There are some terms that institutional leaders would prefer to leave up on the shelf — collecting dust, generally forgotten, because certain issues have just not come up. Some are more sinister than others. Malfeasance, for example, and misappropriation. These words mean someone did something wrong. Other terms are more innocent yet unfairly hitched to negative feelings.
In 2010, Chris Meinzer answered the question, "What is ‘financial exigency’?" This is one of those phrases a board would rather avoid, even when declaring financial exigency is the responsible next step for a school in trouble. According to Meinzer, a declaration of financial exigency is “a formal declaration by the board that a demonstrable, bona fide, imminent financial crisis threatens the survival of the institution as a whole.”
No one wants to be at the helm in an emergency. It’s not unimaginable that stakeholders might question the decision. Some will question all the decisions that led up to the crisis. But when you’ve hit an iceberg, it makes no sense to keep chugging forward when you should be calling all hands, loading lifeboats, passing out flotation devices, and doing what you can to save lives.
As Meinzer points out, declaring financial exigency is never an easy decision to make, nor should it be. It affects staff and faculty morale, the school’s fundraising efforts, and student recruitment. At the same time, however, it can also be the best tool for saving an institution and propelling the school’s mission into the future. With this move, a board can “end faculty tenure, drastically reconfigure operations, and nullify contractual obligations.”
At the end of his piece, Meinzer lists some excellent resources for boards in financial straits considering what financial exigency might mean for their institution.
If you have an online In Trust account, you can read Meinzer’s full article online.