College Accrediting Bodies Want to Cut the Corporate Claptrap

At least one group of watchdog organizations are looking past the arbitrary divisions between for-profit, nonprofit, faith-based, and governmental  organizations. 

It was just a passing comment in an article in the Chronicle of Higher Education (Private-Equity Juggernaut Rolls Through Higher Education, by Goldie Blumenstyk cached), but it caught my eye:

This May the directors of the seven regional accrediting groups agreed to adopt new common policies to ensure that their agencies have a right to obtain financial information from companies that own colleges. The new policies would apply to religious bodies that sponsor colleges and to states.

What a novel idea that the rest of the charitable world could take up.  Right now there are a few types of organizations in the charity industry (which includes hospitals & higher education) that are subject to wildly different reporting requirements:

• Truly private nonprofit organizations, from PTAs to the Kaiser Health Plan (EIN 94-1340523 Form 990) have to complete IRS Form 990, which has a lot of information  and includes tantalizing bits about compensation of board and senior staff, but falls short of genuine financial disclosure due to their unconsolidated reporting, lack of financial footnotes, and absence of an audit requirement.
  
• Large for-profit institutions (paradoxically known as public companies, as was Hospital Corporation of America) are subject to extensive financial disclosure, including standardized financial reporting, details of compensation arrangements for executives (in proxy statements), and public disclosure of governance policies.
• But large for-profit institutions (privately held, as HCA now is) are subject to almost no disclosure, even though many were once public companies and will be again (known as a round trip). 
• Small and large nonprofit organizations that can claim religious exemption are subject to almost no disclosure. 
• Nonprofit organizations integrated into government operations are subject to almost no disclosure, as we have recently seen.

As the true charity watchdog groups in the US (as opposed to the phony, self-appointed ones), the senior college accrediting bodies have put the issue on the table: let's set the same reporting standards for all organizations, appropriate to the scale of their operations and the public nature of their work rather than the technicalities of their legal structure.

Comments

[kgotthardt]

What about private colleges that claim to be non-profit?

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