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Self-generated income for schools

It is perfectly legitimate for state-maintained schools to generate their own income using their resources, as long as it’s for purposes related to the education of its young people and the community it serves.

In fact, for academy trusts there is almost an expectation that there will be some self-generated income in the trust. Read more about income generation for trusts in The Academy Trust Handbook here

For local authority-maintained schools, there is also an understanding that schools will have their own self-generated source of income. This will be reflected in the local authority ‘scheme for financing schools’ and its financial regulations. You can read an example of a local authority scheme here.

What is self-generated income?

This is income that your school or trust has generated through the activities of its staff, pupils, or parents.

It is separate from the monies which your school receives from the state, such as Generalised Annual Grant (GAG – academies), School Budget Share (SBS), Pupil Premium funding, Recovery Funding, Universal Infant Free School Meals, funding attached to Education Health Care Plans (EHCPs), PE Sports Premium, Devolved Formula Capital (DFC), School Condition Allocation (SCA).

These sources of income come to schools and trusts direct from the Education Skills Funding Agency (ESFA) or your Local Authority (LA).

Self-generated income depicts charges for goods and services you have provided. Such as: -

·       Hiring out school facilities (school hall, football pitches, theatre, gymnasium, swimming pool etc.)

·       Private music tuition  

·       Private nursery provision

·       School meals

·       Donations and sponsorship (without restrictions)

·       Sale of items – uniform, textbooks, year books, prom tickets, trips

There is a widespread understanding that income coming from the state into state-maintained schools must be used ‘for the purposes parliament intended’

Simply put that’s to cover three aspects of school life: -

1.     Recurring costs

·       Teachers and support staff salaries and on costs

·       Utilities

·       Building maintenance

·       Educational Supplies (paper, textbooks, exercise books, science lab kit)

Non educational supplies (legal advice, HR, payroll and so on)

2.     Compliance costs

·       Health and safety

·       Licencing and registration

·       DBS disclosures

·       General Data Protection Regulation

·       Data Protection Officer

·       Registration with the Information Commissioner Office

·       Subject access and Freedom of Information processing.

3.     Development Priorities

·       Typically, the objectives within your school or trust improvement plan

The idea is that monies coming from taxpayers should be sufficient to support all the activities and purposes of a school budget mentioned above. There is an ongoing debate as to whether state funding is sufficient to cover the cost of these priorities, but that’s a debate for a different day…

The principle is that income from self-generated sources should not be used to cover the priorities above. A school would not hold a sponsored walk, for example, to raise enough money to pay teachers salaries for the next month!!

So, what do schools use self-generated income for?

Self-generated income is either used to cover a recharge e.g., school meals or to enhance something which is happening, or we want to see happen in school for our young people.

In my last school we ran an ambitious sports related school trip for students in years 10 to 11 every other year. It involved long haul flights to Mexico, South Africa, Thailand which was expensive. It was a fabulous opportunity as young people linked with professional sports people and clubs in those nations. Funds needed to be raised for sports kit, equipment, and entries fees. There was no statutory requirement in terms of curriculum to offer such an opportunity. The school was not in a prosperous area so the pupils and school had to work hard to raise sponsorship from local businesses, undertook car washes and bake sales and raised huge amounts of money in order to make the trip as inclusive as possible.

What are the advantages of self-generated funds?

Generally speaking, these are what schools can record as unrestricted funds. This means that schools can determine how these funds are and when, how and for what purpose these are to be used. Unlike income from the state which is generally classed as restricted. For example, Pupil Premium Funding is a restricted fund and must be spent in such a way that it helps removes barriers for learning for pupils from disadvantaged backgrounds. Helping to close the progress and attainment gap when compared with non-pupil premium children.

This doesn’t mean that there are no rules of course. School governing boards will need to approve policies for recharges and school lettings. Any financial transactions will need to comply with financial propriety and statutory guidance (Academy Trust Handbook, Scheme for financing Schools, Governance Handbook).

You can be as creative as you wish to be, within the limits of legality and decency of course. Most schools have a plethora of untapped potential in terms of income generation.

Over to you…

Does your school have self-generated income? How does the level of income compare with other similar schools? Benchmarks suggest that most schools can generate between 6% and 10% of total revenue income from their own means.

If your school has underused spaces, any charities, societies, and local businesses would rather pay to use your facilities, than pay what might be an exorbitant rate for a commercial letting. It’s also appealing, as they’re keen to give back and support their local communities.

There are also significant non-financial benefits in terms of; the time school business managers can save by outsourcing lettings; pupil recruitment and retention; engagement of parents in school life; reduction of complaints through greater community understanding of how a school works; reduced anti-social behaviour; and improved mental and physical wellbeing in your community; to name but a few

What are you missing out on?!

If you are interested in finding out more about how to generate income for your school, join Vivify’s Income Generation and Managing School Budgets webinar with ISBL, Zenergi and Schools Advisory Service on Wednesday 5 October at 10am. Book your free place now.

You can also contact Vivify’s expert team at hello@vivifyvenues.com for a free audit on letting out your school facilities.

Andrew Blench, School Business Partner Andrew Blench, School Business Partner

Andrew Blench is the former School Business Manager for Dinnington High School in Rotherham. He has been an SBM since 2003 and in 2016 set up his consultancy company – School Business Partner. Andrew is currently a School Resource Management Advisor (SRMA) for the DfE, a Facilitator/Assessor/Coach for the level 4 SBM Diploma with SBM Partnership and a Leadership and Management Coach. He has extensive experience in advising academies and LA maintained schools in the areas of effective resource management, leadership and management and governance.

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