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At Nonprofit Organizations, a Lack of Regulation Invites Failure

Financial mismanagement at Cooper Union has the NY attorney general’s sights set on NGOs.

Cooper Union. Image by I, DavidShankbone via Wikimedia Commons

This April, New York’s Attorney General Eric T. Schneiderman announced plans to crack down on Cooper Union, a private college renowned for its arts and design programs and the practice of offering a tuition-free education. Until two years ago, that is, when the school suddenly started charging a non-trivial $20,000 annual fee to students. According to Schneiderman (and previous investigations by reporters in 2013) the decision to charge directly stems from the failure of the nonprofit institution’s board to manage their endowment and physical assets—which include the land under the Chrysler building. The board allegedly took on unnecessary debts, failed to cultivate donor bases, and never really attempted to diversify their holdings, even in the face of financial instability. As a nonprofit, Cooper Union technically falls under Schneiderman’s regulatory oversight, allowing him to propose and foist a bevvy of procedural reforms and monitoring regimens on the institution, which he says he’s now glad to do. But this willingness goes beyond Cooper Union—according to Schneiderman, he’s apparently planning to put nonprofits on notice, bringing increasing scrutiny to organizations that often fly under the radar.

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