What is the difference between a profit and not-for-profit school?
Very simply, a for-profit school is run as any other company where shareholders will receive a return on investment – i.e. payment based on their initial risk of the capital they put into the school (their money invested). A Not For Profit schools will not have private shareholders, and will instead re-invest all of its earnings (after loans, costs, etc) back into the school and its facilities.
Not for Profit schools are not a cheaper alternative however to For Profit schools. Most in the UAE are in the upper tier when it comes to the fees they charge. However, not-for-profit schools are also some of the best schools in Dubai/UAE – Dubai College, JESS, the English College, etc.
If well managed, being able to reinvest all of those fees into teacher salaries, teacher development, school buildings, technology means that, in theory at least, these schools have a considerable advantage over For Profit schools when it comes to delivering education.
For Profit schools are not publicly in the UAE and therefore do not have to publish their margins or how much profit is returned to their owners. Assuming however a school with 1000 students charges 50,000 AED per year, and has a net profit of 12%. That would be a return of 6,000,000 AED. If 80% was reinvested, and 20% was returned to shareholders, 1.2m AED would be returned to the school’s owners. In a Not for Profit school that money would go back to the school.
Depending on how much the school is profit oriented, so decisions over the seniority of the teacher mix, the type of technology in the school, etc. will be affected.
Note: Many For Profit schools are rated Outstanding, so it is not axiomatic that For Profit is Bad, and Not for Profit is Good. However, just logically NFP schools should have a financial advantage.