The financial shortfall that has caused a major setback for the Say Yes Guilford scholarship program is raising a slew of questions regarding the group’s financial models, transparency, decision-making structure and the viability of applying its core philosophy in Guilford County.
Say Yes Guilford is facing a large funding shortage in its first year, which is drawing attention to the financial situation of the organization. Say Yes Guilford has kept much of that information close to the vest so far, however, there are some numbers available for the national Say Yes to Education organization, which is working with Guilford County on the initiative. The numbers come from the IRS 990 form required for large nonprofit organizations.
At the end of 2014, Say Yes national had net assets of $50.5 million, of which $32.3 million were held in the Caymen Islands and just over $5 million in Bermuda. The Schedule F attachment to the 990 form, which is the “Statement of Activities Outside the United States,” lists the $32.3 million held in the Caymen Islands as an investment in “Weiss Multi-strategy.” The attachment to the 990 form states that the $5 million in Bermuda is “business reinsurance” and it is listed as “Investment in Weisshorn RE LTD.”
In Guilford County, the Say Yes Guilford initiative is now on hold as it undergoes a radical transformation in an attempt to create a new version of the program that, unlike the existing model, is financially viable and sustainable long-term. A blunder in calculating the financial needs for the program – which was implemented system-wide in the Guilford County schools for the graduating seniors of 2016 – led to first-year payouts that were nearly seven times greater than projected. That led to a one-year $5.2 million shortfall that would have only increased dramatically over the next three years as more students graduated from high school and took advantage of the program.
Say Yes Guilford also projected a needed endowment of about $70 million to make the program sustainable, but it’s now estimated that it would actually require roughly $550 million to meet Say Yes’ needs for the county’s college-bound students on an ongoing basis. In light of that tremendous discrepancy, this week Say Yes Guilford leadership is attempting to regroup and find a way forward.
Jacques Steinberg, a Say Yes spokesman, stated that the national group is working with the Guilford County chapter to resolve the current issues.
Steinberg wrote in an email: “As the Say Yes Guilford Scholarship Board engages in its annual scholarship review – armed now, for the first time, with actual scholarship data from the current academic year, as opposed to projections – the Say Yes National organization is providing guidance and other technical support.
“During this startup period for Say Yes Guilford, representatives from the national organization will remain involved in the regular reviews conducted by the local board of scholarship criteria, scholarship rates and available resources, which are an essential element of the Say Yes strategy. A central goal of that strategy is long-term sustainability.”
Say Yes Guilford is the newest implementation of the national Say Yes program that was started by investment manager and billionaire George Weiss, who, in 1987, offered to pay college tuition for 112 inner-city school children in Philadelphia if they graduated from high school. Say Yes now helps communities create endowments that generate revenue to pay the “last dollar” for students’ tuition after federal and state college aid are exhausted. The Say Yes Guilford program was sold to Guilford County residents as a benefit for all high school graduates in the county’s school system, regardless of a family’s income. However, Say Yes is now expected to implement means testing and perhaps tighten up other criteria as well to limit the number of qualifying applicants.
Publically, Say Yes Guilford is apologetic about the mishap and is maintaining a stiff upper lip. However, behind the scenes, there’s a great deal of handwringing and discontent. Some believe the program can be saved, while others argue that, given the harsh reality of the numbers – combined with the giant promises of the program – any new version of Say Yes will merely be a “shell of its former self.”
Say Yes Guilford and school system officials have been working with the Say Yes to Education national organization since 2014 to implement the program in Guilford County. There are varying accounts as to who’s responsible for the terribly askew projections, but it’s safe to say, as one Guilford County commissioner said this week, there is “plenty of blame to go around.”
Nonprofit organizations structured like Say Yes aren’t subject to the same public records laws that government entities and school systems are subject to and therefore Say Yes is only required to disclose a limited amount of information. One requirement that nonprofit groups such as Say Yes do have, however, is to file an IRS 990 form that provides some financial information for those tax-exempt organizations.
When the Rhino Times requested the current 990 form for the local group, Say Yes Guilford, Donnie Turlington, the communications director for Say Yes Guilford, wrote in an email, “It’s my understanding that the Say Yes Guilford 990 requirement is covered under the 990 for the national organization.”
Steinberg wrote in an email, on behalf of the national Say Yes group, that Say Yes Guilford was an affiliate of Say Yes to Education, but added that part of the program – the Say Yes Guilford Scholarship Board – operates as a separate entity that first awarded scholarships in 2016.
“As an independent 501(c)(3), it has the responsibility for filing its own tax forms,” Steinberg wrote.
When Steinberg was asked about a more recent 990 form for the national Say Yes organization than the one for 2014, he wrote, “The most recent 990 publicly available on the Website Guidestar for Say Yes to Education is for the 2014 tax year.”
That 990 form for the national Say Yes program was submitted in mid-2015 and it gives the organization’s information for the national group for the 2014 calendar year– a time when the organization had begun interacting with Guilford County. Among other information, that 990 form lists the large holdings in the Caymen Islands and the annual compensation for the Say Yes leadership. That national group has been working closely in recent years with area officials and partners to implement Say Yes in Guilford County. Previously Say Yes had started programs in school systems in Buffalo and Syracuse as well as smaller programs in Philadelphia, Hartford and Harlem.
The 2014 Say Yes to Education 990 form reports a $590,000 grant from the national Say Yes organization to the Guilford Education Alliance to “support Guilford Say Yes implementation,” as well as a $6,375 grant to Guilford County Schools for “system support.”
Though the 990 barely references Guilford County, it does shed some light on the workings of the national Say Yes organization, which has offices in New York City and Hartford, Connecticut.
In 2014, Say Yes President Mary Anne Schmitt-Carey had a total annual compensation of $418,097. That included a salary of $350,000, another $23,400 in “retirement and other deferred compensation,” $24,697 in “nontaxable benefits” and a bonus of $20,000.
Say Yes Chief Operating Officer Gene Chasin had a salary of $265,000 in 2014 and a total compensation package of $334,300, while Steinberg had a total compensation package of $303,692. Chief Development Officer Roger Edgar’s annual package amounted to $262,524.
The 990 form only requires the disclosure of the compensation for the highest paid employees, so salary information for others in the Say Yes organization isn’t publicly available.
Say Yes got $4.1 million in total grants and contributions that year and earned $13.4 million from investment income, which is very high given that the group began the year with $35.6 million in investments. Just over $802,000 of that money was invested in “publicly traded securities” with the rest in “other securities,” primarily in an investment fund run by Weiss based out of the Cayman Islands and another investment in Bermuda.
When the Rhino Times asked Turlington the reason the national organization keeps the bulk of its funds in the Cayman Islands and Bermuda, he said that was a question best directed to the national office.
The national Say Yes organization has not yet responded to that question.
As for Say Yes Guilford, one thing that has been a source of contention in recent months is the inability of local officials and other interested parties to get hard numbers from the group. Say Yes Guilford has disclosed that it has $42 million in “pledges and commitments.” However, it will not disclose how much of those pledges and commitments is actually money that the group currently has in hand – though Say Yes officials have stated that the money will come in over a period of roughly five years.
It should be kept in mind that those commitments were to a program that promised scholarships for families of all incomes, so it’s possible some donors will rethink their pledges in light of changes.
Turlington did say that the Say Yes Guilford funds are managed by Diversified Trust in Greensboro and he added that the Say Yes Guilford bank account is with the Bank of North Carolina.
Diversified Trust is a wealth management firm with offices in Memphis, Atlanta, Nashville and Greensboro, with the Greensboro office at 300 N. Greene St. The firm opened in 1994 in Memphis and, according to company literature, it reached the $1 billion mark in client assets by 2003. According to Diversified Trust’s website, the firm currently has over 80 employees and it handles more than $5 billion in assets, making it “among the largest independently owned, comprehensive wealth management companies in the country.”
The evasiveness of Say Yes Guilford regarding its scholarship and financial data in recent months has been a source of frustration for school officials, elected leaders and others who want to know more about the details of the program. Say Yes Guilford has stated that the organization will make more information known – including its new policy on scholarships – by the end of the month.
In hindsight, many in the community are saying Say Yes Guilford should have started small in the first year – or delayed implementation entirely until the program was on more solid financial footing. The nonprofit could have then expanded services to families of all incomes over time if finances permitted. Promising big things at the start and then not being able to deliver on those promises, however, will likely create big problems for some families and students who made life plans and college plans based on the promises of the program.
In the meantime, school officials – not to mention many others – are waiting to see what Say Yes announces, but right now they don’t have much more information than anyone else. Guilford County Board of Education member Pat Tillman said he only learned about the group’s troubles when he read the story in the Rhino Times on Thursday, March 9.
“I found out about it when I read your article,” Tillman said.
He said one source of frustration is the fact that the Guilford County school board has authority to decide school matters but virtually no say when it comes to Say Yes.
“We don’t have any jurisdiction over the program,” Tillman said. “It’s a strange dynamic – outside of our kids, we don’t have any oversight. It’s a private sort of charitable thing and, unfortunately, we don’t have any power over it.”
Tillman said there are a lot of things he wants to find out in the coming weeks.
“We know the basics of Say Yes but we have a lot more questions,” he said. “For instance, how were they that far off? It’s unfortunate when you see the math – six times difference. As a school board member, that’s concerning.”
Guilford County Schools Chief of Staff Nora Carr said she was made aware of the large shortfall for the first year of the program at a meeting of the Say Yes Guilford Scholarship Board on Tuesday, March 7. Carr said that, though she doesn’t serve on that committee, she was asked to attend that meeting.
No one is saying publically, but privately some sources say one cause of the giant shortfall is that the program failed to take into account a number of factors that make Guilford County unique compared to other school systems where the program has been implemented – for instance, those in Buffalo and Syracuse.
The program’s focus before coming to Guilford County – the focus since Say Yes started – was on encouraging high school graduation in areas where poverty is prevalent, by promising students the ability to afford college if they do finish high school. Ironically, the well-off students, who don’t qualify for as much state and federal college aid as poor students, costs the Say Yes program more.
There’s some indication that the same model that has worked in Syracuse and Buffalo wasn’t altered enough to account for Guilford County’s vastly different demographics. Therefore, Guilford County students, on average, cost the group much more than anticipated.
Say Yes also apparently got more Guilford County students in the program than expected. Last March, there was a highly concerted effort to get as many students as possible to apply for Say Yes scholarships. One Guilford County Schools teacher said that last March and April there was a huge push to sign up every student possible and teachers were bombarded with reminders to do so, and multiple events and information sessions were held to encourage applications.
“It was a full-on blitz,” she said,
The teacher added that it was her impression at the time that there weren’t enough students applying because there was so much pressure on everyone to see that all children got enrolled in Say Yes.
That’s in contrast that to this year when, she said, there’s markedly less hoopla – and, in fact, even those who want to apply still don’t know if the program will be available for them.
The wait for the public release of information from the group is nothing new: It is something that’s continued from last year.
At a large Say Yes Guilford meeting at the Guilford Technical Community College in Jamestown on Nov. 14 – Schmitt-Carey, the president of the national Say Yes organization, said, “Local and national offices continue to work with our colleges and universities on this year’s disbursements and we anticipate having final numbers later this year , or in January, regarding the number of scholarships rewarded and the specific dollar amounts.”
At that same meeting, another Say Yes official said, “We will be announcing full details about the distributions in the near future.”