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Could These New Grants End the Taboo Over Mergers and Partnerships?

March 17, 2021

The following article is from The Chronicle of Higher Education

A new $2.5-million grant program — financed by three foundations and being announced today — will provide money to help colleges explore a host of “transformational partnerships,” including mergers, aimed at improving academic outcomes for students.

OK, that’s the news. But there’s a lot more here that’s interesting and — if executed well (yeah, that “if” is no sure thing) — useful to a broader swath of higher ed, beyond the grantees themselves.

But first, a few more basics. This Transformational Partnerships Fund was created by the ECMC Foundation, which put up the initial $1.5 million, and a nonprofit consultancy called SeaChange Capital Partners, which manages five similar grant and lending funds for nonprofits. Ascendium Education Group and the Kresge Foundation kicked in $500,000 each.

The grants themselves will be relatively small: up to $100,000. That’s more than enough for, say, a real estate market analysis or a technical evaluation of a software system, but it won’t cover the planning costs of a major partnership or merger. The grant size is deliberate, to get creative discussions started, Lynn Alvarez, vice president for programs and strategy at ECMC Foundation, told me. “This is kind of the dating phase.”

To qualify, a college or its potential partner must serve a population in which at least 40 percent of students qualify for Pell Grants or at least 25 percent are people of color. The thinking there is that such students may have a harder time regaining their footing if their programs or institutions suddenly close.

Potential partnerships could range from smaller collaborations like accredited dual-degree programs, shared-services arrangements, joint faculty appointments, or a common platform for online courses, all the way up to a full-scale merger. Figuring out what might work best costs money, said Alvarez. “That’s where philanthropy can play a role.”

The approach here is meant to make people think and act differently about partnerships. Here are four takeaways.

The funders want to encourage more colleges to embrace the idea of collaborating. Alvarez hopes the project will “normalize the conversation” around partnerships, she said. That’s not a new thought. (I vividly recall the trustee who lamented to me two years ago that colleges too often treat merger discussions as if they were “conducting a clandestine affair.”) But the risks of hesitating have become even more stark since the pandemic, as many colleges have seen costs rise and enrollments fall.

Foundation-supported discussions could erase some of that stigma, said Alvarez. She ran a similar fund for nonprofits in Los Angeles after the 2008 recession, and several groups got stronger through collaboration, she said. “It’s not a sign of weakness to say, ‘Hey, we may need a partner.’”

Still, colleges already in real trouble need not apply. The grants aren’t meant to be lifelines: The fund managers were pretty clear about that. “Two weak or distressed organizations do not make a strong,” Nadya Shmavonian, a SeaChange partner, told me last week. Her colleague was even blunter. The grants are designed to support “wise partnerships,” said John MacIntosh, a managing partner. “We’re not a hospice.”

I appreciate that tough-love message. The SeaChange folks and funders seem serious about promoting ideas that will result in better options for students, not slowing ailing institutions’ eventual demise.

The grant money isn’t all that’s on offer. The fund managers plan to serve as a sounding board for college administrators and trustees. As Shmavonian said, “You first have to establish that there is a there there.”

SeaChange’s expertise is deeper in the philanthropy sector than in higher ed, but it plans to draw on its own network and from a board of advisers with relevant experience to build its chops. Its status as a neutral third party could also help. While I’m all for transparency around discussions of partnerships, I’m also a realist. Especially in the early stages, those discussions might not get going without some degree of confidentiality. SeaChange and its advisers can provide that, along with a sense of how willing and able each party is to move forward. With money in hand, the managers can act quickly on applications, without having to conform to the funders’ usual grant-making cycles. In the current environment, said Shmavonian, “You can’t do philanthropy as per usual.”

The successful — and unsuccessful — partnerships can teach lessons to the field. This is key. The funders are encouraging SeaChange and the grantees to share their experiences. A lot of it is likely to be in the form of presentations to broader groups of funders via webinars, bilateral conversations, and (maybe someday soon?) conference presentations.

I hope the sharing goes a lot further than that. If the organizers are serious about making collaboration and partnership normal, positive discussions, then — after a confidential phase — I can’t think of a better way to do that than to bring the lessons of the hits and misses fully into the public discourse.

But can small grants make a big difference?
When I first heard rumblings of this project a few months ago, I had two reservations: Would this become a gravy train for consultants with connections to SeaChange? And could any consultants hired in that evaluation stage establish trust with vital campus constituencies, a perpetual challenge of consulting in higher ed? Now that I understand the hired guns’ focus to be on discrete, preliminary tasks, the trust concern has waned for me. (I still suspect this could be the first stop on the gravy train, though.)

But here’s another concern crucial to the success of this effort: Will colleges have the capacity to execute the ideas these grants help develop? It’s a question that occurred to me after talking this week with Dan Greenstein, chancellor of Pennsylvania's State System of Higher Education. The system, which received $300,000 from ECMC Foundation to help it think through its reorganization plans, served as a kind of test case for the new grant program.

The system used some of the money for its review of the financial ramifications of various merger options. “We have smart people,” Greenstein said, but “they have day jobs.” Outside input helped clarify the impacts, he said. But in the end, university-system leaders made the decisions. “You have to have a team that evaluates what comes in,” he said. “You’re not going to somebody else to find a solution.”

In other words (mine this time), these grants might not work so well if the same leaders who have been managing a college poorly get some more money to try one more time to hit upon a winning strategy. With any luck, the SeaChange vetting process will keep that from happening.

The fund managers are planning on as many as 20 grants over the next three years, and if the demand is high enough, the three foundations or others may provide additional funds. “That’s a problem we’re happy to have,” Shmavonian told me. In fact, SeaChange and ECMC Foundation see a need for a fund like this well after the pandemic subsides. After all, the challenges colleges face weren’t triggered only by COVID-19. Some of them — the results of demographic shifts, market competition, and technological change — began long before and will continue long after.

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