Nonprofit Governance Matters

[Mike Burns]

An editorial in today's New York Times discussed state and federal government crackdowns on private for-profit colleges and in particular, Corinthian College.

In the editorial, the paper notes:

Last year, the California attorney general, Kamala Harris, sued Corinthian, charging that it had lied to students and investors about job placement rates for its graduates. The company advertised job placement rates as high as 100 percent for certain programs, when, in some cases, there was no evidence that even a single student had secured a job within the prescribed period of time, according to the lawsuit, which is still pending. Furthermore, it charged that Corinthian deliberately singled out low-income single parents who lived near the poverty line, urging recruiters to focus on “isolated” people who had “low self-esteem.” It also asserted that the company advertised programs that it did not offer.

What I miss most from this editorial: what's the difference between these for-profits and their nonprofit and public sector counterparts. I think the difference important as a lesson for the future. That difference, two actually, is that nonprofit and public sector governance and ownership. Nonprofits and public sector colleges have for their oversight and direction, volunteer leaders committed to the goals of their institution and accountable with fiduciary responsibilities including a high bar in the area of care -- for mission and assets. And, these institutions are in effect, owned by the public, at least through the tax structure for the nonprofits and actual ownership for the public colleges. To me, both of these facts mean that the only reason at all to be engaged in education is for outcomes. Now, they may not always get this right and produce perfect outcomes, but the overseers are not personally profiting from the work and the mission inherently drives an intention to "do no harm".

For the for-profits, neither of these two fundamentals are present. Governance matters.