May 29, 2010; Source: Jackson Sun | Reports from Detroit and Boston concern nonprofit hospitals being sold to for-profit entities, but Lambuth University in Jackson, Mississippi is one of the first institutions of higher education whose nonprofit status was close to being traded in for money from for-profit investors. A week ago, the financially strapped Lambuth had all but announced that it had been sold to for-profits. But now, in a deal with a bunch of unnamed investors, Lambuth will remain a nonprofit—but the investors will bail the university out of its hole.
As of May 15th, Lambuth wasn’t able to pay its staff, but the investors will pay enough of the bills to keep the school open. Who are these investors and what are they getting for their investment in this bankrupt institution? The head of the Southern Association of Colleges and Schools (SACS) put it tersely: “If you are paying the bills, you may own the place.”
Good news, however. The investors may still be completely secret, but they’ve pledged to help Lambuth continue to field its football and basketball teams. So, with a secret deal with unnamed investors bankrolling the nonprofit university, is Lambuth still a nonprofit? Shouldn’t the SACS, shouldn’t the nonprofit sector in the region wonder whether their sector-buddy is now in or out of the fold?—Rick Cohen