Faith Based Failure!: Exploring The Reasons Faith Based Colleges Fail - Softcover

Barton, Dr Edward James

Softcover

ISBN 13: 9798388140302

Publisher: Independently published, 2022

Synopsis

The federal warning score that boards and lenders rely on missed most of the faith-based colleges that later closed. This book shows what to watch instead.

Small religious colleges face shrinking enrollment, a secularizing population, heavy tuition discounting, and thin endowments. Most trustees and lenders judge financial risk with one number: the Department of Education's Financial Responsibility Ratio (FRR), also called the composite score. This study tests whether that number predicts closure. It falls short.

Dr. Edward Barton served as chief financial officer and general counsel of a small Catholic university, where he watched boards and banks lean on the FRR score firsthand. For his doctoral research, he pulled federal IPEDS data on every faith-based nonprofit college under Heightened Cash Monitoring, 12 faith-based colleges that closed or announced closure between 2016 and 2020, and a random control group of 100 institutions. He tested 139 financial and demographic factors and narrowed them to a 13-factor model.

What the study found

• The FRR score predicts whether a college will still have a weak FRR score five years later. Used alone, it flagged only 16.67% of the colleges that went on to close.
• The 13-factor model covers enrollment, student mix, staffing, local population, financial aid, student success, endowment, and the FRR score. It correctly identified 58.33% of the colleges that closed and 83.2% of those that stayed open.
• Colleges with more distance education students showed a lower probability of closure, a result earlier research did not predict.
• Graduation rate, Pell Grant percentage, retention, and tuition discount rate moved closure risk less than most boards would expect.

Who this book is for

• Trustees and board members of Christian, Catholic, and other church-affiliated colleges
• Presidents, CFOs, and chief business officers at small private colleges and universities
• Sponsoring religious orders, dioceses, and denominations
• Lenders, bond analysts, accreditors, and regulators
• Researchers and graduate students in higher education administration and finance

The book includes a link to a working closure probability calculator in Google Sheets. You can enter your institution's numbers, see whether it crosses the 20% risk threshold that calls for action, and test which changes lower that risk the most.

If you sit on a board, sign the budget, or lend to a faith-based college, this book gives you a sharper read on closure risk than the composite score alone.

Edition details

• Publisher: Independently published
• Publication date: 2022
• Language: English
• ISBN 13: 9798388140302
• Binding: Paperback
• Number of pages: 177