Why Some Evangelical Colleges and Universities are Struggling Financially– While Other Schools are Doing Great

This last week brought contrasting bad news and great news. The bad news was that Bethel University, where I taught before I came to Creighton, had to lay off 15 faculty due to financial shortcomings. The contrasting great news was that a Creighton Alum had given over $50 million to bring our current fundraising for our college of business to over $93million.

Bethel is a close community, and I know that those layoffs are hard for everyone there. Our thoughts and prayers are with all affected. One of the faculty there posted a blog about the broader issue of why some evangelical schools are struggling financially, and his main conclusion is that the denomenations have stopped supporting the schools as they once did in the past http://www.pietistschoolman.com/2013/10/15/an-open-letter-to-american-churches-the-crisis-of-christian-higher-education/

Dr. Gehrz writes of the Bethel situation, and draws broader concerns for evangelical higher ed as a whole:

“I have no doubt that similar days loom ahead for a significant number of our peer institutions in the Council for Christian Colleges & Universities, given reports like the one from Forbes magazine that graded American institutions of higher learning on their financial health: we were among the 74% of CCCU schools to receive a C or lower. By most accounts, we are among the top 10-15 Christian colleges: allowing for the possibility that that relatively high standing rested on much flimsier supports than we imagined, I fear that our situation augurs poorly for our consortium as a whole.”

It is likely that a lot of evangelical and bible colleges are facing similar struggles. Dr. Gehrz’ view is that an important reason for the financial difficulties of these schools is that their original supporting denominations no longer support them like they once did.

It is certainly true that denominations no longer support schools like they did. But that has more to do with the general demise of denominations than anything, in my opinion. Denominations as a brand identity have been intentionally dropped. You will be hard pressed, for example, to find evangelical free churches (granted they are not technically a denomination) which even have the name “evangelical free church” in its name or even in its info in the bulletin. It is quite easy for people to attend free churches for years not knowing the affiliation of the church. So brand identity dissipation is the first cause I would point to.

Second, there was a time when each denomination felt it important to produces its own pastors in their own seminary or Bible school. That is no longer the case for evangelical churches. For one thing, a majority of evangelical churches are nondenominational. In addition, a number of seminaries have no or at best a minimal affiliation to a particular denomination (Dallas, Fuller, Gordon-Conwell, etc). In addition to that, churches no longer care if their pastor was trained at their denominations seminary (see point one here– because few people in the church know what denomination they are anyway). A fourth point here is simply that a few of the seminaries have grown and established themselves as the big dogs in the pack, and attracted the most famous theologians– Fuller, Regent, Dallas, Gordon Conwell, Trinity, etc.

But another obvious reason why evangelical schools are struggling now is the same reason many schools are– they were getting used to regular 5-6% tuition increases each year in a booming economy before 2007 and they did a lot of updating and capital borrowing to compete with the rest of the pack. But like mortgage holders who got stuck holding the bag when the recession hit, their expectation that things would continue to go up up up were ill founded, and now reality is setting in, and their previous supporters and student-parents don’t have increasing equity in their house to borrow against anymore. Its not just that more and more students are deciding that they don’t want to pay the high costs of going to these evangelical schools, its that in many cases they cannot. However, its not clear that it makes financial sense anyway– in a number of recent studies, a lot of evangelical schools faired poorly when it came to analyses of their ROI (return on investment)– the degrees conferred by a lot of evangelical schools just weren’t door-openers, at least not opening the doors that such high costs would be expected to open. (see gehrz’s blog on the dismal financial state of evangelical colleges at the end of this post)

Endowments can’t overcome all problems, but if evangelical schools had better endowments, things would be different. But they don’t. Most of them have $5,500-12,500 endowment per student. Compare that with Princeton (1.85 million per student) Yale (1.43 million per) Harvard (1.3 mil per) or even little Grinnel (745,000per). Why the difference? Why don’t evangelicals endow their colleges? I think there are at least two obvious reasons. First, evangelicals don’t generally invest in things of this world, particularly higher education. Saving souls is first and foremost– and service to others is second– which leads us to the second problem that has led evangelical schools to have pitifully small endowments: their strong suites are programs like missions, ministry, teaching and nursing. There are occasional teachers who come up with a big philanthropic gift to a university, but they are few and far between. Pastors and Missionaries almost never do, and nurse philanthropists are quite uncommon, in my experience. These aren’t high-dollar career people that are being graduated from evangelical schools. Of course a few business people come through, and a few philosophy or psych majors end up ‘having’ to go into business to make a living, and make a very good living, and then give back.

Creighton University where I am at has a very strong college of business, and their alum have come back and given a lot of money. Creighton has produced a lot of graduates who happen to be very successful in business, and who also are huge supporters of Creighton and their mission. Generally speaking, if you look at most major philanthropy, it is coming from people who got wealthy in business more often than not. People don’t generally grow great amounts of wealth on a teachers, ministers or nurses salary.

So from my business perspective, what evangelicals should do, rather than expect their little churches to step up and fill the gap, is to focus more on producing students who are great at business who will make a lot of money and give back to mission. Evangelicals for too long have been focused on producing missionaries and ministers who need others to support them. Its time they start producing some of the producers who can support their institutions of higher education more fruitfully– namely, high quality business students who can be successful and then come back and share the benefits!

May God have Mercy on us all!

For Dr. Gehrz’s blogpost on the financial condition of evangelical colleges see his: http://pietistschoolman.com/2013/08/12/eighteen-evangelical-colleges-earn-a-d-for-finances/

For more on Creighton’s recent fundraising campaign for their new Heider College of Business, see: http://news.yahoo.com/shared-vision-creates-exciting-future-heider-college-business-213000242.html


2 responses to “Why Some Evangelical Colleges and Universities are Struggling Financially– While Other Schools are Doing Great

  1. Pingback: Are Christian Colleges Good Financial Stewards? | The Pietist Schoolman

  2. Pingback: 2013: That Was The Year That Was | The Pietist Schoolman

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