Erskine College, a small Christian college in South Carolina that has faced its own financial challenges in recent years, has filed a lawsuit in a South Carolina state court against Icelaven Development Group for failing to repay a $1 million loan.

According to reporting by The Herald, Icelaven is the parent company of Reason and Republic, a for-profit charter school management company in South Carolina founded in 2017.

Icelaven defaulted on payments it should have made on the promissory note, according to the lawsuit. The lawsuit did not state the purpose of the loan.

In 2017, Erskine College founded the Charter Institute at Erskine to authorize charter schools.

According to the Charter Institute’s website, it has authorized 25 schools. Until recently, Reason and Republic operated three of those charter schools, The Herald reported.

Since 2022, Erskine has faced accreditation issues due to financial concerns. According to the Southern Association of Colleges and Schools (SACS), Erskine College is still accredited but was denied reaffirmation of its accreditation and placed on warning due to issues with financial resources and financial responsibility.

“These standards expect an institution to (1) to have a governing board that (b) exercises fiduciary oversight of the institution; (2) to have sound financial resources and a demonstrated, stable financial base to support the mission of the institution and the scope of its programs and services; and (3) to manage its financial resources in a responsible manner,” the statement reads.

Erskine can be under a warning for two years, the end of which will be December 2024 when it will present another monitoring report to SACS.

About the accreditation warning, Erskine told MinistryWatch it “has demonstrated improvement in fiscal oversight, financial management, and availability of financial resources.”

In an open letter, Erskine President Steven Adamson said the school projected finishing the 2023-24 school year with the “most robust combined financial results in over 25 years.”

He said the college expected to see an operational surplus for the first time in 10 years and an increase in revenue of 17% from the previous year, even with no tuition increase.

According to its most recent IRS Form 990 for fiscal year ending in June 2023, Erskine College showed $3 million more in expenses than in revenue.

Adamson also pointed out in his letter that about $2.5 million was spent from the schools $38.5 million endowment, a reduction from $4.1 million.

“Our endowment spending declined from a 20-year average of eight percent down to just six percent this fiscal year,” Adamson wrote, crediting the decreased reliance on the endowment to “generous donations from our alumni network.”

Erskine’s spokesperson said the school is “grateful to SACSCOC for its diligence in accreditation and looks forward to demonstrating the impact of the College’s plans.”

The college declined to comment about the lawsuit against Icelaven but said it is not related to the accreditation issues.

Erskine was founded by the Associate Reformed Presbyterian (ARP) denomination in 1838 and was the first church-related four-year college in South Carolina. It has a student population of more than 850 students, according to its website.

The ARP denomination that founded Erskine appears to be facing its own set of challenges, with declining membership and annual financial support.

The 2022 minutes of the ARP General Synod meeting noted that “the denomination has limited resources due to a decline in members and financial support over the last 10-15 years. At present, the ARP Church has less than 25,000 members and an annual budget of roughly 2.6 million dollars.”

The 2023 General Synod minutes included information about the denomination’s church planting goals — a 10-year plan for 64 new churches.

“We need to recognize that hitting this goal will result in an average of 6.4 new churches per year, still leaving us short of the 7.5 new churches per year we need to become a growing denomination,” the minutes stated.

Additionally, in 2021 the ARP General Synod directed that the Christian Education Ministries division of the denomination be closed on July 31, 2022.

At this year’s General Synod meeting, the leaders voted to dissolve the Second Presbytery of the small denomination. The 28 churches within it will move to either the Catawba or Tennessee-Alabama presbyteries.

According to a report by the committee charged by the denomination with investigating issues within the presbytery over its handling of allegations made against a retired pastor, Second Presbytery is “unable to function” and “is irrevocably broken.”

“Their brokenness has led to a culture of intimidation, retribution, fear, and inaction, based not on the actions of a few, but on the inaction of the whole. Serious errors were made at every turn, either directly by Second Presbytery in session, or by its members throughout this entire ordeal, and all the while Second Presbytery has done nothing meaningful to rectify its mistakes. The Lord has not been honored, victims of the highest forms of abuse have been ignored, The Standards of the Associate Reformed Presbyterian Church have been exploited, and God’s Word has not been followed,” the report read.

ARP did not respond to multiple requests for information about the state of the denomination and its support of Erskine College.

In the MinistryWatch database, Erskine College earns a five-star financial efficiency rating, a “C” transparency grade, and a donor confidence score of 70.

This story has been republished with permission from Ministry Watch.

Kim Roberts is a freelance writer who holds a Juris Doctorate from Baylor University. She has home schooled her three children and is happily married to her husband of 25 years.