AAPS Educational Foundation to close, transfer assets to community foundation

ANN ARBOR, MI – After months in limbo, the Ann Arbor Public Schools Educational Foundation will officially dissolve and turn over its assets for management by the Ann Arbor Area Community Foundation.

The move was prompted by a desire to eliminate the educational foundation’s overhead costs while continuing to offer financial support for AAPS teachers and students, said Dan Schairbaum, chair of the AAPS Educational Foundation board of directors.

“We’ll have no staff, and the upshot of that obviously is that the money that we take in, more of it will go to the kids and the teachers of the schools, which is our primary focus,” he said.

When the foundation’s previous executive director Linh Song announced she was planning to leave the position in the summer of 2016, the foundation board re-evaluated the future of the nonprofit organization and decided it was time for the educational foundation to close, Schairbaum said.

The foundation – which was founded in 1990 – has continued accepting donations since then, he said, but it has not solicited any contributions this school year.

The Ann Arbor Area Community Foundation is now handling about $375,000 in assets from permanent funds previously controlled by the educational foundation, said Neel Hajra, president and CEO of the community foundation. The community foundation should receive approximately another $90,000 as the educational foundation continues the process of dissolving, Schairbaum said.

Another $163,800 of the educational foundation’s assets from 13 non-permanent funds is going directly to Ann Arbor Public Schools to be used for scholarships for graduating seniors and financial aid for students who otherwise could not afford activities like music camp, said Andrew Cluley, spokesperson for the school district.

It’s difficult to get a clear picture of the educational foundation’s recent financial situation because the foundation has not filed 990 Forms with the IRS since 2014. Tax-exempt entities are required to file 990 Forms every year to disclose their revenue and expenses.

“There are things that we were good at and things that we were not so good at. That’s one of the things that we’ve learned as we’ve unraveled things since June or July of 2016 that we were not good at,” Schairbaum said. “As part of the winding down of the corporation, those will be filed.”  

The most recent financial disclosure for the AAPS Educational Foundation – from the 2013-14 fiscal year – shows the foundation had a fund balance of $1.04 million. Its total revenue that year was $423,530, and the foundation distributed 53 percent of that money in grants and spent 37 percent on overhead costs. Those overhead costs included $124,800 spent on salaries.

The graph shows the change in total revenue, grants, overhead costs and fund balance for the Ann Arbor Public Schools Educational Foundation from 2008 to 2014, which is the most recent financial information available.  

The Better Business Bureau says an efficient charity should spend at least 65 percent of its total expenses on programming that furthers the organization’s central mission. Programming expenses include grant funding dispursed and can include some salary and other overhead costs.

Tax records show the AAPS Educational Foundation’s spending on programs was right at that 65 percent threshold in 2010-11. From 2011 to 2014 – the most recent financial information available – between 76 percent and 86.5 percent of the foundation’s total expenses went to programming. 

Having the community foundation handle the educational foundation’s assets also will bring a shift in mindset to more long-term investments, Schairbaum said, rather than immediately distributing most of the money raised each year like he said the educational foundation has done in the past.

In terms of practical impact for Ann Arbor Public Schools students and staff, little will change with the Ann Arbor Area Community Foundation handling the money previously donated to the educational foundation.

AAACF will continue to distribute teacher grants – which were not awarded this school year during the foundation’s transition – and to award student scholarships. A committee including former educational foundation board members will advise the community foundation on how to distribute the teacher grants, and school staff will administer the scholarships.

Hajra sees the transfer of the educational foundation’s assets to the Ann Arbor Area Community Foundation as a continuation of the partnership that has existed between the community foundation and Ann Arbor Public Schools for years.

The community foundation already manages more than $3 million in charitable assets dedicated to supporting the school district and its students, through mini-grants for elementary programs, college scholarships for AAPS graduates and other dedicated funds, he said.

“We view this just as an expansion of the work that we’re already doing,” Hajra said.

History of the educational foundation

In its 28-year history, the Ann Arbor Public Schools Educational Foundation has provided funding to train teachers in a literacy program, offer private music lessons for students, save the Pioneer High School planetarium, update computer labs at the middle schools and Skyline High School and support numerous smaller projects at various schools through teachers’ grant requests.

Wendy Correll was the foundation’s first executive director, hired in 2006. She led the foundation’s One Million Reasons Campaign, which ran from 2010 through July 2012 and raised $795,000 of its initial $1 million goal.

From 2010: AAPS Educational Foundation spends more on overhead than giving grants, tax records show

Donations for the One Million Reasons campaign dropped in 2012, which is when Ann Arbor Public Schools as a whole found itself struggling financially as well.

Going into the 2012-13 school year, the school district eliminated afternoon busing for middle school students who stayed after school to participate in extracurricular activities. The move was part of $3.84 million in cuts the school board approved to balance the district’s budget for that school year.

The educational foundation and the Ann Arbor PTO Thrift Shop each pledged up to $43,000 a year to keep the middle school extracurricular buses running.

Correll stepped down as executive director of the educational foundation in September 2012, and the foundation hired its new director, Mary Cooperwasser, in February 2013. The foundation’s total revenue dropped by about $200,000 in the 2012-13 fiscal year, during the turnover in leadership. That year the foundation spent $4,000 more than it brought in, according to financial disclosures to the IRS.

The table shows total revenue, total expenses, grants, overhead costs and fund balance for the Ann Arbor Public Schools Educational Foundation from 2008 to 2014, according to 990 Forms filed with the IRS. The Better Business Bureau says effective charities spend at least 65 percent of their total expenses on programming.  

Citing financial issues in the fall of 2013, the educational foundation ended its contributions for the later middle school bus routes as well as the school district’s SchoolMessenger system for communicating with parents. The educational foundation and PTO Thrift Shop had been splitting the $32,000 cost of SchoolMessenger as well.

The foundation also did not distribute its “Initiatives in Excellence” grants in the 2013-14 school year, which were typically awards of more than $5,000 to support programming. Smaller grants for teachers’ and other school staff’s projects continued that year.

Foundation’s money woes mean no late bus for Ann Arbor middle schools, loss of grants

Cooperwasser served as executive director of the educational foundation for one year. When she left in February 2014, Linh Song was first named interim director and then took on the role on a permanent basis in May 2014.

In 2015, Song led the educational foundation through a successful $350,000 campaign – in partnership with Duo Security – to upgrade the middle school computer labs.

Changes on horizon for Ann Arbor educational foundation

One of the most notable supporters of the AAPS Educational Foundation in recent years has been IMRA America Inc., a technology research and development company based in Ann Arbor.

Between 2012 and 2016, IMRA gave a total of $350,000 to the educational foundation. Its contributions supported math and science programs, allowed the planetarium at Pioneer High School to continue operating, created a computer and engineering lab for one of Skyline High School’s magnet programs and supported technology and engineering programs at Huron High School.

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