Issues Notice of Non-Objection to Proposed Transactions
Vermont Business Magazine The Attorney General’s Office (AGO) today released its review of Marlboro College’s proposed disposition of assets to Emerson College and campus sale to Democracy Builders. The AGO’s review, issued as a notice of non-objection, found that the proposed transactions are consistent with relevant state laws governing charitable nonprofits and their assets. The AGO acknowledged that Marlboro College’s impending closure is an occasion of significant and challenging import for many of the College’s students, faculty, staff, and alumni, as well as community members of Marlboro.
Under Vermont law, the AGO is tasked with ensuring that charitable nonprofits use their assets in line with their charitable purposes and any relevant donor restrictions. Before a charitable nonprofit “disposes of all, or substantially all, of its property,” it is required by law to provide the AGO with at least twenty days’ notice of the transaction. This notice-requirement allows the AGO to narrowly review:
- what the purpose of the relevant public benefit corporation is;
- what the corporation’s assets are;
- whether any of the corporation’s assets are subject to certain kinds of specific restrictions, such as the terms of a charitable trust or gift instrument;
- how the corporation is proposing to dispose of its assets; and,
- whether the corporation’s proposed disposition of its assets aligns with the corporation’s purpose and asset-restrictions.
“This transition has been difficult, but Marlboro College has acted consistent with its fiduciary duty and has done its best to address the interests of students and faculty,” said Attorney General Donovan. “The transfer of Marlboro College’s assets is consistent with its mission and donor restrictions. As a result, there is no basis under Vermont law for the Attorney General’s Office to intervene in the transfer of assets to Emerson College or the campus sale to Democracy Builders.”
Today’s notice of non-objection found that “Given Marlboro College’s (1) current financial position and projections, (2) inability to restore the College to a financially sustainable position despite substantial efforts in that regard, and (3) likelihood of loss of accreditation should it continue operations in a stand-alone manner, Marlboro College’s Board of Trustees was within its rights under Vermont state laws governing public benefit corporations to wind down Marlboro College’s affairs through an alliance with another educational institution.”
In winding down their affairs, charitable nonprofits may sell their assets if approved by the board and its corporate bylaws. To the extent such a sale produces proceeds, it is within the AGO’s purview to review how the selling nonprofit applies them. The AGO’s review concluded, Marlboro College’s proposed sale of its campus and related assets to Democracy Builders is consistent with Vermont state laws governing charitable nonprofits. “Based on these findings—namely, that Marlboro College is (1) selling its campus to another educational charitable nonprofit corporation for more than nominal consideration after a reasoned process of marketing the campus, soliciting and evaluating potential buyers, and selecting a winning bidder and (2) applying the proceeds of the sale to Emerson College for the purpose of the MIEC [Marlboro Institute for Liberal Arts and Interdisciplinary Studies at Emerson College]—the AGO, therefore, has no basis on which to object to the proposed campus sale.” If Democracy Builders seeks to open a post-secondary school, it will be subject to review by the Agency of Education. Additionally, it will need to comply with COVID-19 guidance issued by the Agency of Commerce and Community Development and the Vermont Department of Health consistent with the requirements of the Governor's executive order.
A copy of the notice of non-objection may be found here.
Source: MONTPELIER – Vermont AG 7.20.2020