July 19, 2007 Silver Spring, Maryland, United States …. [Elizabeth Lechleitner and Ansel Oliver/ANN]
Leaders of two Seventh-day Adventist institutions are hoping the long-term financial benefits will outweigh a potential loss of denominational assets. Two United States colleges are each planning to move forward with sales negotiations — one of a radio station, the other land — that would add to each school's endowment.
Columbia Union College (CUC), founded in 1904, is considering selling its Adventist radio station, which reaches about 300,000 people each week in the Washington, D.C. metro area, in order to fund future campus development and scholarship endowments, according to a church media release. The station, WGTS-FM, is the nation's second most popular non-commercial Christian radio station.
Critics of a proposed sale argue the deal could mean losing a large broadcasting presence in the nation's capital region, which includes the Adventist Church's world headquarters.
Sources close to the station said July 18 that CUC, in Takoma Park, Maryland, is hoping to raise $20 million to $25 million from the sale of WGTS to help fund the college, which enrolls nearly 1,200 students. A July 18 media release by Minnesota Public Radio reported its parent group, American Public Media Group, is in negotiations to purchase the station.
Across the country, in Angwin, California, the board of Pacific Union College (PUC) voted July 17 to approve a contract for the sale of nearly 700 of the school's 2,000 acres of property. Now subject to county government approval, the deal could put the Napa Valley school with about 1,500 students “well-toward” a goal of increasing its endowment to between $125 million and $150 million, up from its current $19 million, college president Richard Osborn said.
Many Adventist colleges are small, operating with less than 2,000 students, and rely heavily on tuition due to their minimal endowments. Last year, New York-based financial services company Standard & Poor's reported at a meeting of America college administrators that the most vulnerable colleges are small, private and running on limited endowments.
“That describes just about every Adventist college,” Osborn said.
Adventist Church leaders say the sale of denominational assets, including land and media entities, has improved the financial stability for many of its thriving institutions, while only delaying the need for management restructuring at others. Deciding to dispose of assets is an issue church leaders struggle with in North America, Asia and Europe, among other places.
Some church leaders told ANN the sale of any of its worldwide assets should be used for endowments rather than current operating expenses or to pay off debt.
Several years ago, the church's Atlantic Union College in South Lancaster, Massachusetts, sold land to pay off debt. The school is still struggling financially and those assets are gone.
“It was a tragedy,” said George P. Babcock, who served as the college president beginning in 2003, shortly after the sale, until his retirement last month.
Opponents of the CUC radio station deal, up for consideration in September, say administration might be in a similar situation — raising cash now at the expense of the school's financial future and the church's ministry in the region.
Steve Vistaunet, an Adventist broadcasting consultant based in Washington state, said the potential sale of WGTS illustrates a trend among some Adventist institutions of selling assets to stay financially afloat. That happens when the academic arm of an institution comes to view its media as commodities rather than ministries, he said.
“It's counterproductive to divest the church of its valuable broadcasting resources,” Vistaunet said. “There are other organizations with visions that run counter to the Adventist mission waiting at the door to buy us out.”
Because the FCC no longer grants radio licenses, any company wishing to obtain a radio presence must haggle within a highly competitive market. That, coupled with WGTS's strong, strategic listener base in the nation's capital, makes the station particularly sought after, said Sharon Kuykendall, a WGTS board member.
School officials said any deal with a buyer would include language allowing CUC to still maintain a digital radio presence.
But some board members said there is no legal basis to require a buyer to offer digital capabilities, and that the current deal will do little to sustain CUC's financial future, which, they say, is already shaky.
“Administration is faced with the possibility of the school going down, and [the sale of WGTS] would only keep it from doing so during their watch,” said Gerald T. Fuller, a WGTS board member for nearly 40 years and its former president.
A college spokesman said the deal would by no means be “pocket change” for CUC.
“The college board is not taking this lightly, nor will it make a capricious decision,” said public relations director Scott Steward. “Every member of that board values the ministry of WGTS and nobody wants to see the station lost.”
Both Fuller and Kuykendall said the CUC board has received — and rejected — at least one offer from an Adventist buyer: the station itself. The WGTS board offered to buy itself from the college for some $35 million paid over 25 years.
Steward confirmed that CUC turned down the offer, citing its “insufficiency” to meet the school's financial needs. Steward said that immediate payment in full following any sale would better enable the school to funnel proceeds toward areas of need: bolstering CUC's working capital, covering future projects and funding a $3 million endowment for need-based scholarships.
Fuller and Kuykendall said they fear a deal would ultimately fund operating expenses and not long-term endowments.
“The bottom line is the college needs money,” said Neville Harcombe, executive secretary for the church in the Columbia Union, which spans seven states along the east coast and mid-west.
Adventist colleges are subsidized by the church in their region. The Columbia Union subsidizes CUC with about $4 million each year.
In California, PUC receives $3.5 million from the Seventh-day Adventist Church's western U.S. region, the Pacific Union.
“If we had a $100 million endowment, that would be $5 million of additional income from interest each year; it would be significant,” Osborn said.
An average endowment for many baccalaureate colleges is about $90,000 per student, Osborn said. PUC's endowment equates to about $12,000 per student, and about 83 percent of operating income comes from tuition. Many other U.S. colleges operate with as little as 50 percent of tuition meeting total expenses.
An Adventist school in Southern California, La Sierra University, used the sale of land as one way to raise endowment. Within the last decade that school has sold about 200 of its 550 acres, growing its endowment to $55 million within the next five years, up from $15 million. Osborn said PUC views La Sierra as a model.
Osborn said funds from the sale of land at PUC will be used to endow student scholarships, faculty salaries and housing for employees living within the surrounding Napa Valley, one of California's most expensive regions. Anti-growth activists in the rural area and some campus leaders have opposed the deal, which will likely result in development surrounding the campus.
Osborn declined to reveal the dollar amount of the land contract.
“The key here is for the board to show discipline and not allow the principal of the endowment to ever be used,” he said.
—additional reporting by Nathan Gemmell
Copyright (c) 2007 by Adventist News Network.
