March 20, 2011 | Read Time: 3 minutes
The Academy for Educational Development, a nearly 50-year-old group in Washington whose financial problems are forcing it to close, is seeking a single buyer to which it can transfer its programs and employees.
Gregory R. Niblett, who has served as president and chief executive officer of the group since January, said that many for-profit and nonprofit organizations are interested in acquiring the group’s assets, which include contracts with the U.S. Agency for International Development worth hundreds of millions of dollars.
The move comes in the wake of a decision in December by USAID to cut off new contracts to the charity after the agency’s inspector general accused the group of financial mismanagement.
With 250 programs in the United States and 150 countries, the charity has worked internationally to improve civil society, economic development, education, and health. In March 2009, the nonprofit was awarded a five-year, $76-million grant from the Bill & Melinda Gates Foundation, in Seattle, to support a new program meant to improve child nutrition in developing African and Asian countries.
In all, the organization raised $48.6-million from private sources last year, up from 2009’s total of $42.9-million but down from $56.1-million in 2008, as reported by The Chronicle’s Philanthropy 400, an annual ranking of the charities that raise the most from private sources.
Selling Assets
Mr. Niblett said the academy is assessing the value of its assets and will accept bids from potential buyers—he declined to name any interested parties—in the next few months. He expects the transfer to occur by the end of June.
In addition to the contracts, grants, and cooperative agreements to run its many programs, Mr. Niblett said the group’s assets include its employees (as many as 2,700 people in the United States and abroad) and such items as the furniture and computers in its offices. Bidders could also offer to take over the academy’s office leases.
Money from the sale would be put into an escrow account, Mr. Niblett said, and used “to wind down affairs, close the organization, and pay off any liabilities.” Any excess funds, he said, would be transferred to a nonprofit group to be spent for charitable purposes.
Continuing Support
Mr. Niblett said the sale will have to be approved by all the organizations that finance the academy, including the federal government, which he expects will endorse the move. One private foundation has already decided to pull its support for an academy-run program and will move the project and grant to another organization, Mr. Niblett noted, though he declined to name the foundation or the project.
He said that either he or a senior manager has personally contacted 62 private grant makers to ask them to continue their individual relationships with the academy at least until the sale is completed. At that point, he said, each grant makerwill have to decide whether it wants to transfer or end its grants.
In December, USAID cut off new contracts to the academy when the inspector general’s office of the federal agency found evidence of what it characterized as “corporate misconduct, mismanagement, and a lack of internal controls” within the nonprofit organization. At the time, the academy said it was taking steps to improve oversight of its programs, which then included 65 contracts with USAID worth about $640-million.
A month before the USAID’s announcement, Stephen F. Moseley, the academy’s president and chief executive since 1987, announced his retirement. George M. Ingram, a senior vice president, was appointed the interim chief, and he stepped down early this year, with Mr. Niblett assuming the top position.
In a statement released this month, Edward W. “Peter” Russell, chairman of the academy’s board, said the group “has been through a period of extensive organizational improvements, which ensure that the acquiring entity receives solid, high-quality programs and portfolios.”
The statement also says that the academy “continues to be financially solvent and stable” and that “the choice to move all of AED’s staff and programs together will allow AED’s programs to continue their excellent record of performance uninterrupted.”
