By Kim Lowe and Matt Norris
President Obama's proposal to make community college free was another blow to for-profit higher education providers., according to a recent Forbes article that analyzed the for-profit sector's deep troubles, and a further decline in stock prices after the announcement. In Minnesota, the state Senate's DFL majority leadership also recently proposed free tuition for community college.
There is no other way to say it; reconciling return-on-shareholder investment with providing affordable, cost-effective education to middle- and low-income students challenges the for-profit business model. As educational institutions, for-profit education providers will always be subject to criticism when held up against their public and nonprofit brethren. How can a profit-making endeavor hold its head high against either a land grant state-funded college or a university founded by nuns or priests? This challenge becomes even harder given that for-profit schools tend to serve a population less able to access elite non-profit higher education providers.
Here's a possible solution. Recently Rasmussen College -- a regionally accredited private college (a for-profit enterprise owned by private investors) -- issued a press release celebrating its first anniversary as a Public Benefit Corporation. Rasmussen is one of the largest for-profit colleges operating in Minnesota. And by the way, a recent report from the state's Office of Higher Education suggests that Minnesota's for-profit colleges compare favorably on some key outcomes to their public competitors.
It remains to be seen whether the Public Benefit Corporation banner will enable Rasmussen and other Minnesota for-profits to survive and prosper, but we congratulate Rasmussen for taking this innovative course. The chartered benefit corporation model allows a for-profit school to legitimately say that student outcomes and success are at least as important as shareholder return on investment.
The Public Benefit Corporation form is a relatively new form of organizational structure that allows a for-profit enterprise to legally embrace and pursue a social purpose that is at least co-equal with shareholder return on investment. Twenty-seven states, including Minnesota, whose law took effect January 1, 2015, have adopted legislation permitting benefit corporations, which have been embraced as part of a new wave of social entrepreneurship both in Minnesota and across the country.
As proponents who helped draft this legislation, and as explainers of it, we encourage other colleges and entrpreneurs with ideas for socially beneficial enterprises to consider the advantages of public benefit corporation status and to check out other sources on the subject.
Kim Lowe, a shareholder at Fredrikson & Byron P.A., chairs the ABA Business Law Section’s Task Force on Social Ventures, leads Fredrikson’s nonprofit organizations practice group, Start Up and Rapid Growth Enterprises practice group and the newly formed Social Entrepreneur practice group. Ms. Lowe chaired the Minnesota Public Benefit Corporation Act Drafting Committee. Matt Norris, J.D., is a graduate of the University of Minnesota Law School and was a member of the Minnesota Public Benefit Corporation Act Drafting Committee. Lowe also is a member of the Growth & Justice Board of Directors.
Some high-profile journalists in the business press and mainstream media are talking about economic competitiveness in a way that suggests a paradigm shift may be underway. In a Fortune magazine piece headlined “The U.S. Has the World’s Most Competitive Economy. So What?” Christopher Matthews cited academic experts who argue that by pursuing policies aimed only at increasing business profits, “government itself becomes a... Read More
AUSTIN, MN --It started with platters and bowls heaped with tasty fresh-cooked food _ a taco bar and a build-your-own-casserole table. Before long, as comfort levels rose, people began to hold each other’s babies, toddlers from South Sudan played with pre-schoolers from Central America, and grandmothers from continents apart began to share stories about their grandchildren. And we began to feel the impact of “intentional social inte... Read More
Political humorist Mark Shields has said that a week can be a lifetime in politics and three months can be an eternity. How true for Obamacare and MNSure… About two eternities (six months) ago, things were not looking good for the Affordable Care Act. The much decried audition of the www.healthcare.gov website emboldened opponents of the Affordable Care Act to declare victory, asserting that the website’s failure had sealed the fai... Read More
One particular theme in President Obama’s State of the Union address resonated for us at Growth & Justice. And we think it might have drawn the most bi-partisan applause from business owners, educators and philanthropic leaders. As he described a vigorous new effort to address growing inequality, the President offered specific policy prescriptions to re-vitalize our workforce with new investments and reforms for A... Read More
The roll-out of Healthcare.gov, the federal online marketplace to purchase insurance under Obamacare, has been beleaguered and ridiculed, to say the least. The media and talk-show hosts have had a field day, and of course the “botched roll out” has been the target of unrelenting criticism from Congressional Republicans. On November 14th, House Speaker John Boehner declared, “The only way to fully pr... Read More
Web Development by Creative Arc, a Minneapolis Web Design firm.