The Attention-Getting Device

So far, I've highlighted the windfall NCR expects to reap from the retirement development off Stimson Avenue and the disaster that I think it would be for east-siders, but what of the third party with a vested interest in the outcome of the project?

There have been three arguments consistently made about how the proposed NCR-run retirement center will enhance Ohio University. The first is that the center will provide on-site learning opportunities for students in the college of Heath and Human Services. I’m not sure this argument carries much weight. The programs in HHS have been graduating successful students for decades without the benefit of such a local arrangement, and if representatives for an existing local retirement facility are to be believed, HHS has never (at least not recently) explored the possibility, which suggests that even they don't view it as a high priority.¹

As for the second popular argument, the idea that OU wants to keep its retired faculty in the area for their expertise and continued involvement, I think that the University may be hoping to draw more heavily on its retired profs as an inexpensive teaching pool, but my unscientific observation is that many departments still seem actively engaged in trying to shoo their emeriti out the door. Also, former employees spread out around the country would seem to constitute a much more effective publicity presence than a single enclave, and the task of harnessing them for the institution will simplify as the information age progresses.

So what’s in it for OU?

The major benefit that an OU-branded retirement center might carry is in direct fundraising. It's no secret that University financial planners are looking for bigger sources of private money in an era when public funding for higher education continues to decline. Retired alumni, faculty and staff living in close proximity and connection to a university are likely to make larger yearly donations or, even better, major bequests from their estates.

How much money is at stake? It is important to measure the boundaries of the potential financial benefit that Ohio U. may receive from residents’ gifts. I will now present one method of calculating such a figure.

To keep the math simple, I'll use rounded averages provided by the Ohio University Foundation, OU's fundraising arm: $25 million a year in total gifts divided by 25,000 donors. Using this formula, the average per capita yearly donation to OU is $1000. (click here for a discussion of the limitations of the above formula). Assuming that all 200 grateful center residents will double the amount their gifts would have been otherwise, OU stands to profit around $200,000 a year from the facility, $240,000 if the new land lease is added in.

This figure is underwhelming to say the least. In the scheme of a more than $300 million University budget, $240,000 isn't much money at all.² It also represents less than a quarter of what NCR stands to make on the development (see related article). OU officials may hope they get better returns from center residents who choose to make large estate bequests, but there's no sure way of knowing whether those bequests will actually be made, and the fact that the center is slated to cater to upper-middle income retirees rather than the very wealthy puts a cap on the size of any bequest OU can expect to receive.

OU's best bet for ensuring that they receive estate bequests from center residents is to include language in the lease requiring that NCR build a true continuing-care facility. A July 2006 Chronicle of Higher Education article on the growing trend of university retirement initiatives suggests that "Communities should include all levels of senior housing: independent living, assisted living, skilled nursing, and dementia care. Colleges that don't build the full spectrum of senior housing may put some philanthropic [fundraising] pursuits in jeopardy."³ The piece goes on to quote industry expert Andrew Carle, director of George Mason University's assisted-living and senior-housing administration program: "If philanthropy is one of the big hooks, why would you put in a place a model that, by definition, makes you kick people out just before they're going to give you money?"⁴

Currently, a model that kicks people out seems to be just what NCR is planning. They have yet to obtain any state nursing bed licenses, nor have they announced any concrete strategies for doing so. This should serve as a clear red flag to OU planners. Keep in mind also that the new lease agreement still doesn't appear to contain stipulations that NCR limit the amount it charges its residents or that the center work in specific ways to provide internships for OU students in HHS. While these may be much smaller concerns, the picture they help paint is bleak: Ohio University on the verge of entering into a long-term lease agreement with no guaranteed benefits or legal leverage to make its partner honor promises made, a managing company in a position to make $4 for every dollar that OU does (and to demand a bailout in the event of a business failure), and neighbors, including a sizable cross-section of the University's own faculty and staff, that strongly resent the entire project.

A year and a half ago, one University trustee remarked that he was "concerned about the reputation of Ohio University for integrity", suggesting that OU's reliability as a business partner would be called into question if it re-examined NCR's lease after making early commitments.⁵ I believe the opposite. By going through with this deal without more legally binding guarantees than appear to be in place, Ohio University risks tarnishing its reputation as an institution that manages its assets wisely and its business shrewdly. Once done, that damage will be difficult to repair -- NCR's complex will not vanish once built. It could wind up making something like a 2 million dollar loss on a food service venture seem tame by comparison. I don't think that anyone with experience in the business world will fault OU for stepping gracefully, or even awkwardly, out of the current agreement.