According to a 2019 article by The Hechinger Report, the following universities in the US have the highest percentage of marketing budget to income:
- Southern New Hampshire University: 15.7%
Opens in a new window Wikipedia - Western Governors University: 14.8%
Opens in a new windowWikipedia - University of Phoenix: 12.9%
Opens in a new window University of Phoenix - University of Alaska Anchorage: 11.5%
Opens in a new window www.uaa.alaska.edu - University of Maryland Global Campus: 11.2%
Opens in a new window www.umgc.edu
It is important to note that these percentages are based on data from 2018 or 2019, and the actual percentages may vary from year to year. Additionally, the percentage of marketing budget to income can vary depending on the type of university. For example, online universities tend to have higher marketing budgets than traditional universities.
The high percentage of marketing budget to income at these universities is likely due to a number of factors, including:
- The competitive nature of the online education market: Online universities are competing with each other for students, and they need to spend a lot of money on marketing to attract new students.
- The need to reach a wider audience: Online universities need to reach a wider audience than traditional universities, and they need to use a variety of marketing channels to do this.
- The cost of marketing: Marketing is expensive, and online universities need to spend a lot of money to reach their target audience.
It is also worth noting that the high percentage of marketing budget to income at these universities does not necessarily mean that they are spending too much money on marketing. In some cases, it may be necessary for online universities to spend a lot of money on marketing in order to attract new students and stay competitive. (Bard 06252023)
(Ed. Note) I’ll be curious to continue this train of thought, to see what an average percentage of administration costs for a normal nonprofit organization is, vs a business, or a for profit university or organization. How do those percentages relate or not to their marketing budgets?
And, does the IRS have limits on administrator costs for a nonprofit?
Yes, the IRS has limits on administrator costs for a nonprofit.
The Internal Revenue Service (IRS) requires that nonprofit organizations spend a certain percentage of their expenses on program services. This percentage is known as the program service ratio, and it is calculated by dividing the total expenses for program services by the total expenses for all activities.
The IRS does not specify a specific program service ratio for all nonprofits. Instead, the program service ratio is determined by the type of nonprofit organization. For example, a charitable organization may be required to have a program service ratio of at least 65%, while an educational organization may be required to have a program service ratio of at least 85%.
Administrator costs are the expenses that are incurred by a nonprofit organization to manage and operate the organization. These expenses include things like salaries for administrators, rent, and office supplies.
The IRS does not allow nonprofit organizations to spend too much of their expenses on administrator costs. The specific limit on administrator costs varies depending on the type of nonprofit organization and the program service ratio.
For example, a charitable organization with a program service ratio of at least 65% may be allowed to spend no more than 35% of its expenses on administrator costs.
If a nonprofit organization spends too much of its expenses on administrator costs, it may lose its tax-exempt status.
Here are some tips for nonprofit organizations to manage administrator costs:
- Set clear job descriptions and expectations for administrators.
- Use technology to streamline administrative tasks.
- Outsource administrative tasks to third-party vendors.
- Negotiate favorable contracts with vendors.
- Track administrator costs and make adjustments as needed.
By following these tips, nonprofit organizations can manage their administrator costs and ensure that they are spending their money wisely.
What is the percentage of Program cost to Administration cost
at your university?
(Ed. Note) The Dean at one College said, “15% of student credit hour income goes to program costs.” Maybe they need a visit from the IRS?
Yes, a whistleblower at a nonprofit can get a monetary reward if the IRS finds tax issues. The IRS Whistleblower Program offers monetary rewards to individuals who provide original information that leads to the recovery of tax revenue. The amount of the reward depends on the amount of tax revenue that is recovered and the whistleblower’s level of cooperation.
In the case of a nonprofit, the IRS Whistleblower Program can be used to report tax issues such as:
- Noncompliance with tax laws: This includes failing to file tax returns, failing to pay taxes, or claiming illegal deductions.
- Misuse of tax-exempt funds: This includes using tax-exempt funds for personal or improper purposes.
- Fraudulent activity: This includes falsifying documents, making false statements, or engaging in other deceptive practices.
If a whistleblower provides information to the IRS that leads to the recovery of tax revenue, they may be eligible for a reward of up to 30% of the amount recovered. The whistleblower’s level of cooperation is also considered when determining the amount of the reward. For example, a whistleblower who provides detailed information and cooperates fully with the IRS is more likely to receive a larger reward than a whistleblower who provides only general information and does not cooperate fully.
To be eligible for a reward under the IRS Whistleblower Program, the whistleblower must meet certain requirements. The whistleblower must:
- Provide original information: This means that the information must not have already been known to the IRS.
- Provide information that leads to the recovery of tax revenue: This means that the information must lead to the IRS collecting taxes that would not have been collected otherwise.
- Cooperate with the IRS: This means that the whistleblower must provide all requested information and answer all questions truthfully.
If you are considering reporting tax issues at a nonprofit, you should contact an attorney to discuss your options. An attorney can help you determine if you have information that is eligible for a reward under the IRS Whistleblower Program and can help you navigate the process of filing a claim. (Thanks Bard)