Preliminary Analysis of Financial Condition of Sweet Briar Institute: Sweet Briar College’s Financial Condition Did Not Warrant Closure

by vixenSBC


R. Steven Spitzer, CPA, CFE
April 6, 2015

Preliminary Analysis of Financial Condition of Sweet Briar Institute

Sweet Briar College’s Financial Condition Did Not Warrant Closure

An initial review of Sweet Briar College’s finances shows that the College was not in dire financial straits just eight months before the College’s Board and Interim President announced they were closing the College for financial reasons. Assuming the College’s finances are handled in a prudent and responsible way going forward, it would still remain financially viable. Three reliable sources, two of which were released only eight months before the closure announcement, show that the College is not in bad financial shape:

• On July 30, 2014, a study by Forbes magazine was released grading the financial health of more than 900 private not-for-profit institutions. The Forbes study took into account nine components, broken into three categories to determine the financial health of private institutions. Sweet Briar College received a rating of 3.899 out of 4.50 and was given a grade of “A”. The College ranked number 88 out of the over 900 institutions studied. Only four institutions in Virginia ranked higher: Washington and Lee, the University of Richmond, Hollins University and Randolph College. The remaining 23 Virginia institutions ranked by Forbes fell below Sweet Briar College.

• The Composite Financial Index (CFI), developed by a number of consulting groups and endorsed by the Council of Independent Colleges to assess the health of educational institutions, provides a more complex picture of the financial health of an institution. The CFI score is calculated based on information from each institution’s audited financial statements. Comparison of CFI scores over time provides a long-term view of an institution’s financial performance. The CFI score falls along a scale of -4 to 10. An institution with a score of greater than 3 is considered well-positioned to strategically invest institutional resources to optimize achievement. The CFI for Sweet Briar College was 5.09 and 4.72 for the years ended June 30, 2014, and June 30, 2013, respectively.

• The USDOE uses a financial responsibility composite score made up of three ratios based on official audited financial statements to gauge an institution’s financial health. Composite scores range from negative 1.0 to positive 3.0. A score greater than or equal to 1.5 indicates a financially responsible institution. The USDOE’s composite score for Sweet Briar College was 3.0 (the highest score possible) as of June 30, 2013, the year-end date of the most recent Department of Education report.

The Facts Do Not Seem to Support Interim President Jones’ Claim that the College Needs a $250 Million Endowment to Stay Open

Interim President Jones has asserted publicly several times that the College needs $250 million in its endowment to remain open. See, e.g., Sheryl Stolberg, “Anger and Activism Greet Plan to Shut Sweet Briar College,” New York Times (March 22, 2015). It is hard to imagine why such a claim would be made.

Sweet Briar College has about 700 students. Colleges and universities with $250 million endowments are typically much larger, and include Duquesne University (about 10,000 students), Seton Hall University (about 10,000 students), and Ithaca College (6,723 students). See National Association of College and University Business Officers (NACUBO), U.S. and Canadian Institutions Listed by Fiscal Year 2014 Endowment Market Value.

Sweet Briar ranks 17 out of 35 public and private colleges and universities in the region in terms of overall endowment size. See Virginia College Endowments as ranked by NACUBO, February 2015. As reported by the Washington Post on January 28, 2014, Sweet Briar College ranks a very respectable 10 out of 30 public and private colleges and universities in Virginia, Washington, D.C. and Maryland, with respect to the amount of endowment funds per-student. See Top College Endowments Per Student (2013), Washington Post, January 28, 2014.

If Sweet Briar College had a $250 million endowment, as Interim President Jones suggests is required, it would rank third in endowment-funds-per-student in the region – above the University of Virginia. Id. It is difficult to imagine why Interim President Jones would claim that an endowment of this magnitude is necessary to keep Sweet Briar open.


Our preliminary conclusion upon a review of the publicly-available data is that, as of approximately eight months before the closure announcement, the College was financially viable, and there was not an urgent financial reason to close.

Data Reviewed and Considered
1. Audited financial reports for years ending June 30, 2009, through June 30, 2014.
2. IRS Forms 990, “Return of Organization Exempt from Income Tax,” for years ending June 30, 2010 through June 30, 2013.
3. Financial analysis by the U.S. Department of Education.
4. Financial analysis by Forbes magazine.
5. Composite Financial Index (CFI) Methodology.
6. NACUBO, U.S. and Canadian Institutions by FY 2011-2014 Endowment Market Value.
7. NACUBO, Virginia College Endowments, Rank and Percent Change, February 2015.
8. Top College Endowments Per Student (2013), Washington Post, January 28, 2014.

About the Author


Saving Sweet Briar Timeline

March 3, 2015 - Sweet Briar College announces Spring 2015 will be final semester, school will close on August 25, 2015.

March 3, 2015 - Sweet Briar College alumnae galvanize on Facebook, creating working groups to work to halt closure.

March 4, 2015 - launches in the early morning hours. Website begins accepting pledges midday.

March 6, 2015 - pledges exceed $1 million (with additional unconfirmed $1 million pledge that will later be confirmed).

March 6, 2015 - Troutman Sanders retained to fight closure. Read More

March 9, 2015 - Saving Sweet Briar, Inc. formally incorporated as a non-profit with seven alumnae appointed to serve as board members. Read More

March 11, 2015 - Virginia State Senator Chap Petersen sends letter to state Attorney General regarding the legality of closing the college. Read More

March 11, 2015 - Sweet Briar faculty join alumnae in fight to keep college open. Read More

March 18, 2015 - Saving Sweet Briar, Inc. begins accepting donations in the fight to save the college.

March 23, 2015 - Troutman Sanders sends letter requesting President and Board resign. Read More

March 26, 2015 - Saving Sweet Briar, Inc. hires Certified Fraud Examiner. Read More

March 30, 2015 - Amherst County Attorney, Ellen Bowyer, files suit against Sweet Briar College.

April 6, 2015 - Initial Financial Analysis concludes financial condition did not warrant closure Read More

April 12, 2015 - $5 million pledged to Saving Sweet Briar.

April 13, 2015 - Amherst Mayor sends letter opposing closure. Read More

April 15, 2015 - Judge Updike issues a 60 day injunction preventing the college from using funds solicited to operate the college to close it.

April 23, 2015 - Saving Sweet Briar, Inc. launches Alumnae Angels program to help students with financial concerns during transition and uncertainty.

April 29, 2015 - Judge Updike issues another injunction in one of the other legal cases preventing the college from selling assets for six months.

April 29, 2015 - Amherst County Attorney files Petition to Review with Virginia Supreme Court.

May 19, 2015 - Saving Sweet Briar, Inc. granted 501(c)(3) status, with tax exempt status applying to all donations made from the incorporation date of March 9, 2015.

June 9, 2015 - Virginia Supreme Court rules that Sweet Briar College can be a trust.

June 19, 2015 - Saving Sweet Briar, Inc. announces $21 million total pledged over 5 years.

June 20, 2015 - Settlement reached, keeping Sweet Briar College open. Settlement terms include 3 payments to college with the first $2.5 million due on July 2.

June 23, 2015 - Amherst CountyBoard of Supervisors names Sweet Briar Day.

June 30, 2015 - Saving Sweet Briar, Inc. delivers $5 million ahead of schedule to Sweet Briar College.

July 2, 2015 - President Stone assumes new position, new Board of Directors appointed.

September 2, 2015 - Saving Sweet Briar, Inc. delivers final settlement payment to Sweet Briar College, exceeding $12 million total.