When the leadership team at Luther Seminary developed its strategic plan last year, members had no idea how quickly the document would be put to a test. As part of the planning process, the board studied the school's budget, anticipated possible challenges, and discussed responses to a range of "what-if" scenarios. The exercise brought financial issues into sharp focus and offered stakeholders a primer in sound money management. "Mind you, we did all this during what we thought were 'good' times," emphasizes Paul Dovre, chair of the 26-member board of directors.
Dovre describes the current recession as the "most dramatic and far-reaching" that he's witnessed in his long and distinguished career. A former seminary dean, college president, and member of the board of the National Association of Independent Colleges and Universities, Dovre has viewed economic up-ticks and downturns from a variety of perspectives. "I've seen blips and experienced belt-tightening," he says, "but I haven't seen anything as substantial as this."
Luther Seminary's strategic plan didn't make the school recession-proof, but its preparation ensured that board members were up to date on financial issues and understood the impact that a shrinking endowment can have on an institution. They also saw how easily a down economy can hobble the three legs of the income formula - enrollment, tuition, and gifts. Their contingency plan, which Dovre admits is a work in progress, provided direction. "Every seminary is in the contingency-planning mode right now," he says. Because of Luther Seminary's timely self-examination, Dovre and his colleagues "had a sense of what we needed to do and how we should approach this new set of challenges."
Division of labor
Dovre acknowledges that the role of board members may change when fiduciary concerns mount. The question is: To what degree do they change? The buck may stop at the boardroom, but Dovre cautions against members' temptation to blur the line between oversight and operations. He's a strong believer in division of duties, with the faculty shaping the academic program, the administration performing management tasks, and the board looking out for the big picture. "It would be easy for a seminary board or committee chair to want to micromanage and say, 'Here's what you need to do.'" His best advice: "Resist such temptations. It's critical for board members to remember the separation of responsibilities." Only if the administrative team fails to discharge its responsibility should the board step in as a kind of default manager.
That's not to suggest that in stressful times policymakers should concentrate exclusively on fire prevention, expecting administrators to battle daily blazes without assistance. When endowments shrink and adjustments are imminent, board members can help in two informal ways. First, Dovre emphasizes the importance of boards expressing their ongoing support for senior leaders who have "difficult decisions to make and complex matters to navigate." Second, board members with special expertise can serve as resources to those administrators who request their input. "As events have unfolded, I've seen seminary presidents and cabinets seek out board members who have experience that is germane to the work the administrators are doing," says Dovre.
Good communications skills
Theological school leaders should expect communication to increase at all levels during an economic crisis. This includes communication between the board and the administration, communication between leaders and the rest of the theological school, and communication between the school and the general public. The amount of interaction between the board and the administration typically depends on the seriousness of the situation. "Responses can range from an up-tick in the level of briefing that goes on, to extraordinary actions such as calling more frequent board meetings or appointing special board committees," says Dovre.
Because rumors often run rampant during crises, he sees value in frequent communication, both written and face-to-face, between the seminary leadership team and the faculty and staff. This accomplishes two goals: It calms fears and invites participation in the problem-solving process. Before convening the community, "seminary leadership has to develop an analysis of the current situation and outline the challenges and the options," says Dovre. "Once that's accomplished, leaders go to the community to solicit the best thinking on the issues." Later, as the board and administration implement steps to address the issues, they reconvene the community and offer progress reports. This puts to rest any rumors that might be circulating and it mines the creative ideas of the community.
Finally, in communicating through the mass media or with the public at large, a one-voice policy should prevail. Rather than having multiple board members weigh in on financial issues, one person (most likely the president) should speak for the seminary's administration and one person (most likely the chair) should represent the board. "That's critical," says Dovre. "The spokespersons should be clearly identified. When inquiries come to other board members, those members should direct the calls to the designated persons."
At Luther Seminary, the management team is keeping board members abreast of its findings as it reviews the number of courses offered and takes note of which programs are under-enrolled and which are over-enrolled. "My guess is that one of the outcomes of this analysis will be some gains in efficiency," says Dovre. "There's something about a crisis that gets you to take a close look at things that you probably should have been thinking about earlier but had no need to."
Ultimately, the economy will stabilize, endowments will swell again, and the recession of 2009 will fade from memory. Before theological schools resume business as usual, Paul J. Dovre suggests they pause and consider four core takeaways from the recent economic downturn.
Understand that most seminaries are vulnerable and are at the mercy of external forces beyond their control. The economy is a prime example.
Appreciate the value of a contingency plan that outlines how an institution will approach certain circumstances if they occur.
Cultivate a thorough knowledge of the school's budget, including those variables and expenditures that a board can and can't control. In short, know your options.
Position the seminary for long-term solvency so it will be less subject to the vagaries of the market.
Paul J. Dovre, Chair of the Board of Directors, Luther Seminary
In 1963, Paul J. Dovre joined the theater and communications faculty of Concordia College in Moorhead, Minnesota. Later he served as dean and academic vice president before beginning a 24-year presidency in 1975.
A lay member of the Evangelical Lutheran Church in America, Dovre earned master's and doctoral degrees from Northwestern University. He has served as vice chair of the Lutheran Council in the U.S.A., as a member of the Commission for a New Lutheran Church, and as a member of his denomination's delegation to the Lutheran World Federation Assembly. He co-chaired the Task Force on Education of the Evangelical Lutheran Church in America from 2003 to 2007 and is currently a member of the Minnesota legislature's Regent Candidate Advisory Council and the Minnesota Humanities Commission. He serves on the boards of the Oak Grove Lutheran Schools Foundation and the RDO Company and is co-director of the Lutheran College and University Leadership Program.