logo
    • Magazine
    • Membership
    • Donate
  • Racial Justice
  • Economic Justice
    • Collections
  • Climate Justice
  • Health Justice
  • Leadership
  • CONTENT TYPES
  • Subscribe
  • Webinars
    • Upcoming Webinars
    • Complimentary Webinars
    • Premium On-Demand Webinars
  • Membership
  • Submissions

Sector Jumping among Higher Ed Institutions Doesn’t Change Their Stripes

Ruth McCambridge
March 4, 2015
Share
Tweet
Share
Email
Print

sector-jumping-masks

March 2, 2015; New York Times

For-profit higher education institutions do not enjoy the tax exemptions meant for nonprofits. They also must work within an increasingly restrictive regulatory and legislative environment, which flows from substandard graduation rates and high use of government loans, among other things. Lastly, they receive less favorable treatment where government grants are concerned. This combination has resulted in some for-profit colleges eying the nonprofit sector for a better perch, despite the ban on “ownership.” It appears, according to the New York Times, that a little creativity can make it all work for the principals.

Take the case of Keiser University in Florida, which was “sold” by its owner to the nonprofit Everglades College, coincidentally also created by Arthur Keiser. Keiser, the university’s former owner and the college’s august president, in 2012 earned a total of $856,000 after the 2011 sale—more than the president of Harvard. In a weird creative quirk, he is also earning interest on loans he made to the nonprofit of more than $321 million. The college also pays rent to the tune of $14.6 million on properties he has an ownership stake in. He’s also got a piece of the charter airplane flown in by the college’s managers and the Holiday Inn used by employees. The computer company the college uses is partially owned by a Keiser family member, too.

Dr. Keiser, by the way, is the House Republicans’ appointee to the Education Department panel that oversees accreditation. He was also formerly the chairman of the governing board of the Association of Private Sector Colleges and Universities, the sponsor of a lawsuit challenging new federal regulations that require for-profit colleges to show that their students will eventually earn enough money to pay their student loans. These regulations, if they pass, would restrict the flow of federal loans and aid—and this is the lifeblood of many of these institutions, worth approximately $30 billion per year.

Keiser University itself was the focus of an investigation by the Florida attorney general. It reached a settlement at approximately the same time that it turned nonprofit, agreeing to offer thousands of students free retraining.

Sign up for our free newsletters

Subscribe to NPQ's newsletters to have our top stories delivered directly to your inbox.

By signing up, you agree to our privacy policy and terms of use, and to receive messages from NPQ and our partners.

Late last year, Robert Shireman, a former Education Department official, filed a complaint with the IRS accusing Keiser and three board members of using the nonprofit “for personal gain.” Above and beyond Keiser’s own interests, one of the university’s nine board members owns a business that provided the college’s paperless filing system, another is related to someone who owns a recruitment company, and a third received “a net share of income from the aquatic engineering program.”

Lloyd Mayer, an associate dean and law professor at Notre Dame Law School, says, “There is a concern that the now-nonprofit colleges may be providing an impermissible private benefit to their former owners. These sorts of arrangements raise yellow flags.”

This article in the New York Times details other similar transformations of for profit to nonprofits with similar conflicts. Playing fast and loose with sectoral intent this way is dangerous to all nonprofits, but with the IRS functioning with reduced resources, any pursuit of these issues will likely occur at the state attorneys general and legislative levels.—Ruth McCambridge

 

 

Share
Tweet
Share
Email
Print
About the author
Ruth McCambridge

Ruth is Editor Emerita of the Nonprofit Quarterly. Her background includes forty-five years of experience in nonprofits, primarily in organizations that mix grassroots community work with policy change. Beginning in the mid-1980s, Ruth spent a decade at the Boston Foundation, developing and implementing capacity building programs and advocating for grantmaking attention to constituent involvement.

More about: colleges and universities conflicts of interestNonprofit News

Become a member

Support independent journalism and knowledge creation for civil society. Become a member of Nonprofit Quarterly.

Members receive unlimited access to our archived and upcoming digital content. NPQ is the leading journal in the nonprofit sector written by social change experts. Gain access to our exclusive library of online courses led by thought leaders and educators providing contextualized information to help nonprofit practitioners make sense of changing conditions and improve infra-structure in their organizations.

Join Today
logo logo logo logo logo
See comments

Spring-2023-sidebar-subscribe
You might also like
Universities after Neoliberalism: How to Build a Democratic Civic University
Ira Harkavy and Rita A. Hodges
Old University Turns over New Leaf with Launch of Indigenous Studies Chair
A-dae Romero Briones
Amid COVID, Higher Ed Reconsiders Its Approach to Student Mental Health
Nicole Zerillo
Is Marquette University “Rightsizing” or Taking a Wrong Turn?
Rob Meiksins
Governors Urge High Caution for Students Headed Home and Their Families
Marian Conway
With COVID Surge Comes New Wave of University Shutdowns
Steve Dubb

NPQ Webinars

April 27th, 2 pm ET

Liberatory Decision-Making

How to Facilitate and Engage in Healthy Decision-making Processes

Register Now
You might also like
AOC’s “Tax the Rich” Dress Dazzles Met Gala, while...
Anastasia Reesa Tomkin
Universities after Neoliberalism: How to Build a Democratic...
Ira Harkavy and Rita A. Hodges
Foundation Giving Numbers for 2020 Show 15 Percent Increase
Steve Dubb

Like what you see?

Subscribe to the NPQ newsletter to have our top stories delivered directly to your inbox.

See our newsletters

By signing up, you agree to our privacy policy and terms of use, and to receive messages from NPQ and our partners.

NPQ-Spring-2023-cover

Independent & in your mailbox.

Subscribe today and get a full year of NPQ for just $59.

subscribe
  • About
  • Contact
  • Advertise
  • Copyright
  • Careers

We are using cookies to give you the best experience on our website.

 

Non Profit News | Nonprofit Quarterly
Powered by  GDPR Cookie Compliance
Privacy Overview

This website uses cookies so that we can provide you with the best user experience possible. Cookie information is stored in your browser and performs functions such as recognising you when you return to our website and helping our team to understand which sections of the website you find most interesting and useful.

Strictly Necessary Cookies

Strictly Necessary Cookie should be enabled at all times so that we can save your preferences for cookie settings.

If you disable this cookie, we will not be able to save your preferences. This means that every time you visit this website you will need to enable or disable cookies again.