OAM 331 Khan section - a case study PDF

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Jack Brodsky Kahn Academy Case OAM As Khan Academy popularizes all around the world, a big issue that Sal Khan will face is maintaining/increasing the amount of incoming revenue. As a non-profit, Khan Academy relies heavily on big donations from people and firms that believe in what Sal Khan is doing. The donors feel compelled to give in order to help the underserved; however, relying on a handful of donors may not be a sustainable source of income for Khan, considering it makes up about 70% of their total revenue.

One possible solution to this inevitable issue is to reinvest the donations that they receive that become a part of their endowment fund. If Khan Academy began to reinvest some of the donations into stocks, bonds, or even real estate, the donations would turn from having minimal cash value, into potential revenue generators. A segment of their revenue would come from the cash simply being in another place. This would take away the heavy reliance on the hefty donation because Khan would begin to be generating their own money while maintaining to be an NPO. Now, despite the fact that some of these investments may come with a certain level of risk, as we have learned in class, the riskier a decision tends to be, the reward is generally higher if it pays off. Related to what AJ Lafley preaches, making decisions like this can be risky, but they are made with the “winning” mentality. If Khan Academy were to make a move like this, they’d be leaving the “surviving” state that they are currently in, and it would take away from their heavy dependability on cash donations. Another opportunity that Khan has to take away from the reliability of cash donations is preaching to their donors about stock donations. Instead of letting the cash sit there maintaining its value, Khan could be receiving dividends from the company’s stock that they now own, as well obtaining more value from that stock as the price per share potentially rises. This also makes the money that they receive a potential revenue generator and it could take out the extra step of having to invest the money into stocks themselves. While Khan deserves credit for creating several revenue plans that intend on doubling their current revenue by 2020, Khan should look into opportunities to decrease the business’ expenses. In recent years, Khan’s salary and benefit expenses have gradually increased relative to their expenses as a whole scaling upwards of 75%. If Khan were able to find a solution to this incremental increase, they may not have to work so hard to maintain donations to increase revenue. We believe that Sal Khan could look to create several more internship programs where students and potential employees could provide work for Khan Academy without having to be paid. The students will appreciate the sole experience, exposure, and college credit factor that they’ve been offered, which saves money for Khan that they may have had to pay an employee for performing the same work....