How HBCUs maximize social & economic impact

Historically Black Colleges & Universities (HBCUs) have been changemakers for nearly two centuries: empowering Black families and communities with more than 100 accredited schools across the United States and Virgin Islands.

According to a recent study by the United Negro College Fund (UNCF), HBCUs generate about $15 billion in economic impact. Further, every dollar spent by an HBCU and its students produces positive economic benefits to its surrounding community: generating $1.44B in initial and subsequent spending for its local and regional economies. And the ripple effect continues. For each job created on campus, another 1.3 public- and private-sector jobs are created off campus because of HBCU-related spending. That’s a hefty amount of economic power.

While these higher education institutions (HEIs) are making positive immediate and long-term impacts and closing the Black wealth gap, they are historically underfunded and less appealing to Black students. And while nearly all U.S. colleges and universities are grappling with drops in enrollment, lower alumni engagement, and staff retention, HBCUs are at higher risk of severe budget cuts or even closure.

“Colleges and universities are facing headwinds related to the current economic and social environments, including supply chain issues, inflation, human capital shortages, and budget constraints,” says Herman Bulls, JLL Vice Chairman of the Americas and Founder of the Public Institutions Business Unit, which specializes in delivering comprehensive real estate solutions to governments, nonprofits, and HEIs.

“These financial challenges are exacerbated for many HBCUs since they generally do not receive priority for funding and grants, nor do they have large endowments,” explains Bulls. “Consequently, it is critical that HBCUs have access to best practices for funding and operating their campuses. Reducing facilities operating costs, providing superior services to attract top students, and leveraging owned assets will be vital to their long-term success and survival.”

Augmenting government funding

Innovative HBCUs are utilizing recent federal grants as well as other funding sources to improve campus appeal, provide equitable education opportunities, and even drive sustainable revenue. Recently at the National Association of College and University Business Officers (NACUBO) annual meeting, Bulls hosted a roundtable to discuss these issues with HBCU leaders Undria Stalling, Senior Vice President of Business & Finance and Chief Financial Officer at Morehouse College, and Robert Pompey, Vice Chancellor of Business & Finance and Chief Financial Officer at North Carolina Agricultural & Technical State University (NCA&T).

From deploying robots to lobbying on Capitol Hill, each shared examples of how their HBCUs are making a social and economic impact on campus and in the community, while fiscally supporting and growing their institutions through diverse funding sources.

One such source was the American Rescue Plan (ARP) Act, which allocated $36.9 billion in funding to the Higher Education Emergency Relief Fund (HEERF III) to support HEIs with costs associated with remote learning, COVID-19 monitoring and mitigation, offsetting student expenses, and replacing lost revenue for schools.

North Carolina A&T Delivers

Known for science and technology, NCA&T opted to utilize some of their HEERF funds to experiment with new tech, including the Starship robot program. Like many HEIs, dining areas at NCA&T were crowded around mealtimes. They deployed 50 robots to deliver food around campus, alleviating lines and allowing for social distancing during the pandemic. Additionally, the program is bringing in food service revenue for the university. 

 A more traditional use of the federal funding went toward launching the First Day® Complete program, a $7 million partnership with Barnes & Noble College to provide textbooks to students at no cost to them, so they would have their books on the first day of class, at no cost to the student. Not only does it make education more affordable and accessible to students, but NCA&T makes revenue from the bookstore partnership as well.

“Oftentimes our students make tough decisions,” explained Pompey. “Do I pay rent or pay for textbooks? Do I go to the grocery store or buy my textbooks? And in some of these courses, if you are trying to get an engineering degree and you don't have your calculus textbook until three weeks into the semester, you're done.” 

NCA&T also used HEERF funding to satisfy outstanding balances, create scholarships, and start a vaccination center to serve campus and the community.

Evolving legacy foundation into modern partnership

Beyond government funding, NCA&T has thought sustainably about its foundation dollars as well, forming the NCA&T Real Estate Foundation to create a partnership to develop and finance commercial real estate projects in and around campus. This public-private partnership (P3) gives their public institution an infusion of private capital, management and expertise. Not only does this benefit the university’s portfolio, but it is having an immediate impact on campus appeal and student retention.

“We had a housing shortfall,” Pompey told the group. “We had a number for apartments that were constructed around our campus because there were these prospectors...they were having trouble. We decided to buy almost every apartment within a quarter mile of our campus…. We've purchased five apartment complexes. And [students] want to go to these apartments. They don't have to worry about paying the utilities because it’s paid for through the university. They don't have to worry about paying the rent because it’s coming out the financial aid. They feel like grown folks, but at the same time being part of our campus community, too.”

With their P3, NCA&T is also developing a new mixed-use property called The Resurgent, featuring 80 apartments, retail, restaurants, an office complex with an entrepreneurial hub, and a health clinic. 

Beyond campus: NCA&T proves HBCU social & economic impact

As of 2019, the university’s economic impact was estimated at $1.5 billion for North Carolina. Pompey made sure to mention that there are five public HBCUs in North Carolina and all of them are pillars of their communities.

“North Carolina A&T is located in east Greensboro, which is the most challenging area in Greensboro,” Pompey said. “What we have decided is that, if not us, what's going to make a difference in our community? We decided to make an investment in ourselves.”

And it’s working. NCA&T enrollment is up 26% since 2015 and 96% of alumni surveyed say they would attend the school again. Black students that graduate from HBCUs like Morehouse or NCA&T are likely to make more money than if they graduated from a predominantly white institution (PWI); oftentimes because they are recruited intentionally by employers right on campus. Pompey and Stalling agreed this was a crucial value proposition for HBCUs to attract talent.

But while most HEIs face funding constraints, the dynamics of public and private institutions differ.

Morehouse College makes connections to empower community

As CFO for a private institution, Stalling explained how important it has been for Morehouse to align with other private HEIs in Georgia to collectively lobby for state funding that otherwise would not be allotted toward their schools. She also emphasized the importance of advocacy on local and grassroots levels.

“It’s very important to partner with our local government, the local community,” she said. In addition, Stalling discussed the importance of diversity, equity and inclusion (DEI) in selecting partners and vendors, and that Morehouse is ensuring there are policies in place to reflect this value.

Reinvesting in Morehouse College

When Morehouse received designated federal funds, some of the funds were placed in their investment portfolio. Not only do the earnings support operations, but they are also a part of their sustainable fundraising strategy. Having a sizeable endowment will go a long way in attracting and retaining donors. 

In fact, Morehouse was focused on strengthening their financial position when the COVID-19 pandemic began impacting the economy. The HEERF funds and HBCU Capital Financing Program debt dischargement pushed their plans into action.

“We were the recipient of CARES funding, CRRSAA and ARP funding,” Stalling reported. “We were also the recipient of the debt relief. Morehouse had about $56 million in debt that was forgiven.”

“We did not look at this as a windfall when those funds came in,” she continued. “We had to be very strategic and very careful, because yes, this is a great opportunity. This is a great gift and it’s helping us strengthen our financial position. But you’ve got to be able to manage, you’ve got to be able to sustain. We looked at a number of items specifically within our strategic plan that we wanted to advance.”

Those items included strategic goals like “pursue public-private partnerships to monetize and create recurring streams of revenue from our real estate holdings,” and “build the campus of the future.”

Exploring new partnerships for a “campus of the future”

With strategic plan and campus master plan in-hand, Morehouse has partnered with JLL for project management, P3 negotiations with private developers, and as a resource for real estate best practices.

 “Inside of Morehouse we think, ‘We need this,’” Stalling said. “But until you really dig into the data, and know what data to collect, you really don’t know what the demand is. Having a partner to [say] ‘this is what the data provides’ allows you to make a better and more informed decision. We have a professional facilities and campus improvement area, but development is not something that we do daily. And so again, it’s just so important to ensure that you have the resources that you need so your institution can make the best decision for years to come.”

Plans are to evolve the campus with short-, medium- and long-term improvements. This includes creating a multi-functional campus center where students, faculty and staff interact, constructing formal and informal learning centers, facilitating a pedestrian-friendly environment, and improving campus wayfinding and identification.

Morehouse is exploring the use of P3s for potential projects like workforce housing, student residential housing, and a mixed-use facility.

“These projects will begin to address housing demand for Morehouse students, local housing opportunities for faculty/staff, and advance academic programming,” Stalling explained. “In addition, the P3 developments are anticipated to provide an additional revenue stream to the College.”

Financing the future

Institutions across the nation are struggling with how to repair, expand and modernize their core infrastructure and critical facilities. To bridge the gap between available public resources and the cost of needed infrastructure and facilities, public institutions are turning to P3s, maximizing the strengths of both the public and private sectors.

By examining their programing and financial needs, Morehouse and NCA&T leaders have strategically determined how to utilize their funding, as well as look to the future with their partnerships, advancing their institutions’ missions: providing equitable high-quality education. Both HBCUs have optimized partnerships and other resources to generate revenue and improve their schools and community, driving campus appeal and student retention. The ripple effect of these efforts is undeniable in the measurable social and economic impact of in their local and regional communities.

If you’re considering a P3, you’ll want to read 8 crucial factors to consider before embarking on a public-private partnership.