Acquiring Minds

Written by Ashley M. Biggers Category: Valley News Issue: January 2014
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Thunderbird School of Global Management proposes a for-profit alliance amid vocal alumni dissent.

Since 1946, the Thunderbird Field flight tower has been a beacon of the Thunderbird School of Global Management. Alumni remember the tower as they reminisce about earning business degrees at the institution U.S. News & World Report frequently ranks as the world’s best international business graduate school. Today, the tower also puts a figurative exclamation point on the debate between the school and some alumni who object to its proposed partnership with Laureate International Universities.

Thunderbird began seeking a for-profit partner more than 10 years ago. A study by the Harvard Business School and The Parthenon Group estimates there are 200 nonprofit/for-profit academic partnerships serving around 400,000 students in the U.S. Usually, the for-profit partner provides technology out of the financial reach of the academic institution. Beginning its search in earnest in October 2012, the board of trustees at Thunderbird considered four potential partners and agreed in June 2013 to sign with Baltimore-based Laureate (formerly Sylvan International Universities), a private global network of post-secondary schools with numerous online programs. (Although non-disclosure agreements prevent trustees from naming names, the other contenders are popularly known to be Hult International Business School, ASU and Middlebury College.) Thunderbird reported a net loss of $4.1 million in 2011, and the Laureate deal would increase Thunderbird’s earnings via new programs, provide savings by tapping into a network of global campuses, and grant capital through a campus sale-lease back program. So, where’s the rub?

The decision led four alumni – Harry Cockrell, Thomas Greer, Merle Hinrich and Robert Theleen – to resign from the board of trustees to form the Thunderbird Independent Alumni Association. The TIAA’s mission is to block the alliance and raise a $30 million fund to “allow for the development of a sound strategic alternative.” Explaining their disagreement with the deal, TIAA Executive Director Will Counts cites concerns like a lack of leadership reformation at Thunderbird and the inability to maintain academic integrity.

This month, the Higher Learning Commission will consider the Thunderbird-Laureate deal. Thunderbird president Dr. Larry Edward Penley is confident the HLC will find Thunderbird will be able to continue to meet HLC standards and the alliance will proceed. Penley says the deal is a joint venture: “Thunderbird remains an independent nonprofit with control by its own board, it retains total academic control, and the agreement creates a 50/50 venture that acts as an independent corporation; it is not a merger or takeover.”

The partnership does have faculty support. Veteran Thunderbird professor Mary Teagarden will develop an undergraduate degree program, the first at Thunderbird since the school suspended its undergrad curriculum in the 1970s. Because the faculty is staying at Thunderbird and will have more research resources and access to global campuses, Dr. Teagarden believes Thunderbird’s reputation will grow.

But the TIAA believes these new programs could demean Thunderbird’s academic reputation. “I understand there’s a place in the world for companies like Laureate. But they by no means meet the standards of Thunderbird. This is going to devalue our degrees, ones that we paid $100,000 to go and get,” Counts says.

If the deal proceeds, Laureate will buy the Glendale campus and lease the buildings to Thunderbird, which can buy back the campus, should it raise the funds. This buy-back clause was a win for alumni who wanted to keep the campus.

But Counts says alumni feel ignored. “Thunderbird made [this] decision without consulting with or making announcement to alumni. Yes, a few sit on board, but to say they have participated with alumni is absurd,” Counts says.

Sam Garvin, one of 17 alums on the 28-person board who participated in the negotiation, says, “I don’t think Thunderbird alumni has [been] ignored. I think that some would have liked to have had a bigger voice in this decision. Thunderbird can always stand to improve communication with its 43,000 alumni.”

Higher-Learning Nonprofit/For-Profit Partnerships
Arizona State University partnered with Pearson eCollege to develop new technology and online platforms.
Indiana Wesleyan University partnered with the Phoenix-based Institute for Professional Development (IPD), an education consulting corporation, to develop adult accelerated-degree programs.
Tiffin University partnered with education technology startup Altius Education to create Ivy Bridge College, a branch campus of Tiffin.
University of Southern California partnered with education technology company 2U to offer the school’s Master of Social Work degree online.
Purdue University partnered with online-learning leader Deltak to develop and market distance learning programs.