The following is the perspective of Mr. Tran Duc Canh – former Member of the Northeast Massachusetts Intercollegiate Council (USA), shared with Vietnam Education Online Newspaper regarding the current profit and non-profit university models in Vietnam.
“An advantage of the non-profit model is the participation and contributions of many concerned individuals, including long-term contributions from alumni.”
No confusion between the two models
Interviewer: The issue of distinguishing between for-profit and non-profit universities has been unclear for a long time. How should we understand these two types of universities?
Mr. Tran Duc Canh: Currently, there are no colleges or universities in Vietnam that truly follow the non-profit model. Although a few institutions have mentioned this model, they are essentially still for-profit. A genuinely non-profit institution must meet the following three criteria:
First, it must have no ownership: This means the institution has no shareholders, does not pay dividends, and no individual owns any part of the institution’s assets, not even 1%.

Mr. Tran Duc Canh

Third, transparency and oversight: The institution must report and publicly disclose its activities, including annual financial information, to the relevant authorities and be accountable to the community. Second, community responsibility: The Board of Trustees is the institution’s highest authority, typically established by the original founders. The board members include respected individuals in education and society, elected according to the institution’s bylaws. The Board’s activities must be independent, not influenced by external powers or interest groups, with the goal of serving the common interests of the institution. In a non-profit model, there is no self-interest, so conflicts of interest do not arise, which could negatively impact the institution’s long-term operations. Even if the institution ceases operations or dissolves, its assets must be transferred to another non-profit or social organization, and cannot be distributed to any individual.

For-profit universities operate like businesses, meaning they have owners, distribute profits, and fulfill financial obligations to the state.
Non-profit universities, however, should be treated fairly by the state, like public institutions. They should also be exempt from taxes on donations from individuals and businesses, exempt from value-added taxes, and receive other incentives such as land grants.
The goal of non-profit institutions is to serve the community and society, creating a mechanism that motivates various societal sectors to contribute.
Given the current situation in our country, Mr. Tran Duc Canh, do you think universities should develop under a for-profit or non-profit model? And would the transition from for-profit to non-profit make the development of institutions easier?
Mr. Tran Duc Canh: If we do not count previous periods, the non-public university model has only been around in Vietnam for about 20 years. Given the development context of our education system over the past years, the for-profit university model has somewhat met the domestic demand for higher education, and this type will continue to play a role in the education system.
At this point, a non-public, non-profit university model should be introduced. For-profit and non-profit universities should coexist and complement each other within the education system, alongside public universities. The decision to transition from a for-profit to a non-profit model is up to each institution. However, we should understand the true nature of the non-profit university model.
The advantage of the non-profit model is the participation and donations from society, organizations, and individuals both domestically and internationally. Over time, alumni who appreciate the value they received from the institution will also contribute.
Currently, most non-public universities face the issue of dividing shared assets, which leads to internal instability in some institutions. How can we regulate external stakeholders (donors) to prevent them from interfering too deeply in the Board of Trustees?
Mr. Tran Duc Canh: When a university is organized as a business, it must accept this playing field, meaning it has owners who are shareholders. The Board of Trustees makes business decisions, distributes profits, and divides assets. Institutions can choose to operate as an educational investment business or transition to a non-profit model as I’ve described above, but there should be no confusion between the two.
Ownership is the determining factor for whether an institution is for-profit or non-profit. An institution can distribute profits to shareholders even at the level of government bonds, but the shareholders still own the institution’s assets. If for any reason, they sell part or all of the institution at 5-10 times the original price, what happens then? No individual or organization would want to donate or contribute (without compensation) to an institution knowing it is owned by someone else.
Non-profit universities, as mentioned, generally rely on donations to achieve their educational goals. Does this make the financial model of the institution risky?
Mr. Tran Duc Canh: The financial resources to launch a non-profit university are crucial. After that, the institution must balance its finances like a business; revenue comes from societal contributions, tuition fees, other income sources, and the ability to issue bonds or take out bank loans. These funds must not only cover annual operating costs but also build capital for long-term development. Most university presidents in the U.S., especially in non-profit institutions, are not only knowledgeable about education and academia but also require strong diplomatic and fundraising skills.
Most institutions have endowment funds that are invested to generate income, providing financial stability and supporting long-term development. In 2013, Harvard University had an endowment of $32.7 billion and invested this capital very effectively, generating $4.26 billion in revenue that year. While the U.S. government may shut down due to budget constraints, large universities like Harvard, Stanford, and Princeton never will.
There should be no % regulation for external members
Is it reasonable to stipulate that external members of the Board of Trustees should not be less than 60% (according to the draft regulations for non-profit institutions)?
Mr. Tran Duc Canh: In my opinion, the percentage of internal and external members of the Board of Trustees should not be regulated but should be determined by the institution’s bylaws based on their operational needs and conditions. Members of the Board of Trustees in a non-profit model participate voluntarily. They are usually outstanding, successful individuals in society who are passionate about the institution’s goals. To ensure effective operation, the balance of power and responsibility between the Board of Trustees and the institution’s management is crucial.
Normally, the bylaws of non-profit institutions reflect a balance of components within the Board of Trustees, preventing the emergence of group interests that could affect the institution’s reputation and operations. Students are the institution’s most important “spiritual shareholders”; they not only contribute but also protect the institution very well. For an institution to develop long-term, it must first take good care of these seeds. From my observation, most public and non-public institutions in our country are currently very weak in this area.
Some say that the draft regulations for a non-profit model proposed by Phan Chau Trinh University are mechanically copied from American institutions, where institutions are ownerless, and such a model cannot be applied in Vietnam. What do you think, given your experience working at several universities in the U.S.?
Mr. Tran Duc Canh: In my opinion, the non-profit university model proposed by Phan Chau Trinh University is very fundamental, avoiding confusion between non-profit and for-profit, preventing harmful conflicts that may arise later. There are basic principles for establishing a sustainable and long-lasting non-profit university model, regardless of whether it is in the U.S. or any other country.
In the U.S., Section 501(c)(3) of the Nonprofit Organizations Act clearly outlines the duties, rights, and responsibilities of non-profit organizations and their participants.
According to the law, a non-profit university is a legal entity with societal obligations and responsibilities, differing only in that it has no individual ownership. Vietnam currently lacks laws or clarity on this matter. Therefore, calling a non-profit institution an “ownerless” model is inaccurate. The concept of non-profit is still new and “abstract” to us, but this “intangible value” is fundamental in Western society.
Trust will help education develop
Given the current educational and societal context in Vietnam, what factors do you think will help non-profit universities, as proposed by Phan Chau Trinh University, develop?
Mr. Tran Duc Canh: The advantage of the non-profit university model is the interest and ability of society to contribute, provided that society perceives the value created by the institution. The disadvantage is that this model is new in our country, and there will undoubtedly be many challenges in the future operation of such institutions. Managing a non-profit organization, like other models, is both an art and a science that needs to be learned and experienced as the outside world has done.
Some believe that our country is still poor, and Vietnamese people are not used to contributing like in the West. Since the non-profit model largely relies on individual and community contributions, it will be difficult to implement.
Mr. Tran Duc Canh: The nature of Vietnamese people has long been very generous and willing to contribute to the community when they trust that the contribution has a good purpose. I believe that contributing to a university they trust is not difficult, especially for alumni and those who care about education. However, there must be mechanisms in place to ensure that their contributions are not exploited.
A typical example is the Ninh Hoa Scholarship Fund, established in a poor town in the Central region. In 2003, it started with only about 50 million VND from donations by benefactors abroad, providing scholarships to 17 poor students. After 10 years, the amount of contributions increased to 300 million VND, providing 130 scholarships, with nearly 70% of the contributions coming from local residents and former scholarship recipients. While the amount is modest compared to the contributions needed for a future non-profit university, it proves that when people trust the meaning and goal of a contribution, they will participate in building a non-profit university.
Thank you very much.
In the U.S., 37% of the total 4,500 colleges and universities follow the non-profit model; 25% follow the for-profit model, and the remaining 38% are public institutions. The characteristic of for-profit institutions is that they offer programs with practical applications, meeting employment needs, or online programs with low investment costs, which are necessary to generate the required profit. Public and non-profit institutions typically are multi-disciplinary and require higher investment for learning and research.
In this year’s rankings by the prestigious U.S. News magazine, the top 20 universities in the U.S. are all non-profit institutions, with no for-profit institution making it into the top 100. This indicates that, in the long run, the non-profit model, alongside the public system, has the potential to gather resources to realize the potential of higher education, including research capabilities.
Source: http://giaoduc.net.vn/Giao-duc-24h/Chuyen-gia-Tran-Duc-Canh-Viet-Nam-hien-chua-co-dai-hoc-phi-loi-nhuan-post149272.gd