Larry E. Penley, Ph.D.

Elmore R. Alexander, Ph.D.

January 2022

College and university trustees accept special obligations, called duties of care and loyaltyDuty of care refers to making rational, reasonably well-informed decisions without conflict of interest.  Duty of loyalty is exercised by always making decisions in the best interest of the college or university without self-interest. Trustees often receive little formal training in these duties, and this was adequate for functioning successfully as a trustee when institutions of higher education faced a benevolent environment.  The environment has changed, but the trustees’ duties have not.   Especially for smaller colleges and universities, financial viability has become more tenuous as burdens of marketing and centralized services expenses are becoming harder to bare.  With domestic demographic changes, a declining preference for higher education, and global disruptions to travel, most colleges are facing lower enrollments.  Financial viability has become far more tenuous.  In exercising their duties, trustees find themselves facing unanticipated decisions that differ markedly from the usual governing responsibilities of college and university boards. 

Being a college or university trustee has been viewed as a desirable assignment.  It comes with prestige; an opportunity to contribute to the institution and to higher education; an expectation for hiring, advising and supporting a president; and sometimes a responsibility for donations.  But rarely has a board member anticipated the need for the combination of experiences that address today’s disruptive challenges.  These challenges include expanding to new markets, dealing with declining enrollments, lowering the costs of central services, acquiring partners, and even merging with another university.  They can also include challenging an established president when appropriate.  What may well be needed to meet a board’s challenges today are academic experience, university management knowhow, and experience with academic partnerships and corporate restructuring that is usually found in the private sector.

We created ELM2 Advisors with just this combination of background and experience.  Our partners are college trustees, who, like you, take their duties seriously.  ELM2 Advisors also includes the combination of experience and backgrounds that is especially helpful to trustees with today’s disruptive challenges.  With nearly 100 years of academic and university managerial experience, our partners have also advised and handled a wide variety of strategic transactions, including partnerships, mergers and acquisitions. 

We’ve been around as trustees struggled with whether their duty was maintaining a college’s independence or developing a strategic alliance with another institution.   We’ve been a part of boards that have waited too late to act in the face of declining enrollment and declining financial health.  We’ve observed the difficulty of exercising adequate duty of care in reviewing complex financial information, preparing for meetings rich in detailed materials, or in trusting a favored college president just too much.  But we have also been there when boards have made tough, successful decisions for partnerships, service contracts, and mergers. 

Smaller colleges and universities have had a special role in American higher education.  They have served the needs of segments of students who otherwise would not have pursued their degrees.  They have served women and men who preferred more coherent, congenial environments in which to study.  They have served professional, spiritual, or social niches.  And in many cases, smaller colleges and universities thrived without the marketing prowess and deep financial pockets of the very large public university or the highly endowed private university.   With changing demographics, rising costs of required services, smaller colleges and universities face rising challenges.  Prospective students and society still deserve to be served by these very special educational institutions.   

In less chaotic times, these special institutions’ survival was unquestioned.  And their trustees were assured that they could exercise their duties without major corporate structural modification or change in organizational design.  Mission could be pursued without threat of demise.  Today’s trustees face very different challenges for which sound, experienced advice may be necessary.  ELM2 Advisors can support and advise trustees who face responsibility for meeting changing and challenging times. 

Larry Edward Penley is a partner in ELM2 Advisors, a current board member and the previous chair of the Arizona Board of Regents, and member of four other college boards, including the Board of Directors of the Glion Institute of Higher Education (Switzerland).  He is also the former president of Colorado State University and Thunderbird School of International Management and dean of the W.P. Carey School of Business at Arizona State University.

Elmore R. Alexander is a partner in ELM2 Advisors and a current member of the Governing Board of Les Roches International School of Hotel Management (Switzerland).  He is the former business school dean at Marist College, Bridgewater State University and Philadelphia University (now Jefferson University).