Non-Profit Regional Institutions Replace For-Profit Education Companies

Over three years ago, I wrote a “Dear John” letter to all the great colleagues we had done business with in for-profit higher education over the last 20-something years. You can still see the letter posted on www.significantfederation.com. It is my digital monument to a past era.

About 24 years ago, Dr. John Sperling granted me lunch in Phoenix with him. Dr. Jorge Klor de Alva and my partner, Luigi Alfonso Falcigno (Lou), met together to discuss my proposal.

TeleUniversity was the name of the company Lou and I had formed. Lou was the creator of Pay-Per-View boxing with Don King. We thought we could use the same relationships with cable companies as well as with schools to offer Pay-Per-Courses to students in their homes. We thought — like all of our ideas — it was the most incredible revelation ever.

As I presented over lunch, Dr. Klor de Alva — who has since become a great friend and colleague — kept saying to John Sperling, “Let’s get out of here we got bigger things to do.” John listened to Jorge say that a couple of times, then he fired back “Jorge, shut up. If we don’t learn to listen to entrepreneurs we will go out of business.” Jorge enjoyed the rest of his lunch in silence. How prophetic of Dr. Sperling.

When I finished my stellar presentation, Dr. Sperling (with a mouthful of food) shouted at me, “That is the dumbest idea I’ve ever heard on the planet.” Lou and I were stricken with grief. Dr. Sperling went on to tell us that although it was a really stupid idea, he enjoyed my passion. He told me he thought I had a “curious nature.” He was incredibly encouraging, telling me to not give up on finding a niche in higher education. I will be forever grateful to Dr. John Sperling.

One thing led to another and the good Lord put me in a position to be a catalyst to bring together some of the finest minds in education to help play a small role in creating some world-class brands. It is all about the people. The managers. The leadership. And wise investors that know how to “bet on the jockey not the horse.”

There are a lot of wonderful human interest stories around Grand Canyon University, Jack Welch Management Institute, TeleUniversity becoming Bridgepoint Education, Forbes Business School, and many others I can’t even mention…

The point of this short message is that the days of for-profit education are dead, in my opinion. I believe any for-profit, regionally accredited institution that wants to survive the future, must adopt a strategy of becoming a non-profit university.

We have been involved in several discussions with private equity groups that are keenly interested in pursuing this type of strategy with not only the publicly traded companies, but the privately held ones as well. This includes trade/vocational schools as well as regionally accredited schools.

The big opportunity, which requires a significant wakeup call for the leaders of regionally accredited non-profit institutions, is the unprecedented opportunity to propel their mission forward by forming some sort of unique relationship whereby the for-profit institutions become non-profit. Any president of a non-profit, regionally accredited institution should take a very careful review of the “meltdown” taking place in for-profit education for the benefit of their institution.

It is my prediction that the majority of for-profit schools will either go out of business or adopt some hybrid strategy within the non-profit structure in the very near future.

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