One of the most prominent U.S. international development consultancies announced Thursday (March 3) that it was planning to sell its assets and transfer its programs to other aid organizations.
Over the last 50 years, AED established itself as one of the leading U.S. NGOs helping to boost development around the globe. The organization reported $119 million in total assets in 2009, and $440 million in revenues. It employs nearly 3,000 staff worldwide, not including consultants and many partners.
“I want to emphasize that we have chosen to safeguard programs and staff by pursuing an orderly process of selling our programs, projects, and assets,” AED Board Chairman Edward “Peter” Russell told colleagues in a statement republished below. “We chose this path in part to honor the many long-term relationships we have with a host of private foundations, NGOs, and a range of government agencies with whom we have partnered to serve communities at home and abroad.”
The decision to restructure, beef up anti-fraud measures and, finally, sell assets were in large part prompted by the U.S. Agency for International Development’s decision to temporarily suspend AED from procurement due to fraud allegations in its Af-Pak programs. USAID is one of AED’s main business partners.
AED staff in Washington were made aware of the news during a Town Hall meeting on Thursday afternoon. Field staff have the opportunity to participate in phone conversations and webinars on Friday and Monday.
Here is AED Board Chairman Edward “Peter” Russell’s message to AED staff:
AED has been through an extensive period of organizational improvement over the last several months. The Board has been working with senior management to invest in and implement new systems under the broader umbrella of transformation. During this time, AED has invested in the implementation of a series of management, risk assessment, internal audit, compliance, and financial improvements of its systems and reporting structures. These improvements have comprised best practices and benchmarks to track progress towards change. Some of them include, but are not limited to:
A changed reporting structure for the head of Internal Audit reporting directly to the Board Audit and Compliance Committee, and the creation of a Chief Compliance Officer also reporting to the Board Audit and Compliance Committee.
A changed reporting structure for the AED contracts unit and greater integration between all contractual, procurement, and financial aspects of AED’s implementation.
The design of a professional procurement function staffed with senior, professionally trained procurement personnel to ensure global procurement integrity. This unit was designed to provide a direct reporting line from the project field level up to the CFO’s office for procurement.
Increased review and scrutiny of the qualifications of managers in regional and field positions with responsibilities for finance, procurement, and internal audit.
The mobilization of three of six regional controllers who will ensure local program finance oversight. Their efforts would be strengthened by a direct reporting line to the Office of the Chief Financial Officer.
The continuation of on-going compliance training throughout all AED offices around the world building on compliance training that has already been conducted in AED’s Washington, DC offices.
A review of AED’s Code of Ethics and whistleblower policy and procedures with enhancements and changes to be made as necessary.
A strengthening of the AED time card reporting and compliance.
I want to thank all of you who have been instrumental in making these changes and creating a new AED.
I particularly want to thank our past interim President and CEO, George Ingram, and our current President and CEO, Greg Niblett, for the ways in which they have dramatically improved AED over recent months. This has been a short period, but their leadership styles of openness, inclusiveness, and improved communications have resulted in a better AED. With the help of other managers and talented staff, they have been tireless in their efforts to enhance compliance systems, internal controls, and communications, and to foster a culture of transparency.
I also want to say a special thanks to Rob Murphy, AED’s CFO since late-November. Rob has made significant improvements in our finance operations in a short time while also dealing with the impact of the several financial scenarios that AED faces. Thank you, Rob for your example of skilled financial and managerial leadership and for all of your contributions over these last three months.
While AED has been emphasizing organizational and operational improvements, it has been concurrently implementing its projects and being responsive to each of its donor’s requirements. In addition, we have also been scrutinizing our financial situation and confronting hard financial realities. The Board of Directors has been weighing options about the best way to move forward in a way that is consistent with our mission and has the future of AED’s many programs and talented staff as its highest priority.
In light of our circumstances, AED’s Board of Directors has directed me to announce that 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.
I want to emphasize that we have chosen to safeguard programs and staff by pursuing an orderly process of selling our programs, projects, and assets. We chose this path in part to honor the many long-term relationships we have with a host of private foundations, NGOs, and a range of government agencies with whom we have partnered to serve communities at home and abroad.
AED has been a tremendously valuable contributor to the arena of social, human, and economic development for nearly 50 years and we have many important projects and outstanding staff doing significant work to bring about social change. Our excellent reputation in program implementation and our expert staff are our most valuable strengths. While many of our donors and staff may be disappointed to learn that AED is taking this action, we hope everyone will understand that this is the best and most prudent course of action to protect both programs and employees. We pledge to all of our donors that we will continue to guarantee exemplary implementation between now and the transfer of our projects to a new organization. We are confident that donors as well as potential acquirers will want to ensure that, together, we guarantee continuity.
I especially want to thank all of the excellent staff of AED worldwide – in Washington D.C., New York City, Boston, other US locations, and in over 60 countries around the world. Your commitment and conscientious work make a real difference in people’s lives in the areas of health, education, civil society, economic development, and an improved environment for our planet’s future. I want to thank you for staying loyal to AED through this period of change and remaining with the organization. I sincerely hope that you will maintain the solid, stable team you have become and remain with AED throughout the acquisition process. AED remains committed to our critical work, and we cannot do it without you, our greatest strength.
To the other senior managers and officers of AED, I thank you for rising to all the challenges that you have recently faced – for continuing to step up to the plate and suggest ways to improve AED’s program implementation and daily operations. Our Senior Vice Presidents in the program groups – Peggy Parlato in the Global Health, Population, and Nutrition Group, Denise Borders in the U.S. Education and Workforce Development Group, May Rihani, Mary Joy Pigozzi and John Gillies in the Global Learning Group, and Frank Beadle de Palomo in the Social Change Group – have provided outstanding leadership over these past few months. Each of the Center Directors in these groups is also to be commended for successfully managing the myriad challenges that confronted our technical and field staff on a daily basis. Thank you, too, to each of our operational leaders – including Chief Management Officer Ricardo Villetta, our department heads, and their staff – for your support. You have truly proven to be a remarkable team working through a period of crisis and uncertainty.
The hard work of Mark Miebach, our Vice President of Contracts and the entire Contracts Department in strengthening AED’s procurement systems deserves special recognition, as does the work of Byron Radcliffe, our Chief Compliance Officer, Esther Ko, Acting Director of Internal Audit and the efforts of their teams in revising our policies, procedures and internal controls. The work of these two teams greatly enhanced our compliance standards and will continue through the transition.
On behalf of the Board, I want to thank Greg, in particular, for taking the helm in mid-January in the midst of major challenges and now, for his willingness to see that AED’s programs and staff will be transitioned into a safe harbor.
I want to thank the Transformation Team, under the leadership of Senior Vice President Frank Beadle de Palomo and Senior Program Officer Tom Lent merits recognition. This team has worked very hard and thoughtfully to counsel AED leadership on how the organization might transform itself moving forward. I regret that the great ideas coming out of this team will not be implemented on behalf of AED, but I feel confident that aspects of their work will enhance the future of all of our projects and staff.
To the AED Board of Directors, it has been an honor to serve with so many distinguished colleagues, and I especially want to thank all of those who have faithfully dedicated thoughtful attention and many hours to work with AED’s management and advisors during the period of extraordinary challenge in the past year. All of us serving as voluntary, independent members of AED’s Board have been inspired by the creative, dedicated and professional contributions of AED’s staff over so many years. We are so proud of your accomplishments in all the fields and locations where AED has worked as an exemplary partner with a tremendous range of organizations.
As I think of all of AED’s employees around the world, I am fully aware that if circumstances were different, you would have been the backbone of a bright, new day at AED. I want each of you to know that you can continue to do your work and implement your projects with your heads held high. None of you – nor any of the current managers – had any role in the past mistakes of the organization. It is our responsibility to ensure that as many of you as possible, within our global workforce of nearly 3000, successfully arrive in a safe harbor in the coming months.
Again, please know that this was a very difficult choice for the Board and we will continue to have the best interests of AED, its donors, and beneficiaries in mind as we move forward in the divesture process. On behalf of the entire Board of Directors, I thank you, the employees of AED, for your commitment to implementing solutions to critical social problems in the U.S. and around the world. The quality of your work has always been, and will continue to be, a benchmark of excellence in the development community and we owe you our gratitude.