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April 5, 2012; Source: Washington Post (AP)
The idea that a for-profit institution might create an affiliated nonprofit as a shell simply for marketing purposes, to reach an important market segment, or to appeal to a demographic that it might not get as successfully on its own? How shocking, how awful, how dastardly, and how to-be-expected! But what is particularly galling is that, once again, the victims of the abuse of charity status are veterans. The NPQ Newswire has touched on this topic before, with increasing outrage that somehow no one is taking a special look at ensuring that the legitimate, high quality veterans’ organizations don’t get their work and reputations tarnished by people who seem drawn, like moths to a flame, to playing fast and loose with veterans’ charities.
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In this case, both the Associated Press and Stars and Stripes are reporting that the Student Veterans Association (SVA) has suspended chapters at 40 for-profit colleges, alleging that the colleges set them up as “shell organizations to help them appeal to veteran students who carry lucrative government tuition benefits.” AP says that the “essentially fake SVA chapters” help the schools get onto lists of “military friendly” or “veterans friendly” colleges. According to SVA, some of these fraudulent chapters had contacts who were school employees, not student veterans, and websites that simply linked to the schools’ sites. The for-profit schools want veterans as students not just for the tuition benefits, but because G.I. Bill payments are excluded from the 90-10 rule, which requires that colleges get no less than 10 percent of their revenue from non-federal sources. Steve Gunderson, the president and CEO of the Association of Private Sector Colleges and Universities (APSCU)—the former CEO of the Council on Foundations who took over the for-profit college association this past January—expressed surprise about the SVA charges.
There’s no question that the SVA is really ticked. Michael Dakduk, the organization’s executive director, told Stars and Stripes, “SVA will not allow institutions of higher learning, whether for-profit or not, to use the name Student Veterans of America for the sole benefit of the institution.” The SVA’s action, according to Stars and Stripes, “comes just weeks after lawmakers again took aim at the for-profit industry’s aggressive recruiting of student veterans and their GI Bill education benefits, offering new legislation limiting how much of the federal funding they could accept.”
It is a little odd that SVA has shut down the chapters but, at least for the moment, will not identify the 40 for-profit schools involved. Gunderson told the paper, “Once we learn of the specific schools, we will reach out to them to determine if there are misunderstandings or problems that can be resolved…We look forward to working with SVA and others to ensure that the chapters on all school campuses are meeting the expected standards.”
Let’s not minimize the challenges of student veterans and why legitimate organizations—not shams—are needed to help them. Rep. Tim Walz (D-Minn.), a member of the House Veterans Affairs Committee, held a meeting at Mankato State University to better understand the challenges of student veterans and learned of plenty, such as delays in the VA’s issuance of checks, problems in getting private employers and schools to recognize and credit vets for experience and skills gained in the armed forces, and difficulties in getting the VA to communicate and share information with schools. Delays with the VA are expected to get worse as the U.S. military presence in both Afghanistan and Iraq winds down.
This imbroglio with SVA chapters at for-profit colleges should be cleared up at once. If the for-profit schools are an important resource to veterans, then the SVA and the APSCU ought to be working on this right away, and other student veterans’ organizations and programs ought to be brought into the mix. But we’re perplexed by the seeming absence of oversight by the Veterans Administration itself, by the various state education agencies that also have higher education oversight roles, and by the Internal Revenue Service—all of which ought to be engaged when shell nonprofits are used for distinctly non-nonprofit purposes.—Rick Cohen