the author’s experience as a leader in the Seventh-day Adventist Church for more than a quarter century, both in the gospel ministry as a church and educational administrator, has been applied. While Seventh-day Adventist schools are faith-based and non-profit, the financial principles and strategies for financial success are the same as those used in the public sector.

Financial Principles and Strategies

Businesses and schools have become financially successful in many different ways. After carefully reviewing a number of potential practices, principles, and strategies, five have been identified as effective when consistently implemented: strategic planning, diversified funding sources, cost management, basic financial literacy, and ethical stewardship in financial leadership.

Principle 1: Strategic Planning

Universities and schools have applied the various components of strategic planning to operate their institutions successfully. Fletcher’s study of three financially successful Christian universities in the United States between 2006 and 2010 found that strategic planning was one of the factors in their success.¹⁴

Financial leadership in Seventh-day Adventist schools requires a strategic planning approach that aligns financial decisions with the school’s mission and goals. Three elements are involved in strategic planning: conducting regular Strengths, Weaknesses, Opportunities, and Threats (SWOT) analyses, setting financial targets, and developing contingency plans to address potential risks.

SWOT Analysis: This approach can help identify the internal and external factors that impact the financial performance of Adventist schools.¹⁵ Rightly conducted, the results of such an analysis will aid leaders in recognizing strengths (S) and leverage them to achieve financial goals, address weaknesses (W) and mitigate their impact, capitalize on opportunities (O) for growth and development, and develop strategies to counter threats (T) to minimize risk in operations.

Setting Financial Targets: Financial leaders who set goals or targets accomplish more than those who do not.¹⁶ Setting clear and achievable financial targets is essential for successful financial leadership and management, as this helps to measure progress toward the desired goals. The acronym SMART is a good guide for writing effective goals: Specific, Measurable, Achievable, Relevant, and Time-bound.

Developing Contingency Plans: Successful financial leaders always prepare for risks and make plans to manage them. This involves identifying risks and their potential impact, developing strategies to mitigate or manage risk, establishing protocols for crisis management, and regularly reviewing and updating contingency plans as an integral part of preventative action.¹⁷ Failure to provide for contingencies may result in high costs, as the school may be forced to borrow to meet the unexpected need. The amount that should be kept in reserve for contingencies varies with many factors, including the size of the operations.

Applying the above practices and concepts of strategic planning has helped many institutions to achieve financial success. The author developed and implemented a strategic plan as a college president that resulted in great financial success within five years. The most remarkable thing about a strategic plan is that it helps ensure that leaders remain focused and constantly evaluate their performance against the strategic plan.

Principle 2: Diversified Funding Sources

The purpose of diversifying revenue is to maximize sources of funding so that if one source fails to produce the desired results, other sources will take effect. Many schools have severe financial challenges because they have relied on a single funding source: tuition and fees. A 2017 study on revenue diversification in universities indicated that higher education institutions in today’s competitive market must diversify their sources of revenue. The study further pointed out that identifying new revenue sources will entail pursuing revenue options different from those considered in the past, including academic programs, services, property, institutional advancement, and more.¹⁸ In the following several pages, I will examine and propose some sources of funding that Adventist schools should seriously consider.

1. A Seventh-day Adventist Church-supported funding model. The Seventh-day Adventist Church should seriously consider creating a new revenue model for its schools that is supported worldwide by all church members from all churches. They can do this by keeping the schools’ mission before the members.

A qualitative analysis study done in the North American Division that identified innovative structural practices and financial models that may help sustain the mission of Christian schools concluded “that a school’s mission, connection to the community, and inclusive vision were all related to the sustainable and innovative practices it adopted. With respect to mission, having a clear mission, being committed to the mission, and taking a long-term outlook helped schools innovative [sic] adaptively in ways that enabled each to better fulfill its mission and vision.”¹⁹

Seventh-day Adventist schools are unique and special because they are part of the mission thrust of the church. Ellen White wrote: “In the highest sense the work of education and the work of redemption are one, for in education, as in redemption, ‘other foundation can no man lay than that laid, which is Jesus Christ.’”²⁰ When education is regarded as one with the work of redemption, this justifies its establishment, existence, sustenance, and continued viability. This understanding implies that the financial challenges found in Adventist schools today must not be considered the problem of only educators and school administrators but instead become the challenge and responsibility of the entire church. The North American Division Education Taskforce of 2016 accordingly made this recommendation:

“Financing Adventist education should be the responsibility of the whole church, as it is an important part of our denominational mission and a practical expression of both stewardship and evangelism. To deal with increasingly higher tuition, lower average income levels, and societal changes, a new model for financing Adventist education is needed.”²¹

The report made additional recommendations:

“We believe that the problem of low enrollment can only be addressed if there is less reliance on tuition and more emphasis on other sources of revenue. In particular, we recommend that more of the financial burden should be shifted from parents of children in Adventist schools who are members of a constituent church to all members in all churches.”²²

There are compelling reasons why the Seventh-day Adventist Church should be the primary source of funding for Adventist schools. Adventist schools are:

• a significant nurture tool for the church;
• the primary trainers of employees of the church;
• an evangelistic tool that produces thousands of student baptisms;
• centers of influence in some parts of the world;
• the trainer of most Adventist employees, including theologians who help define the church's beliefs.

Therefore, the church should assume the responsibility of financing educational institutions, in addition to what is already being done to supplement tuition and fees, by developing financial policies that support education, just as it supports the gospel ministry.

2. Leasing of school land or buildings. Another source of income is the leasing of school land and buildings to various businesses to generate revenue for the school.²³ Many university administrators have testified that leasing land can be a great source of revenue for schools. The University of Zambia has leased its land for 99 years in what they call the Private Public Partnership between the University and East Park Mall, and according to Vice Chancellor Luke Mumba, this “is one of the most profitable undertakings that the university has ever engaged in.”²⁴

3. Research grants. Another source of income is through grants for research or other purposes. While these grants generally focus their spending on specific (new) activities performed by the university, a percentage benefits the hosting school. A report by Gladys Lwizi states that the University of Zambia (UNZA) was awarded a research grant for US$2.4 million dollars²⁵ for research on ticks and tick-borne diseases. A substantial portion of this money was allocated to the university to support further research, such as salaries or stipends for researchers and graduate students, paying for equipment, books, supplies, or travel to conferences to present findings, and other much-needed investments in infrastructure (e.g., labs, simulation classrooms, etc.).

Grants to educational institutions are awarded by national and state governments, as well as private organizations (non-profit and for-profit). Since Seventh-day Adventist schools may have issues obtaining grants from the government or the state due to the conditions and restrictions that come with such grants, a better choice may be grants from private organizations: community foundations, corporate giving programs and foundations, and independent foundations.²⁶ According to the Foundation Center, thousands of grants are given yearly to education, amounting to billions of dollars, some as small as a few hundred dollars, upward to thousands or even millions of dollars. Community foundations consolidate donations from local companies and individuals to support programs in specific regions. Corporate foundations typically focus on giving where employees live and work. The largest number of foundations, which are independent, fund various school functions like libraries and computer labs. Although obtaining grants from foundations may sound like a challenging task, once the process is established, this can be a source of good revenue for a school. With search engines today, one can find a variety of sources and apply for grants.

Multiple sources of funding can be explored for school revenue. These sources could include endowment funds, alumni associations, annual fundraising campaigns, mobilizing small-contribution donors, nurturing major donors,²⁷ auxiliary enterprises, and more.

Principle 3: Cost Management

Effective financial leadership involves optimizing expenditures without compromising academic quality. This can be achieved through efficient resource allocation, outsourcing non-core functions, and implementing cost-saving technologies.²⁸

Efficient resource allocation involves conducting regular cost and expenditure analysis and benchmarking, aligning resources with strategic priorities, implementing appropriate budgets, and fostering a culture of cost consciousness in the school in those tasked with managing cost-center budgets.²⁹

Outsourcing non-core functions is another way to optimize cost management. This is one of the most underutilized financial-management practices in Seventh-day Adventist schools. Outsourcing can have many advantages, such as managing human-resource issues such as vacation days, sick leave, and reimbursement for employees’ work and travel expenses.

The outsourcing process starts with identifying non-core functions (e.g., groundskeeping, custodial, facilities management, technology support, etc.), evaluating outsourcing options (e.g., contractors, partnerships), negotiating contracts and service agreements, and monitoring and evaluating the effectiveness and compliance of outsourced services with the contracts’ conditions.

If rightly done, carefully selected, and well-thought-through, certain functions in a school can be outsourced without affecting the school’s mission and philosophy—after careful planning identifies appropriate functions for outsourcing, appropriate providers are selected, and the school board approves the proposals. One university where I was president for eight years outsourced three services, which proved three times cheaper than continuing to pay the 19 employees whose services were terminated to facilitate outsourcing.

There are many cost-saving technologies on the market these days that, if the right ones are selected and applied, will result in effective cost management—for example, the use of digital communication and collaboration tools, hiring of computing and software services, and even the use of Artificial Intelligence where it has proved to work effectively. This is a field that has not been widely implemented but should be explored. By embracing these strategies, financial leaders can minimize waste, enhance resource utilization, and support the long-term viability of their institution.

Principle 4: Basic Financial Literacy

Financial literacy, especially among key decision-makers, is vital to ensure effective financial leadership for the 21st century. In the Seventh-day Adventist Church, schools are run by governing boards. Boards have final autonomy in many of their decisions, including financial decisions. But how many board members and, in most cases, even key educational management leaders, understand and can interpret financial statements and the operation of an educational institution?

A study by Onesmo Amos pointed out that financial-management skills, such as mobilizing school funds (e.g., seeking donations, planning fundraising or revenue-generating events), monitoring, evaluating financial performance, and auditing books, were essential for financial sustainability and that, unfortunately, these skills are often lacking in those who provide school leadership.³⁰ One of the three factors identified by Fletcher for financially successful institutions is employing “a business framework in all operations and intentionally living within their financial means by managing the efficiencies of the institution and by avoiding excessive debt. In addition, institutions should implement strong tactical planning and follow-through, combined with conservative fiscal management, to enhance long-term institutional success.”³¹

Financial statements (balance sheets or statements of financial position, income statements and statements of financial activities, working capital, liquidity, etc.) are critical to making decisions that keep the institution financially viable. Not only literacy in understanding and interpreting financial statements but also in budgeting and budget management should be considered mandatory for school board members and administrators. (The Adventist Learning Community offers several resources and training modules in finance education: https://circle.adventistlearningcommunity.com/browse/52.) 

While the scope of this article does not allow for full coverage of each of these items, the essential point is this: Seventh-day Adventist educational leaders and board members who understand and can interpret financial statements and relate the same to budgets and their management are likely to make decisions that are not only well informed but also that increase the stability of the institution’s finances.

Sound financial practices include auditing financial reports by both internal and external auditors. A combination of these two, rightly done, will authenticate the quality of financial statements and confirm the figures in the statements to help decision-makers make wise choices.

Principle 5: Ethical Stewardship in Financial Leaders

The last and final principle of financial leadership in the Seventh-day Adventist schools is ethical stewardship by those who provide financial leadership. This is a cornerstone of financial leadership, ensuring fiscal responsibility and upholding the values of the Seventh-day Adventist Church.³²

The imperative of ethical stewardship is rooted in the Scriptures, which emphasize the responsible management of resources entrusted to human beings (Matthew 25:14-30, Luke 12:42-48). Successful financial leadership will not occur if people handling fiscal matters do not model ethical stewardship—demonstrating integrity, accountability, and transparency in their financial dealings.³³

The fundamental values of ethical leadership include but are not limited to accountability (1 Corinthians 4:2), transparency (Matthew 10:26, 27), integrity (Proverbs 10:9), responsible resource management (Matthew 25:14-30), and compliance with regulations, which includes civic as well as church-generated guidelines relating to financial management (Romans 13:1-7).

Ethical stewardship calls for adherence to established financial policies and statutory obligations to civic authorities, ensures transparent financial reporting and auditing processes, fosters a culture of accountability and integrity among financial leaders, encourages ethical decision-making, and avoids all forms of conflict of interest (see https://executivecommittee.adventist.org/wp-content/uploads/2022/10/Conflict-of-Interest.pdf).³⁴

In his book Business Ethics in Biblical Perspective, Michael Cafferky observes, “In the biblical perspective, while it is the person’s responsibility to watch over the heart diligently, ultimately the faithful heart and all it contains for good comes from and is developed by God. . . . The transformation of the heart toward the actions of faithfulness also is a gift!”³⁵ This heart transformation impacts all aspects of business decision-making and the Christian’s view of business management. Relating to this, Ellen White shared good counsel:

1. Recognizing God as the rightful Owner must be central to all business decisions.
2. Christlikeness is to remain the standard of practice.
3. Diligence, thrift, and temperance are the secrets of true business success.
4. Serving the needs of others is like planting a seed; it will grow into business blessings.
5. Honesty should always be a mark of Christian business practice.³⁶

In addition to being well-trained and versed in financial literacy, school fund managers need to be men and women of integrity. Their integrity must come from their commitment to biblical values that teach us to emulate Christ Jesus and honor God in everything we do.

Conclusion

Given the many financial challenges facing education, including Seventh-day Adventist Christian schools, some may doubt if financial viability is attainable. This article has identified reliable financial practices, principles, and strategies that, if applied, will result in our institutions achieving financial viability and thriving. Seventh-day Adventist schools can achieve financial viability and thrive by applying proven strategies like strategic planning, diversified funding, cost management, financial literacy, and ethical stewardship leadership.

This article has been peer reviewed.

Pardon Mwansa

Pardon Mwansa, PhD, DMin, is Chair of the School of Leadership and Associate Professor of Educational Leadership and Administration at Andrews University (Berrien Springs, Michigan, U.S.A.). Before this, he served as Vice Chancellor of Rusangu University in Monze, Zambia; General Vice President of the General Conference of Seventh-day Adventists (Silver Spring, Maryland, U.S.A.); President of the Southern Africa-Indian Ocean Division (Pretoria, South Africa); and President of the East Africa Division (now the East-Central Africa Division in Nairobi, Kenya). He earned a Doctor of Ministry in missiology and a PhD in educational administration from Andrews University and has extensive experience in strategic financial planning.