International branch campuses
There are many ways in which higher education engages in cross-border education. The most common remain study abroad opportunities for students. In the last decade, however, colleges and universities have begun to extend their international presence to include branch campuses to better position students to enter a globally-connected workforce, improve global rankings, tap into alternative revenue streams and respond to foreign investment interests.
Today, colleges and universities in the United States are the largest exporter of higher education with a total of 77 international branch campuses (IBC). IBCs exist on every continent and in 42 countries, and there are more than 20 new IBCs in the planning stages.1
As veteran institutions of IBCs have found out, opening a foreign campus is not without substantial risk. Worst case scenarios include making an investment of significant resources only to pack up and leave because of insufficient admissions, loss of promised government incentives or donor funding, or a change in local regulations disallowing the institution to reside in that country, including expropriation of campus property.
As there are unique challenges to consider, a systematic risk identification process should begin before the topic appears on a trustee meeting agenda.
Early discussion questions might include:
- Does the new IBC meet the intent of the institution’s mission statement?
- What is the level of institutional investment at risk, including financial and human resources?
- To what extent would the institution’s reputation be harmed if the endeavor failed?
- Is the selected country politically stable? What are the natural catastrophe risks of the location?
- Will there be faculty objections because of possible authoritarian governments and in-country laws restricting, for example, academic freedom, freedom of speech, and monitoring of Internet activity?
There are specific steps institutions can take to help address these questions and prepare for a new IBC.
Conduct a risk assessment
Institutions should identify the risks, particularly the greatest financial, legal and human resource risks, followed by an impact assessment based on a worst case but probable basis. This is not intended to dissuade an institution from moving forward with opening an IBC but, instead, to help determine the institution’s risk appetite related to the expansion project. It also helps with planning for impact resiliency in the event the IBC effort fails.
Comply with regulations and laws
There are numerous U.S. laws and regulations that travel internationally with an institution. These include, among others, Title IX, Clery, ADA, FERPA, the Foreign Corrupt Practices Act, and the U.S. Export Control Act. Faculty, staff, and, in some cases, students will need to be trained in how to comply with these regulations outside of the United States. There are also host country laws and regulations that will likely apply.
Similarly, accounting and taxation laws differ considerably among countries and many colleges and universities have little or no experience with international employment laws prior to launching an IBC. There are specialty firms that advise on international accounting, finance, tax, and employment matters; all of which should be well understood before a decision is made to commit to an IBC in any particular country.
Work with a knowledgeable broker
Many countries where colleges and universities are expanding often have ambiguous insurance regulations. The institution will want an insurance broker with international capabilities, including in the selected host country. This will lead to the development of a comprehensive international insurance program that contemplates U.S. and foreign exposures and compliance with local in-country insurance regulations.
Create security and crisis response plans
The institution’s duty of care to the campus community for its health and safety cannot be overlooked. Security and crisis response plans to address logistical challenges of relocating faculty, students, and staff are needed for working in almost any country, whether the risk is a terrorist attack, political unrest, natural catastrophe, or a contagion outbreak such as Ebola.
Cross-border education is a worthwhile pursuit but it is not without considerable risks. With a comprehensive preplanning risk assessment, the chances of success will increase.
Leta Finch is National Practice Leader, Higher Education, Aon Risk Solutions
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