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The only way private colleges can survive and compete is to justify their mission to an ever-widening circle of stakeholders. No college can survive if it stands still.
The pending closure of Iowa Wesleyan University has to be understood as a case study in college management. Data on college finances from the National Center for Education Statistics’ Integrated Postsecondary Education Data System show that Iowa Wesleyan’s financial situation deteriorated for a decade or more until it became unsustainable.
This one case is not representative of all private colleges. IPEDS data for private liberal arts colleges in the Bureau of Economic Analysis’ Midwest region show wide variability. Of 145 institutions, Iowa Wesleyan was well below average on several critical measures like its 2021 ratio of assets to liabilities, the change in its endowment value over 10 years, and its sharp decline in private giving.
Other similar Iowa colleges have managed to do much better on these measures, although the condition of some will bear watching carefully. Yes, COVID and larger economic and demographic trends have played a role, but strategic and operating decisions result in the cumulative picture presented in the data. In many ways, a college is no different than other businesses.
More: Long-struggling Iowa Wesleyan to close due to budget shortfall; USDA to take over campus
Each institution makes and lives with the unique way it manages its resources. Howard Bowen, an economist and former president of both Grinnell College and the University of Iowa, studied private college finances. (See “The Costs of Higher Education: How Much Do Colleges and Universities Spend Per Student and How Much Should They Spend?”) He found few explanations for their differences and concluded that each college was unique. He capped his book off with this: “Colleges get all the money they can and spend it.”
College presidents may be educators first, but they (and the professional staff upon whom they rely) need to “get” as well as “spend.” Raising and managing funds are more urgent than ever among small private colleges that do not get the state support public universities enjoy, perhaps at least as important as attending to teaching and learning – because without the resources to keep the institution in business, there will be no teaching and no learning.
More: Vilsack says USDA will look for new uses for campus as Iowa Wesleyan University closes
Since Harvard was founded in 1636, private colleges have depended on donors to provide many of the resources they need. For most early colleges, Harvard included, that meant support from churches. Gradually, alumni and organizations like foundations took on the responsibility. Community organizations and businesses have often stepped up to keep local colleges afloat. Auxiliary enterprises like athletics and business incubators increasingly contribute a share. But it is a never-ending quest.
The only way private colleges can survive and compete is to justify their mission to an ever-widening circle of stakeholders. And that, of course, means negotiating purposes and programs to meet the real interests and needs of the widening circle. No college can survive if it stands still.
David W. Leslie of West Des Moines is chancellor professor of education emeritus at the College of William and Mary.
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