Piety and Pocketbooks
After employees at a Christian college concealed financial problems from the institution’s president and Board of Regents, the college has turned to its affiliated church to raise enough money to survive the summer.
Emmanuel College, an 800-student institution in Franklin Springs, Ga., is the educational flagship of a relatively small Pentecostal sect, the International Pentecostal Holiness Church. In a denomination-wide appeal, the church has asked congregants to donate to the college in order to alleviate a $1.5 million shortfall -- caused by misleading financial information provided by college employees -- by the end of July.
The church has roughly 250,000 American members distributed across 2,000 congregations.
In a video released last month, Doug Beacham, the church’s presiding bishop, encouraged his sect’s pastors to declare a day of “prayer, fasting, and offering” in hopes of shoring up Emmanuel College’s financial stability. Beacham, like many IPHC officials, graduated from Emmanuel.
In the video, Beacham said the college was “facing its most critical financial crisis in the modern era.”
“There are times we realize we’ve come into the kingdom for such a time as this,” the bishop said. “Through God with us … we can accomplish this.”
The fund-raising appeal coincides with the departure of the college’s president, Mike Stewart, who resigned effective June 30. College officials declined to make a senior official available for an interview about the situation. In a letter to alumni and friends of the college, Linda Thomas, the chair of Emmanuel’s Board of Regents, said Stewart resigned because of health problems and fatigue brought on by the president’s travel schedule.
The president’s resignation was “entirely his decision,” Thomas wrote.
Unprecedented Growth, Unforeseen Debt
Over the last five years, Emmanuel College has invested heavily in facilities and buildings. In October 2011, the college unveiled Roberson Hall, a 138-student dormitory. A 144-bed extension of Roberson Hall was completed in fall 2013. In October 2012, the college held a dedication ceremony for a $10 million, 76,000-square foot athletic center. The college took out bonds to finance both the athletic center and dorm expansion.
“Emmanuel College needed to refinance their campus debt in order for the project to move forward,” reads a post on Carroll Campus Development’s website.
In November 2012, the college issued $22.46 million in tax-exempt bonds and $2.76 million in taxable bonds, at an interest rate of 6.25 percent. (A high interest rate can reflect a credit risk.)
The proceeds of the bonds will go toward refunding the college’s debt and paying for the Roberson Hall extension and the athletic center, according to the official bond statement.
As of March 2014, the institution had roughly $9.2 million in net assets.
During this same period, while new buildings began to dot the campus, “underlying cash problems were concealed from leadership, including Dr. Stewart and the Board of Trustees,” Thomas wrote in her letter.
Emmanuel officials thus made decisions “based on inaccurate and misleading financial information,” Thomas wrote. These decisions resulted in a cash shortage. The college’s cash flow problems “must be rectified immediately in order for Emmanuel to continue her mission,” the board leader wrote.
College officials said they discovered the financial shortfall in November 2013. “I can tell you without a doubt nothing fraudulent has gone on,” said Paula Dixon, the college’s director of communication. “They discovered it in time so that we can land where we need to land.”
On its homepage, the college is advertising an early payment discount for new students. Students who settle their account in full by July 15 will receive a 10 percent discount. Students who pay by July 31 will get a 5 percent discount.
In the June 20 video, Beacham said the college needed to raise $700,000 by the end of June and $800,000 by the end of July.
Dixon said the college had “landed well” at the end of June and closed the fiscal year without a deficit. She said the college expects to meet its July target as well. “It’s not like we’re running around wringing our hands,” Dixon said.
Bill Robinson, president of the Council for Christian Colleges and Universities, said it’s not uncommon for Christian colleges to have their denominations help them in a time of financial stress. “A lot of people pray for our schools,” Robinson said.
What is unusual, Robinson said, is the “energy” that the IPHC has exerted in its bid to raise funds for the college. “They’ve been more public about this,” he said.
John Lippincott, president of the Council for Advancement and Support of Education, said it’s rare to see a fund-raising appeal “based on an immediate budgetary shortfall.”
“That’s a tough case to make to a general pool of donors because the concern of the donor would be, 'If I make my gift now, how do I know that a year from now the institution will have survived the financial crisis it’s going through?' ” Lippincott said.