Alumni | Costs

This Tiny College Wants to Close. Its Alumni Won’t Let it

Sweet Briar, a small liberal arts college for women, shocked students, graduates, and donors when it announced it would close despite a $96 million endowment
BLOOMBERG BUSINESS   |  March 16, 2015 by Michael McDonald

Sweet Briar College, a 114-year-old Virginia school for women whose former students include Jacqueline Kennedy Onassis’s mother, is learning that shutting down might be easier said than done.

Hundreds of graduates descended on the campus near Lynchburg, Va., on Sunday to welcome students back from spring break and to protest after the school announced March 4 it will close after this academic year. Alumnae raised $3 million within days and hired a law firm to thwart the plan. Many were stunned because the school has a $96 million endowment, making it better off than numerous peers.

The drama in Virginia demonstrates the financial struggles of many small U.S. liberal arts colleges, which are squeezed because of a shrinking pool of high school graduates and concern about student debt. The move raised questions about the rights of those who donated to the college over the years.

“I don’t think the school ever expected this kind of blowback,” said Sally Mott Freeman, a former public relations executive in Washington from the class of 1976 who helped organize the group Save Sweet Briar. “The school is not insolvent.”

The number of private four-year colleges that closed or were acquired doubled from about five a year before 2008 to about 10 annually in the four years through 2011, according to a 2013 study by researchers at Vanderbilt University in Nashville, Tenn., citing federal data.

Sweet Briar had been fighting to maintain a niche as a small, remote residential college known for a rigorous liberal arts curriculum. It is one of the few women’s colleges to offer an engineering degree. The school, chartered in 1901 on a former plantation in the foothills of the Blue Ridge Mountains, began as a finishing school for the area’s elite young women, a reputation still evoked by its top-tier equestrian program.

Competition for the declining number of U.S. high school graduates has grown even fiercer since the recession that ended in 2009, and Sweet Briar has struggled. Enrollment has fallen 8 percent, to 700 students, since 2011, according to Standard & Poor’s, the New York bond-rating company. To fill seats, the college has boosted financial aid. The school on average discounted its tuition 57 percent last year, S&P said. The sticker price for tuition, room, and board at the time was about $47,000.

To compensate, the college has been forced to dig deeper into its savings to cover operating deficits, spending 9 percent of its endowment last year, according to the bond-rating company. Typically, schools use about 5 percent of their endowments every year on operations.

Forecasting more of the same, Sweet Briar’s board voted unanimously to close before the next academic year, shocking students, alumni, faculty, and even Wall Street, which late last year had been told the college was exploring a merger and other strategies, according to Ken Rodgers, an S&P analyst in New York.

“We recognize that the closure of Sweet Briar is an emotionally draining experience, and we share the same sadness as those who are affiliated with this effort,” said Christy Jackson, a school spokeswoman.” At the same time, the college’s financial situation cannot be reversed.”

The college has said it will help students transfer and use available funds to pay down its $25 million of debt. It will also request legal guidance on what will happen to its endowment, most of which is restricted to certain uses, such as faculty chairs.

Chap Petersen, a Virginia state senator, has asked the state’s attorney general, who has oversight of nonprofits, to intervene.

“There was no thought given to the original donor as well as all the people that had been giving money up until just a few weeks ago,” said Petersen, who represents Fairfax and whose grandmother is a Sweet Briar graduate. “As long as they got a couple of dollars to fight with, that’s what they should be doing.”

Legally, Sweet Briar needs to respect the wishes of its donors, which had expected their money to be used for the women’s college, according to Michael Poliakoff, vice president for policy at the American Council of Trustees & Alumni, a nonprofit group in Washington.

In New Orleans, Tulane University’s decision to dissolve its all-female Newcomb College in 2006 led to a long court battle. The Louisiana Supreme Court let stand an appeals court ruling that the will of the school’s founder, Josephine Louise Newcomb, did not require Tulane to operate Newcomb “unchanged in perpetuity,” according to Tulane’s Website. Tulane now has an undergraduate college and institute bearing the name of Newcomb, who made the gift in 1886.

The attorney general’s office is exploring what role, if any, the state may have in the board’s decision to close Sweet Briar, given that it’s a private institution, spokesman Michael Kelly said. He called the “outpouring of support” by the Sweet Briar community “remarkable.”

It isn’t the first time the school has had to contend with the complexities of donor intent. In the 1960s, the college went to court to lift a restriction in the will of Indiana Fletcher Williams that created the school. It specified the money was to be used only for “white girls and young women.”

A.J. Lukanuski, a first-year engineering student from the suburbs of Richmond, said she has applied to other schools but won’t commit unless absolutely necessary, in case the closure is reversed. Her mother, a dentist, and an aunt, a musician, are both alumnae.

“No one else would understand unless they went there the experience and the community,” she said.” It’s irreplaceable.”


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