The Impact of Pre-Pandemic Financial Structure on Knowledge-Production Resilience During COVID-19: A Cluster Analysis of U.S. Nonprofit Higher Education Institutions

Abstract Higher education institutions sustain the knowledge economy by producing the human capital and knowledge workers who drive innovation, yet the COVID-19 pandemic exposed sharp differences in institutional capacity to weather financial shocks. This study examines how financial structure shaped enrollment resilience among U.S. nonprofit higher education institutions during the pandemic. Using IRS Form 990 tax filings from 2019 ( N = 1,167), the researchers conducted hierarchical cluster analyses to group institutions by revenue and expense composition prior to the pandemic, then linked these clusters to enrollment changes from 2019 to 2021 using Integrated Postsecondary Education Data System (IPEDS) records. Institutions most dependent on government contributions, with little investment income, experienced the largest enrollment declines, while institutions with more diversified revenue — particularly investment income and other sources such as royalties, rents, advertising, and athletics — proved most resilient, retaining their capacity for knowledge production through the crisis. These patterns held even though most institutions relied heavily on tuition revenue, a finding that complicates prior claims that tuition dependency alone predicts institutional vulnerability (Taylor & Cantwell, 2019). The researchers discuss revenue diversification, rather than tuition dependency per se, as a key determinant of institutional resilience during acute financial shocks, with implications for strategic planning, policy, and the broader stability of knowledge production within the U.S. higher education system. Given the pandemic-specific scope of the data, the findings are presented as evidence of resilience during a discrete crisis rather than a general theory of institutional viability.