A college with a $94 million endowment is shutting its doors, and people in higher ed should be scared

by Peter Jacobs for the Business Insider

sweet briar college, estate planningA women’s liberal arts college in Virginia announced Tuesday that its Spring 2015 semester would be its last.

Sweet Briar College — located near Lynchberg, Virginia — will close “as a result of insurmountable financial challenges,” the school said in a statement.

Sweet Briar administrators cited several trends that informed the decision to close, including the declining number of female students interested in all-women colleges and the dwindling number of students overall interested in small, rural liberal arts colleges.

Last year, Bloomberg Businessweek reported that small, private US colleges were in a “death spiral” in light of dropping enrollment rates. This decline comes amid competition from cheaper online colleges and community colleges, which are enticing to students in a job market that’s weaker than it once was.

Several colleges similar to Sweet Briar have recently made changes to survive financially, according to Scott Jaschik at Inside Higher Ed. But each choice has come with its own trade-offs. Jaschik highlights two other women’s colleges in Virginia:

Mary Baldwin College has embarked on a plan to preserve its identity as a residential undergraduate liberal arts college by creating new colleges of education and health professions. College leaders say this approach will make the women’s residential college financially sustainable, but many professors fear that the institution’s liberal arts ideals are being compromised.

Randolph-Macon Woman’s College, meanwhile, renamed itself Randolph College and in 2007 started enrolling men. As has been the case at many women’s colleges making that decision, some alumnae objected.

Randolph College’s endowment is over $125 million.

The Sweet Briar statement in part reads:

In March 2014, the College began a strategic planning initiative to examine opportunities for Sweet Briar to attract and retain a larger number of qualified students and determine if any fundraising possibilities might exist to support these opportunities. Unfortunately, the planning initiative did not yield any viable paths forward because of financial constraints.

Speaking with IHE, Sweet Briar College President James F. Jones Jr. lamented the closing of the college as a part of a broader change in “the diversity of American higher education.”

“The landscape is changing and becoming more vanilla,” Jones said.

As Jaschik notes, Sweet Briar’s closing is not unique, especially given the financial burdens many schools have faced since 2008. But, Jaschik writes, “the move is unusual in that Sweet Briar still has a $94 million endowment, regional accreditation and some well-respected programs.”

Mary Baldwin College recently created new colleges of education and health professions.

Shutting the school now — as opposed to when Sweet Briar runs out of funds — will allow the college to offer help to its students and faculty as they transition out after the semester.

“We have moral and legal obligations to our students and faculties and to our staff and to our alumnae. If you take up this decision too late, you won’t be able to meet those obligations,” Sweet Briar College board of directors chairman Paul G. Rice told IHE.

Here’s how Sweet Briar plans to offer support, according to IHE:

While all employees will lose their jobs, the college hopes to offer severance and other support. Students (including those accepted for enrollment in the fall) will receive help transferring. This semester will be the last one at the college, but it will remain officially open through the summer so that students can earn credit elsewhere and transfer it back to Sweet Briar to leave either with degrees or more credit toward degrees.

Sweet Briar announced on its Facebook page that it has expedited transfer arrangements with four local colleges.

Source: BusinessInsider.com Read more: http://www.businessinsider.com/sweet-briar-college-closing-2015-3#ixzz3TMzAxfY7

Patricia Annino is a sought after speaker and nationally recognized authority on women and estate planning. She educates and empowers women to value themselves and their contributions in order to ACCOMPLISH GREAT THINGS in the world – and in so doing PROTECT THEMSELVES, those they love, and the organizations they care about. Annino recently released her new book, “It’s More Than Money, Protect Your Legacy” available at Amazon.com. To download Annino’s FREE eBook, Estate Planning 101 visit, http://www.patriciaannino.com.

Protecting Donor Intent in a New Economy

This past weekend I read two examples of how donor intent may not have been protected in the wake of our new economy.  One involves philanthropythe bankruptcy of a major US city and the other involves the philanthropic legacy of one of Warren Buffet’s originals investors.

The New York Times highlighted an entire new area to be concerned about when thinking about donor intent.  The article highlights that as Detroit files for bankruptcy the collection of the Detroit Institute of Arts (which is owned by the City of Detroit) is a political bargaining chip between Detroit and its creditors. The creditors are taking the stance that the $2 billion art collection must be considered a salable asset.

Detroit’s debt exceeds $18 billion. The Detroit institute is not owned by a nonprofit corporation or trust for citizens but rather by the City itself. The Museum with an estimated 600,000 visitors a year is taking the position that a sale of even part of its collection will render the Museum defunct.

The bankruptcy judge will have his/her hands full as the article points out the issue of the value of the cultural assets goes beyond philosophical or moral arguments and the judge will have to weigh whether the sale of a city’s artworks would have long term economic implications such as, depressing tourism, harming real estate values and the value of other cultural institutions in Detroit.

A former director of the Museum, Samuel Sachs is quoted in the articles as adding if you could sell off Detroit’s hospitals and its universities would you do that to? If you do things like this you are basically spelling the end of the city as an ongoing entity.

For me this is also an interesting commentary on nonprofit law, looking into the future, understanding donor intent and not taking anything for granted. In Detroit’s golden days, no one obviously thought about an entity other than the city owning the art. Detroit was yesterday’s Silicon Valley and there was no thought that the economy was going anywhere but up.

The donors who made the art gifts jumped on that train too and no one contemplated the harsh reality of today. An ounce of prevention is worth a pound of cure, protecting the institution would not have been difficult or novel- the City of Detroit, the Museum and the Donors were blindsided by the present.

The Wall Street Journal highlighted the story of Donald and Mildred Othmer whose original $25,000 (each) investments with Warren Buffett was worth $780 million when Mildred Othmer died in 1998. The Othmers created a $135 million endowment for Long Island College Hospital in Brooklyn NY in the 1990s, to be held in perpetuity and in less than 20 years their gift is virtually gone.

The NY regulators have also authorized the closing of the hospital –which in its heyday was one of Brooklyn’s biggest employers. The endowment was hit over the years to serve as collateral for loans and cover malpractice cases- all in the opinion of the trustees to keep the hospital going.

Warren Buffet is quoted as saying that if the Othmers were alive they would feel betrayed. The legal mechanism the Othmers set up in their will was clear- the funds were to be endowed “to be held in perpetuity and the income to be used only for its general purposes” After the Othmers died, the trustees of the hospital went to court to use the principal, arguing the donors would have wanted the hospital to stay in existence and these funds were needed to do that.

Originally the court allowed $85 million to be used as collateral for loans and the trustees went back several more times for principal invasion.  Warren Buffet is quoted in the article, “The Othmers did not spend huge sums on themselves but instead wanted the money to go back to society. At least one institution could not wait to change the terms under which it received the money”.

As these articles point out, the question of protecting and upholding donor intent as the economy and trustees change continue to be a key challenge. Make sure your intent is clearly stated and that all possible angles of upholding your intent are included.  Make sure to consult an estate planning attorney to make sure your donation is protected.


Patricia Annino is a sought after speaker and nationally recognized authority on women and estate planning.  She educates and empowers women to value themselves and their contributions in order to ACCOMPLISH GREAT THINGS in the world – and in so doing PROTECT THEMSELVES, those they love, and the organizations they care about.  Annino recently released an updated version of her successful book, Women and Money: A Practical Guide to Estate Planning to include recent changes in the laws that govern how we protect our assets during and beyond our lifetime.  To download Annino’s FREE eBook, Estate Planning 101 visit, http://www.patriciaannino.com.

Do I Have Enough Money?

Estate planning is designed to help you create enough wealth to keep you and your loved ones financially secure. In an effort to empower you to plan your estate wisely, let’s start with some steps you can take now. 

Gather the Facts 

To plan you must know what the facts are. Gather your financial information and compile it two different ways. First, put together a listing of your assets-list each asset, how it is titled (in your name, jointly, in your husband’s name, in a trust) and its approximate value. Include in your list:

  • Real estate
  • Investments
  • Retirement plan
  • Annuities
  • I.R.A.s
  • Business interests
  • Valuable artwork and personal effects
  • Life insurance

Now list any debt-such as:

  • Mortgage
  • home equity loan
  • installment loans

Second, put together a list of your income:

  • Your salary
  • Your spouse’s salary
  • Investment income (whether you use it in your lifestyle or your reinvest it)
  • Passive income (from rental real estate or other investments)

Next list your expenses:

  • Mortgage
  •  Rent
  • real estate taxes
  • utilities
  • insurance 

Your lifestyle expenses:

  • travel
  • entertainment
  • style
  • beauty

Your anticipated expenses, such as:

  • tuition
  • long term care needs

Take the time now to prepare a complete list. If you have any challenges or need additional information please feel free to comment below.

Check back next week for my post, Understand the Facts.  This will help you analyze the facts you have gathered.