To Close or Not To Close…That may not be the question

Late March, Inside Higher Ed reported that Notre Dame de Namur University (NDNU), a private Catholic institution in California, made the decision not enroll a first-year class this coming Fall 2020. The story reported that the this decision was intended to conserve “resources for current students who can earn degrees within the next full academic year.” While the story frames the decision as means of considering options other than closing the 169 year-old institution, it seems from other reports that this college has been struggling for a number of years and is staving off what may be an inevitable permanent closure.

While it is regrettable that we may witness the closing of another university, the purpose of this discussion is to examine some the questions and issues raised by decisions institutions make and how this might signal a different approach to dealing with challenges many colleges are facing.

Over the last five years we have witnessed attempts to shutter a number of financially stressed institutions with varied success. Some closures have been delayed because of emotional pleas on the part of faculty, students, and alumni whom have stepped in and provided much needed life-support. Two of the primary examples of this are Sweet Briar in Virginia and Hampshire College in Massachusetts. Both institutions abruptly announced their closing to seemingly stunned students and faculty, which resulted in protests, changes in administration, and massive fund raising efforts. Both institutions currently remain open but look much different with smaller classes and degree offerings.

Other institutions have not had the same outcome with the announcement of their closing or “merger” (aka acquisition) being met with some concern but failed efforts to maintain operations. Wheelock and Marlboro Colleges are examples of institutions that received some initial pushback when they sounded their intent to close or merge but were unable to recover. At a different level, Green Mountain College, Mount Ida College, and Newbury College are examples of other institutions that eventually shuttered with more of whimper than a bang.

Since 2016 the website EducationDive has reported on over 25 private institutions that have closed, some with barely a mention outside local circles, though we can imagine the stress it created for students, staff, and the local economy. With the current COVID-19 crisis taking a severe toll on institutions, The Chronicle of Higher Education published an interview with Robert Zemsky, who co-authored The College Stress Test, where he upped his estimate of colleges facing extreme financial crisis from 10% to 20% depending on how long the current situation lasts. So as universities and colleges across the nation struggle with the costs of moving to on-line instruction, (in addition to refunds to students for unused housing and meal plans) it may be time to consider the range of alternatives for those institutions under stress.

What is most interesting about Norte Dame de Namur’s decision to deliberately not announce it’s closing is the choice not to view the decision as a binary one. As more and more institutions are faced with economic difficulties board members should not convince themselves that the decision is one of “to close or not close”. Instead, taking a cue from NDNU there are other choices. In the case of NDNU, it seems they are buying themselves some time to consider options while remaining true to their mission. What will result is unclear but if successful, they could manage to restructure themselves, while creating a supportive educational experience for existing students. This could set the foundation for a renewal. Of course it could be that the board is simply trying to avoid the controversy of announcing their closure and control the process in step-wise fashion. In either case they have made a strategic decision, which permits them to move forward, maintain control, and commit to the educational experience of its students.

For examples of how other institutions have rebuilt themselves out of near disaster we can look to Bennington College. Originally a woman’s college, Bennington’s first transformation came when it became co-educational. Although this caused some controversy, it was later when Bennington effectively abolished faculty tenure that it raised huge concerns that we would see a wave of other institutions doing the same. Except for the for-profit sector this has not been the case. However, what is interesting is that with this decision and other restructuring Bennington moved itself from a college at risk to one that is ranked by Forbes as “among the top five most entrepreneurial colleges”.

Of course other examples exist of successfully re-imagining an institution. Southern New Hampshire University — formally New Hampshire College and even before that New Hampshire School of Accounting and Secretarial Science — has seen a number of restructuring episodes over its history. It is now one of the largest institutions in higher education based on enrollments and in the present situation, is sitting on one of the most stable platforms for continuing into the future. It has even started to offer support to other institutions as they struggle to move on-line.

Unfortunately for the many institutions these transformations occurred over extended periods of time and in an environment where the crisis was localized. As such, campus leaders had the opportunity to implement radically new visions of their institutions. In the current milieu, it would be much more difficult to implement these types of transformations.

Even before the present crisis there were numerous challenges present for institutions at all levels. Long lingering and neglected racial issues are forcing institutions to deal with crisis at various levels. As a result, it is likely many more institutions will have difficult decisions forced upon them and how they approach these decisions will not only determine the future of their students but also determine the legacy decision-makers leave behind. As early as November 2019 the momentum has been building with Education Dive looking deeply into the issue of transparency, so it is even more vital for institutions to be prepared to tackle the challenges and difficult decisions surely to be coming in the following months.

While learning from the examples of others is one way of approaching these difficult decisions, it is often wiser to get perspective from the outside. Assessing the strengths, and opportunities vs. the liabilities and deficiencies internally is not always easy. While long-term faculty and administrators may know the institution, they may have been insolated from changes in their target constituency and in rising industries. More than ever consultants can provide the support and evaluation needed. Depending on the situation it may require a team of experts to advise on whether restructuring, merging, or moving to close an institution is the best choice. Regardless of the choice this team could act to guide various aspects including messaging, review of assets and liabilities, contract negotiations and other HR issues, as well as the myriad of other compliance questions that will inevitably arise.

Change is the constant — how an institution responds is going to determine its future and how it is remembered.

Alfredo Varela is Vice President at Academic Assembly, a strategic advisory firm specializing in global higher education and reinvention.For more information you may contact him at alfredo.varela@academicassembly.com