Averett University’s financial situation last summer raised serious concerns about its ability to operate, according to a draft audit prepared for the university. But the private university in Danville has had recent fundraising successes that may help pave its path forward.
“The university has suffered recurring significant deficits, negative cash flows from operating activities” and other challenges “resulting in substantial doubt about the university’s ability to continue as a going concern,” Brown Edwards, a certified public accountant firm, wrote in a draft audit of Averett’s finances for fiscal 2024, which spanned July 2023 to June 2024.
The Danville school started cutting costs a year ago, at the tail end of fiscal 2024, in response to its discovery of a budget shortfall caused by what Averett officials have said were unauthorized withdrawals from its endowment. Averett has laid off staff, eliminated academic programs and begun selling property to keep the university afloat.
The draft audit was posted in late May on the website of the Municipal Securities Rulemaking Board, which enforces regulations on municipal bonds. Averett took out about $15 million in bonds in 2017 and is scheduled to pay those back through 2047.
The document shows the dire straits the university faced after revealing that its endowment had been decimated.
The university’s net assets decreased by about $9 million between June 2023 and June 2024, with an ending total of $35.7 million. In fiscal 2018, the last year prior to the pandemic, Averett reported net assets of a little over $50 million.
As of June 2024, most of Averett’s net assets were restricted and had to be used for specific purposes. Just $1.3 million — about 3.6% — was unrestricted. At the end of fiscal 2018, Averett had more than $17 million in unrestricted net assets.
Meanwhile, an annual report to bondholders posted to the MSRB portal shows some improvements to the university’s finances. As of April 30, Averett projected operating revenue of about $33 million for fiscal 2025, which is in line with the previous year’s revenue. The fiscal year ends June 30.
Averett also projected operating expenses of about $31 million for the fiscal year, a decrease of about $10 million from the previous year.
When it announced temporary staff furloughs last summer, the university said it was trying to recoup about $6 million.
The new report also indicated an increase in gifts to the university during the 2025 fiscal year. Averett received nearly $8.5 million in unrestricted gifts for the year as of April 30, which is more than double the total it received for all gifts the previous fiscal year.
Total gifts to the university as of April 30 totaled $9.5 million.
“Our donors include 100% participation from our current Board of Trustees, as well as former Trustees, campus leaders, alumni, friends of the university, foundations and partners,” President Thomas Powell said in a statement Friday.
The report noted that the university plans to make adjustments to its budget for fiscal 2026 once fall enrollment numbers are finalized.
In a late May interview with Cardinal News, Powell said he’s working on short-term financial recovery plans for the university, including establishing payment plans with vendors and replenishing the university’s endowment.
The university has sued its former chief financial officer and an investment firm in federal court. Averett claims the defendants colluded to hide the excessive withdrawals made from the endowment to cover the university’s bills.
The investment firm, Global Strategic Investment Solutions, has asked the court to enforce an arbitration agreement between the parties. GSIS claims Averett signed an arbitration agreement when it contracted with the firm, which limits the parties to settling any disagreements privately.
