New York state Attorney General Eric Schneiderman's investigation of prestigious private college Cooper Union's risky money moves should set off "a ringing alarm for nonprofit boards," New York Times financial columnist James B. Stewart writes. Mr. Schneiderman's office launched an inquiry into the Manhattan institution's fiscal management after the formerly free college implemented tuition for undergraduate students, saying it faced ruin otherwise.
Mr. Stewart notes that the investigation comes as Cooper Union, while facing persistent deficits, has a $735 million endowment and is "in no imminent danger of failing." The inquiry fits into a broader effort to "get ahead of potential crises by 'stress testing' nonprofits that show signs of potential trouble," such as budget gaps or drawing heavily on endowments, the columnist writes, citing comments by James Sheehan, head of the charities bureau at the attorney general's office.
Cooper Union trustees have voted to inform Mr. Schneiderman's office that they will not renew college President Jamshed Bharucha's contract if it would help end the attorney general's inquiry and litigation challenging the tuition charge, according to The Wall Street Journal.