Pretty much zero chance that the endowment will follow the students.
Personally, I think it would be better spent giving the faculty and staff a financial cushion.
Wowza. The SBC merit/FA will not follow to the transferring institution! BUT SBC is paying out severance! I wonder what all alum donors think of that? Dod these ladies give back to dear college to help encourage and educate other ypung women or did the give to reward the executives who sunk the ship.
Three hundred schools, @xiggi, but I agree with you that it’s hard to keep any guidebook up to date. I found it a really useful and reliable guide, though, when we were starting the search back in 2012. And I just assumed if a school made it into that book it was on solid financial footing. Silly me! 
@momneeds2no, I wouldn’t jump to conclusions about severance packages:
https://www.insidehighered.com/news/2015/03/05/where-will-sweet-briars-85m-endowment-go
I think that at the very least SBC should refund the application fee for all of the students who applied for next fall.
Ever been laid off, @momneeds2no? I guess it just doesn’t matter too much to you if highly-educated faculty who need to support dependents are now mostly and most likely consigned to taking low-paying temp jobs for the rest of their careers.
Silverlady - I believe that refunding is to take place.
Only less than 5% of the current endowment is what’s needed to fulfill SBC merit and FA promises.
The college doesn’t have much latitude in deciding what to do with the endowment, as I posted earlier. We may all wish they sent their students off with their scholarships to follow, but that’s likely a decision made by the Attorney General’s office (the people responsible for monitoring that non-profit organizations follow the law). And there will no doubt be contractual relationships with employees which requires payment (severance, unused vacation time, etc.) which supersede any implied obligation to pay a student’s scholarship NEXT year at an institution which is not SB.
You don’t get to make this stuff up as you go based on whose feelings you don’t want to hurt. There are laws on the books which determine how the assets get used and who is first in line.
Wouldn’t certain endowments be earmarked for merit and FA? The $$ I give to my alum assoc are earmarked for a particular merit award.
Might it be fair to assume that this has been and will the highest on the priority list of the people tasked to unravel the financial affairs. The biggest tug of war will probably be about the percentage that exceeds the legal minimum in terms of employment contracts. There is little doubt that those deltas will be very different for cafeteria workers than for the faculty and administrators. Current students might expect assistance in “relocating” or earning their degrees, but little financial “return” should be expected. They just happened to have been transient customers. The world of academia is about self-preservation. Even when the remnant is a cooling corpse.
With a grad rate of 57% the faculty don’t exactly have clean hands. I understand that contractually some employees faculty and staff will receive buyouts. But honestly I don’t understand the obligation to provide cushions. After all these folks will all recive unemployment. They should be capable of seeking employment elsewhere.
Many moons ago, I worked for a large financial services firm which went through a major restructuring and closed two entire subsidiaries. That was one heavy Monday. The holding company’s obligation was to shareholders not employees. In the case of non-profit college would the first obligation be to students?
They probably are. For a nonprofit, donor-imposed restrictions on their net assets are close to inviolable. They certainly couldn’t decide to liquidate the entire endowment to keep the school going for a year. However, a lot of endowments are created from unrestricted donations that the college board decided to add to the endowment; those moneys wouldn’t be restricted, but they would probably be tied up meeting other contractual obligations that the college has.
There’s probably not one obligation here. They have a responsibility to their students but they also have a tangle of other obligations towards creditors, employees, and donors too.
^^In this comparison, the students would be like your customers, not like the shareholders. In any kind of a payout, the customers get paid dead last, even behind creditors.
According to washington post
Total endowment = 84m
Restricted portion = 57.m
Another article mentioned debt at 25m
I assume that debt does not include contract buyouts.
The 3,000 ac historic campus must be worth something…
Lets say SBC honors it’s commitment to the rising seniors, juniors and sophmores, all 240 to the tune of 20k based on discount rate.
(240 + 160 + 80) 20k = 9600000.
Tell me that SBC doesn’t have 9.6m earmarked endowment for FA. Please…
I don’t know anything about Sweet Briar, so this is pure speculation based on what I read …
They have $94 million in endowment. But only $20 million is unrestricted, and they also have $25 million in debt. When they shut down, it wouldn’t surprise me if most of the debt accelerates and becomes due immediately. So they might need almost the entire unrestricted amount to pay off the bonds. It’s possible that the Board’s hand was more or less forced … they couldn’t wait very many additional years, bleeding $2+ million dollars a year, if they wanted a graceful exit and to avoid a lot of litigation. (Another possibility - they may have needed to roll over some bonds or other debt, but no lender would loan them money, which could have forced their hand too).
And if a Board is officially told by experts that the college is more or less doomed (even if it could keep the doors open a few more years), then voting to continue to accept new classes of students knowing that you won’t be able to graduate them is probably a lawsuit waiting to happen as well. It’s both legally and morally wrong.
They may have some unrestricted funds after redeeming their debt, but it probably won’t be that much. So even if the law and the courts allowed them to spend these moneys on scholarships to other schools and severance packages, it’s not like there’s a lot of money to go around. Over time, they can raise additional unrestricted assets by selling land, buildings, etc, but there will be additional wind down costs too.
It seems like they acted as responsibly as they could given the circumstances. Still sad though, but probably unavoidable.
@twoinanddone I don’t agree. The objective of a corp is to produce earnings for shareholders. The objective of a nonprofit (college) is to produce eduction for students. Especially if endowments are marked for merit and FA. Allowing FA/merit to follow students seems Cheeper the than defending against a breach of fiduciary trust.
I’m sure the debt will accelerate. I wonder if credit review wasn’t a catalyst to this announcement . So what does SBC do with the restricted endowments? Deplete the funds as originally intended or as close to intended as possible with court oversight.
I’ll also offer that the college is contractually bound to students receiving renewable scholarships and renewable aid grants. Offer acceptance performance etc.
time will te