Since 1997, the United States has experienced a steady increase in college closings. Private, nonprofit colleges are the most prevalent among these affected institutions. A 2017 study confirmed that 177 colleges failed a U.S. Education Department test for “financial responsibility.” Of these 177 colleges, well over half are private nonprofits. Further, several colleges have closed since the study was completed. It is reasonable to conclude the financial irresponsibility of these schools contributes to their closures. ...
Part I describes fiduciary duties of nonprofit board members and instances of their failure. Part II discusses inadequate nonprofit oversight and provides information regarding traditional denial of nonprofit stakeholder standing to sue. Part III provides additional examples of and a possible reason for breaches of fiduciary duties. Part IV describes several required disclosures by colleges and other institutions. Part V describes IRS Form 990 and its Schedules. Finally, Part VI offers an analysis of a method to ensure stakeholder protection from malfeasant board members – strengthening IRS Form 990.
Patrick R. Baker, Paula Hearn Moore, and Kaleb Paul Byars, Nonprofit College Crash: Enforcing Board Fiduciaries Through Increased Accountability and Transparency in the IRS Form 990 Procedure, 2019 BYU Educ. & L.J. 167 (2019).