Back in December, USAID suspended the Academy for Educational Development from new government funding. This has kept AED from bidding on any new contracts and to an extent, even receiving funding for current projects.
Since then, I did a back-of-the-napkin calculation based on AED’s size and assumed proposal win rate, and figured they were unable to bid on $80 million a month in new programming, which would reduce their future size by $30 million for each month they were suspended.
I was concerned that if they were suspended too long – for more than 6 months – AED would be permanently reduced in size and scope. It seems my calculations may have been too optimistic.
Today, after just 4 months of suspension, AED Chairman of the Board, Edward W. ‘Peter’ Russell announced that AED is selling or transferring all of its important assets:
AED will pursue a process to sell itself of all of its highly valued programs and assets. We believe that this acquision of our assets is the only way to ensure the continuity of our programs and projects and to provide a new home and safe harbor for our talented staff within another appropriate for-profit or non-profit organization.
While this is a profoundly sad announcement, it is the right choice. First, and foremost, it allows us to focus on sustainability: most of AED’s programs will continue uninterrupted and most staff will continue to implement activities grounded in our mission of implementing solutions to critical social problems in the U.S. and around the world.
The Board’s decision was a difficult one to make and is premised on AED’s current and projected financial condition. We have concluded that the conditions under which we are operating – the significantly negative impact AED’s financial reserves have absorbed during the last few months coupled with an increasingly restricted revenue stream – will not be sustainable. While we have the ability to remain solvent in the near future, AED is choosing the prudent course of divesting itself of its projects and assets so that the important objectives of our programs can continue under the banner of another organization.
Now from what I can tell, that’s a going out of business sale. AED will be transferring its programs that are USAID or US government funded to other organizations (I don’t think they can be “sold”). AED may be able to sell other programs that it’s developed or acquired that have independent funding sources.
Regardless, its gong to be traumatic for all AED staff and programs. My heart goes out to all the hardworking and talented professionals who were focused on doing the right thing, and are now feeling a gut-punch. Even though funded programs will continue elsewhere, this change is going to be a wrenching emotional experience.
And don’t think this event will only effect AED. Every single USAID implementing partner is now put on notice – USAID can and will exercise the nuclear option.