| Notes |
1
THOMAS J. DONOVAN, JR.
ATTORNEY GENERAL
JOSHUA R. DIAMOND
DEPUTY ATTORNEY GENERAL
SARAH E.B. LONDON
CHIEF ASST. ATTORNEY GENERAL
TEL: (802) 828-3171
http://www.ago.vermont.gov
STATE OF VERMONT
OFFICE OF THE ATTORNEY GENERAL
109 STATE STREET
MONTPELIER, VT
05609-1001
July 20, 2020
THE VERMONT ATTORNEY GENERAL’S NOTICE OF NON-OBJECTION
TO THE PROPOSED DISPOSITION OF ASSETS BY MARLBORO COLLEGE
TO EMERSON COLLEGE & DEMOCRACY BUILDERS
On June 29, 2020, the Corporation of Marlboro College (“Marlboro College”) provided
the Office of the Vermont Attorney General (“AGO”) with written notice of its intent to dispose
of “all, or substantially all, of its property” through an “Asset Exchange Agreement” with
Emerson College, a Massachusetts public benefit corporation located in Boston (“Emerson
College”).1 It also provided the AGO with written notice of its intent to sell its campus2 in
Marlboro, Vermont, to Democracy Builders Fund, Inc. (“Democracy Builders”), a Delaware
nonprofit corporation based in New York.
This report sets forth (I) the role of the AGO in reviewing asset-dispositions by Vermont
charitable nonprofit corporations; and, (II) the AGO’s findings regarding the proposed
dispositions referenced above.
As to the AGO’s findings: ultimately, while the AGO recognizes 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, Vermont, the
AGO finds that the proposed transactions are consistent with relevant state laws governing
charitable nonprofit corporations and their assets. Accordingly, the AGO issues this Notice of
Non-objection to the proposed transactions.
1 Marlboro College provided the AGO with written notice and related documents regarding its
proposed Asset Exchange Agreement with Emerson College on June 26 and June 29, 2020. It
provided the AGO with written notice and related documents regarding its proposed Purchase
and Sale Agreement with Democracy Builders on June 2 and June 5, 2020. The AGO considered
Marlboro College’s notice of both transactions effective June 29, 2020.
2 And certain related assets, per the proposed Purchase & Sale Agreement.
2
I. The Role of the Attorney General in Reviewing Asset Transfers by Charitable
Nonprofit Organizations
The Office of the Vermont Attorney General (“AGO”) is empowered to ensure that
charitable nonprofit corporations operating in Vermont—called “public benefit corporations”—
use their assets in line with (1) their charitable purposes and (2) certain potential additional
restrictions governing a specific asset’s use, such as the terms of a charitable trust or gift
instrument.3
Accordingly, under Vermont state law, at least twenty days before a public benefit
corporation “disposes of all, or substantially all, of its property,” it is required to provide the
AGO with notice of that transaction. 11B V.S.A. § 12.02(g). This notice-requirement allows the
AGO to 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.
While the AGO also reviews the rationale behind the public benefit corporation’s
decision to dispose of these assets in the proposed manner, public benefit corporations have wide
latitude in making such business decisions. See generally 11B V.S.A. § 8.30 (“General Standards
for Directors”); 11B V.S.A. § 12.02 (“A corporation may sell, lease, exchange, or otherwise
dispose of all, or substantially all, of its property… on the terms and conditions and for the
consideration determined by the corporation's board.”) In turn, the AGO has limited authority to
challenge such decisions. See, e.g., 11B V.S.A. § 3.03 (authorizing the Attorney General to
challenge a corporate action only if the corporation lacked the “power to act” in the manner in
question).
Ultimately, if the AGO has concern that a proposed disposition of charitable assets—or
aspects of the same—are inconsistent with Vermont state laws, then, depending on the
circumstances, it may seek court intervention. However, if the AGO determines that a proposed
disposition of assets under 11B V.S.A. 12.02(g) is (1) within the public benefit corporation’s
legal power and (2) aligns with the corporation’s charitable purpose and any specific legal
restrictions on those assets, then the AGO’s practice is to issue a Notice of Non-objection, such
as this one.
3 See generally, Title 11B, Vermont Statutes Annotated (“Nonprofit Corporations”); Title 14,
Chapter 120, Vermont Statutes Annotated (“Uniform Prudent Management of Institutional Funds
Act”); and Title 14A, Vermont Statutes Annotated (“Trusts”).
3
II. The AGO Review Process & Findings as to the Proposed Disposition of Assets by
Marlboro College
Below is an overview of the AGO’s review process and findings regarding the proposed
disposition of assets by Marlboro College.
a. Review Process
In order to review (1) Marlboro College’s decision to wind down its affairs and
consolidate its assets with those of another educational institution and (2) Marlboro College’s
proposed disposition of assets as to Emerson College and Democracy Builders, in particular, the
AGO inspected:
• information and records reflecting this decision’s rationale, including:
o a written narrative by Marlboro College’s Board of Trustees describing its
decisions to wind down the College’s affairs and enter into the proposed
transactions;
o Marlboro College’s audited financial statements for FYs 2017-2019 and
unaudited financial statement as of February 29, 2020;
o Marlboro College’s financial projections as of February 2019;
o Ernst & Young / Parthenon’s financial projections regarding Marlboro
College as of February 2019;
o correspondences between Marlboro College and its accreditor (the New
England Association of Schools and Colleges / New England Commission
of Higher Education) from 2015-‘19;
o the recommendation of a Marlboro College Campus Working Group
regarding the future use and sale of the Marlboro College campus; and
o related Marlboro College Board of Trustees meeting minutes;
• information and documentation related to the respective purposes of Marlboro
College, Emerson College, the proposed Marlboro Institute for Liberal Arts and
Interdisciplinary Studies at Emerson College (“MIEC”), and Democracy Builders,
including relevant articles of incorporation, bylaws, Internal Revenue Service
501(c)(3) Determination Letters, and documents reflecting the MIEC’s intended
academic programming;
• information and documents regarding Marlboro College’s assets, including
Marlboro College’s endowment and its 46 restricted endowment funds; and,
• the legal documents memorializing the proposed disposition of assets in question,
including the (1) Asset Exchange Agreement between Marlboro College and
Emerson College (“AEA”) and (2) Purchase and Sale Agreement between
Marlboro College and Democracy Builders.
Additionally, on January 23, 2020, and July 7, 2020, the AGO met with Marlboro
College’s counsel, President, Chief Financial Officer, other representatives of Marlboro
College’s Board of Trustees, and (on July 7) a Marlboro College faculty representative to discuss
the proposed transactions and address the AGO’s questions regarding them. Further, prior to and
4
particularly during the AGO’s 20-day review period, the AGO and Marlboro College’s counsel
conferred on a regular basis to address the AGO’s questions and information/document-requests
regarding the transactions in question.
Finally, the AGO reviewed all correspondences to it by members of the public regarding
the proposed transactions in question.
b. Findings
As a result of the review process described above, the AGO finds that Marlboro College
was and is within its rights to decide to wind down its affairs as an educational institution and
consolidate its assets with those of another institution of similar purposes. Further, the proposed
dispositions of assets to Emerson College and Democracy Builders, in particular, are consistent
with Vermont laws governing nonprofit corporations.
i. Marlboro College was within its rights to decide to wind down its affairs
and consolidate its assets with those of another educational institution.
By way of legal background, Vermont laws permit public benefit corporations to wind
down their affairs in various manners, including through dissolution (11B V.S.A. §14.01 et seq.),
mergers (11B V.S.A. §11.01 et seq.), sales of assets (11B V.S.A. §12.02 et seq.), and transfers of
assets otherwise (11B V.S.A. §12.02 et seq.). Indeed, a public benefit corporation “may sell,
lease, exchange, or otherwise dispose of all, or substantially all, of its property… on the terms
and conditions and for the consideration determined by the corporation’s board, if”—for a
nonprofit corporation without members, like Marlboro College—“the proposed transaction… [is]
approved…by the board,” 11B V.S.A. §12.02(a)-(b)(1), presuming the corporation’s board
operates in conformity with applicable state laws (including “General Standards for Directors”
pursuant to 11B V.S.A. § 8.30 et seq.) and its corporate bylaws otherwise. See, e.g., AndoverNewton Theological School transfer of assets to Yale University Divinity School.
Regarding Marlboro College: between 2009 and the present, Marlboro College’s
enrollment and net tuition revenue have dramatically declined such that the College is currently
operating at a multi-million-dollar annual deficit and is no longer financially sustainable. By way
of illustration, in the 2009-’10 academic year, Marlboro College enrolled 310 students, charged
net tuition revenues of $7.2M, and drew $1.5M from its endowment. By the 2018-’19 academic
year, Marlboro College’s enrollment had dropped to 142 (-52%), net tuition revenues had fallen
to less than $2M (-72%), and the College drew $5.2M (+200% increase) from its endowment and
other reserves.
Since at least FY2015, Marlboro College has been operating at a deficit. Between
FY2015 and FY2019, its operating deficit increased from (-)$.7M to (-)$3.9M. Marlboro College
projects that, to fund the continued costs of operating at such (increasing) deficits, it would likely
be required to spend down its endowment (approximately $29M as of April 2020) at double-digit
($M) levels annually.
5
While Marlboro College undertook an array of efforts to improve its financial
sustainability between 2009 and 2019,4 these efforts were ultimately unavailing. In fact, during
these years, the College’s financial position continued to deteriorate, causing the Board of
Trustees to conclude, in February 2019, that continuing the College on a stand-alone basis was
financially unsustainable. The Board’s then-consultant, Ernst & Young / Parthenon, concurred in
this conclusion.
Given these circumstances, Marlboro College’s Board of Trustees subsequently
determined that some form of alliance with another educational institution was preferable to
outright closure, as an alliance could potentially “preserve Marlboro’s ‘DNA’ relating to its
identity, pedagogy, people and campus.” Narrative of Marlboro College’s Efforts to Maintain its
Independence, at 4. After undertaking substantial efforts to solicit, consider, and negotiate
proposals of other educational institutions that were potentially interested in some such form of
alliance,5 the Board of Trustees identified Emerson College as a potential alliance partner—and
one preferable to potential alternatives in light of Emerson College’s apparent financial
sustainability; alignment with Marlboro College’s values and pedagogy; and willingness to
integrate Marlboro College’s faculty, students, and core pedagogy into a “Marlboro Institute for
Liberal Arts and Interdisciplinary Studies at Emerson College,” as described further below.
Meanwhile, in December 2019, Marlboro College’s accreditor, the New England
Commission of Higher Education (“NECHE”), indicated to Marlboro College that it “concurred”
that a successful merger with another educational institution was the “only way” Marlboro
College could address the enrollment and financial trends that would otherwise put its
accreditation at significant risk. See Letter from NECHE to Marlboro College, dated December
19, 2019, at 2.
Thus, on May 16, 2020, in conformity with Article VII of Marlboro College’s Bylaws,
which authorizes the Board of Trustees to dissolve Marlboro College or enter into mergers
and/or partnerships otherwise, the Board of Trustees voted unanimously in favor of a resolution
to consummate the proposed disposition of assets as to Emerson College (excepting its campus
and related assets, as addressed below in section II(b)(iii)).
4 Including the development and implementation of a Task Force on the Future; dual enrollment
courses with Brattleboro High School; summer programs for high school students; revised
marketing and admission approaches; a new Strategic Plan; a Six College Collaborative to
facilitate cross-enrollment; a Beautiful Minds competition; the Renaissance Scholarship
program; an expanded experiential learning curriculum; and the “Marlboro Promise.”
Additionally, the College implemented a spending freeze, reduced employee health care benefits,
and eliminated staff positions. Most recently, the College implemented a Strategic Options Task
Force to explore ways in which to “preserve Marlboro’s ‘DNA’ relating to its identity, pedagogy,
people and campus,” and hired an expert educational consultant, Ernst & Young/Parthenon, to
assist its process.
5 For example, in July 2019, Marlboro College entered into a letter of intent to merge with the
University of Bridgeport (CT). For reasons not pertinent here, that transaction was not
consummated.
6
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 Trustee’s 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 fact, as discussed below, Marlboro College has undertaken
laudable effort to maximize the extent to which its charitable purpose and charitable assets could
“live on,” given the College’s evident inability to operate independently in a financially
sustainable manner.6
ii. Marlboro College’s proposed disposition of assets to Emerson College is
consistent with Vermont state laws governing public benefit corporations.
By way of legal background, Vermont public benefit corporations are required to apply
their assets in a manner that is consistent with their charitable purposes and any restrictions on
those assets’ use per the terms of a gift instrument or charitable trust. See, e.g., 11B V.S.A.
§14.30 (reflecting the requirement that public benefit corporations apply their assets to their
respective purposes); 11B V.S.A. §17.05 (defining “public benefit corporations” as corporations
required, “upon dissolution,” to “distribute its assets to the United States, a state, or a person
which is recognized as exempt under section 501(c)(3) of the Internal Revenue Code, or any
successor section….”); 14 V.S.A. §3411 et seq. (requiring a “charitable institution” to use a
restricted “institutional fund” consistent with the terms of the relevant “gift instrument.”); 14A
V.S.A. §101 et seq. (requiring charitable trusts to be applied to their respective intended uses per
their respective terms).
Accordingly, when a public benefit corporation disposes of “all, or substantially all” of
its assets to another public benefit corporation, state law requires that the disposition be
consistent with the corporation’s purposes. Practically speaking, where a public benefit
corporation is disposing of its assets to another charitable nonprofit corporation, this calls upon
the AGO to evaluate whether the charitable purposes of these corporations are sufficiently
similar.
Further, if the assets of a public benefit corporation are restricted by the terms of a gift
instrument (under the Uniform Prudent Management of Institutional Funds Act, or “UPMIFA”)
or charitable trust (under the Vermont Trust Code), those assets must be disposed of in a manner
that is consistent with the relevant restrictions’ terms, absent statutory exceptions or court
approval otherwise. See generally, 14 V.S.A. §3411 et seq. (requiring a “charitable institution” to
use a restricted “institutional fund” consistent with the terms of the relevant “gift instrument.”);
14A V.S.A. §101 et seq. (requiring charitable trusts to be applied to their intended uses per their
respective terms).
Here, for the reasons set forth below, the AGO finds that (1) the charitable purposes of
Marlboro College and the proposed Marlboro Institute at Emerson College are (and/or will be,
pending consummation of the proposed transaction) sufficiently similar to support the proposed
6 Marlboro College also sought to maximize outcomes for its current faculty and students, given
its determination that it could no longer sustainably operate on a stand-alone basis.
7
disposition of assets from the former to the latter and (2) the proposed disposition of assets by
Marlboro College is consistent with, and will require continued adherence to, the terms
governing the College’s restricted assets.
1. The charitable purposes of Marlboro College and the proposed
Marlboro Institute at Emerson College are substantially similar.
Marlboro College is a public benefit corporation recognized by the Internal Revenue
Service as a 501(c)(3) organization. Per its Articles of Association, the purpose of Marlboro
College is to “maintain[] an educational institution of higher learning offering instruction in
courses of post-secondary grade, and awarding to the students satisfactorily completing the same
the degree of Bachelor of Arts, Bachelor of Science, Master of Arts, Master of Business
Administration or Master of Science, or such other equivalent degrees as shall be voted by the
Trustees.”
In practice, Marlboro College’s primary purpose has been to provide for (1) a four-year
undergraduate course of self-directed, liberal arts, interdisciplinary study and (2) the “Marlboro
Promise” that, whatever course of study Marlboro College undergraduate students pursue, they
learn the following practical skills needed for “success,” however they define that term:
• to “Write and communicate with clarity and precision;”
• “Live, work and collaborate with a wide range of people;” and,
• “Lead ambitious projects from idea to execution.”
Also in practice, Marlboro College’s purpose is embodied in its current faculty, who,
through their teaching (in both substance and approach), most immediately reflect how the
College’s purpose—including the “Marlboro Promise”—are operationally delivered to
undergraduate students.
Like Marlboro College, Emerson College is a public benefit corporation7 recognized by
the Internal Revenue Service as a 501(c)(3) organization. Per Emerson College’s bylaws,8 the
purposes of Emerson College are to, among other things:
• “Give a general education such as is obtained in college with special reference to
perfection in speech, drama, and other communication arts, with authority to confer, in
addition to the degree of Bachelor of Literary Interpretation[]; the degree of Bachelor of
Arts[]; the degree of Master of Arts []; the degrees of Bachelor of Science in Speech and
Master of Science in Speech (changed to Master of Science in Communication Disorders
in 2007), and the honorary degrees of Master of Arts, Doctor of Humanities, Doctor of
Literature, and Doctor of Laws; the degree of Bachelor of Music; the degrees of Bachelor
7 Emerson College is a public benefit corporation under Massachusetts law. It would likewise
qualify as a public benefit corporation under Vermont law. See 11B V.S.A. § 1.40(28) (defining
“public benefit corporation’).
8 While Emerson College’s bylaws generally parallel its Articles of Organization, they expand
upon them in pertinent ways, so are cited here instead of the College’s Articles of Organization.
8
of Science and Bachelor of Fine Arts; the degree of Master of Fine Arts; the degree of
Doctor of Philosophy in Communication Disorders;” and,
• “To nurture, encourage, educate and train students to think creatively, to work efficiently,
and to achieve in practice what they envision in their imagination. To award degrees in
recognition of the attainment of the practical and theoretical skills necessary to practice
vocations chosen by the students. To conduct research and to document and publish the
results of that research. To receive and hold gifts and grants of tangible and intangible
property and to invest and reinvest the same for the aforesaid purposes.”
While the purposes of Marlboro College and Emerson College are consistent in
fundamental ways (both being charitable 501(c)(3) organizations with the purpose of offering
degree programs in the liberal arts and interdisciplinary studies), Marlboro College’s proposed
disposition of assets involves a near-wholesale transfer of the College’s academic
programming—through its core pedagogy, faculty, and supporting charitable assets—to a
distinct division within Emerson College.
That is, under the proposed AEA, Emerson College is required to:
• rename Emerson College’s Institute for Liberal Arts and Interdisciplinary Studies the
“Marlboro Institute for Liberal Arts and Interdisciplinary Studies at Emerson College”
(the “MIEC”);
• collaborate with Marlboro Faculty to integrate Marlboro College’s liberal arts pedagogy
as embodied in the “Marlboro Promise” into the MIEC;9
• appoint and employ current Marlboro College tenured and tenure-track faculty at the
MIEC or in affiliation with the MIEC;10
• accept and enroll for the 2020-‘21 academic year those Marlboro College undergraduates
in good standing who wish to accept such enrollment;11
9 Emerson College and Marlboro College faculty working groups have collaboratively created a
four-year academic model for the MIEC, including, as described in the Asset Exchange
Agreement, “yearly Marlboro Institute courses that support student independent and
interdisciplinary work and culminates with a capstone experience….” AEA, Appendix B.
10 Following consummation of the AEA, 20 of 24 Marlboro College tenured or tenure-track
faculty would transition to Emerson College. 16 would be housed within the MIEC; the
remaining 4, while in other Emerson College Departments pertinent to their areas of expertise,
would nonetheless maintain a secondary appointment to—and thereby a substantive affiliation
with—the MIEC.
11 Following consummation of the AEA, approximately 55 of 95 Marlboro College students
would transfer to Emerson College.
9
• appoint two members of the Marlboro College Board of Trustees (at least one of whom
must be a Marlboro alumnus) to the Emerson College Board of Trustees for a three-year
term;
• use all assets transferred to it by Marlboro College under the AEA exclusively for the
purposes of the MIEC;12 and, among other obligations,
• identify the MIEC by signage, stationery, advertising, logos, public relations and the like
to include “Marlboro,” and include the name “Marlboro Institute” in diplomas awarded to
students earning degrees from the MIEC.
As Emerson College stated in its request to its accreditor (NECHE) for approval of these
“substantive changes” to the “nature of [its] institution,”13 these steps “will ensure that the
Marlboro College legacy will live on at Emerson and that its name and distinctive educational
mission will be immortalized.” Emerson College Substantive Change Request to NECHE, dated
June 1, 2020.
Emerson College further represented to NECHE: “The new [MIEC] is crafted to uphold
Marlboro’s distinctive educational promise that students can craft their own education, engage in
self-directed inquiry, and bring a big idea to life from conception to execution. This legacy will
live on in the new curriculum that offers an interdisciplinary liberal arts experience in an
otherwise specialized environment. Students will combine liberal arts courses with professional
and studies courses from across the College in a program of their own design that culminates in a
senior capstone project centered on a coherent idea or solution to a problem that sparks their
interest and that integrates learning across their chosen disciplines… The program captures and
emphasizes the value of agency, independent thinking, and self-direction that we believe are
desirable to students. It is designed to nurture independence of mind, innovative thinking, and
project-based inquiry valued by employers.”
Given the substantial and intentional similarity in charitable purpose as between
Marlboro College and Emerson College vis-à-vis the MIEC, Marlboro College was and is clearly
within its rights as a public benefit corporation to transfer its assets (as part of a broader effort to
transfer of its academic programming) to Emerson College for the purposes of the MIEC.
12 Excepting assets required to satisfy certain assumed liabilities under the Asset Exchange
Agreement.
13 Educational institutions accredited by NECHE are required to submit “substantial change
proposals” to NECHE when, according to NECHE, proposed institutional changes will “affect
significantly the nature of the institution, its mission and objectives, its educational program, and
the allocation of its resources.” See NECHE webpage regarding “Substantive Change
Proposals,” available at https://www.neche.org/institutional-reports/substantive-changeproposals/#:~:text=and%20Policy%20Revisions-
,Substantive%20Change%20Proposals,not%20affect%20its%20accredited%20status. (last
visited July 15, 2020). NECHE then determines whether the proposed substantive change may be
included in the institution’s accreditation. On May 29, 2020, Emerson College submitted a
“substantive change proposal” to NECHE regarding the changes the terms of the AEA. On July
6, 2020, NECHE approved the proposal.
10
2. The proposed disposition of assets by Marlboro College is
consistent with, and will perpetuate, the terms governing Marlboro
College’s restricted assets.
By way of legal background, when a donor gives a gift to a charitable institution and the
accompanying gift instrument contains restrictions on how the institution is to manage, invest, or
use that donation, the charitable institution is generally required to abide by the terms of these
restrictions. See generally, 14 V.S.A. §3411 et seq. (requiring a “charitable institution” to use a
restricted “institutional fund” consistent with the terms of the relevant “gift instrument.”)14
Accordingly, as part of its review of Marlboro College’s proposed disposition of assets to
Emerson College, the AGO reviewed the terms governing Marlboro College’s restricted
endowment funds and whether the proposed disposition of these assets abides by them.
Marlboro College’s endowment includes 46 restricted endowment funds collectively
worth approximately $14M as of April 2020. The AGO reviewed all of Marlboro College’s
records, as to each fund, including gift instruments, where available. The AGO then evaluated
whether (1) the proposed disposition of restricted endowment funds constitutes a change in the
respective fund’s purposes, management, or investment pursuant to UPMIFA, and, relatedly, (2)
whether and to what extent the AEA would require Emerson College to abide by these funds’
restrictions, going forward.
Given that the purpose and design of the AEA is to perpetuate the identity, purposes and
academic programming of Marlboro College at the MIEC, including facilitating the transition
(en masse) of Marlboro College’s current tenured/tenure-track faculty and undergraduate
students to the MIEC, the AGO concludes that Marlboro College’s transfer of restricted
endowment funds to the MIEC does not constitute a change in the funds’ purposes under
UPMIFA.15
Further, the AEA requires Emerson College/MIEC to abide by the governing terms of
each such fund as to purpose, management, and/or investment. The AEA delineates each of these
funds, each of their respective restrictions,16 and requires that, upon closing, Marlboro College
transfer to Emerson College “all gift documentation associated with the funds that comprise the
endowment.” The AEA then acknowledges the funds as “encumbered” by these restrictions and
14 A public benefit corporation that holds a specific asset in charitable trust is required to abide
by the relevant charitable trust’s terms. 14A V.S.A. §101 et seq. (requiring charitable trusts to be
applied to their respective intended uses per their respective terms). Based on Marlboro
College’s representations and the AGO’s review of Marlboro College’s assets, Marlboro College
does not currently hold any assets in charitable trust. Accordingly, the laws governing charitable
trusts are inapplicable here.
15 Where an endowment fund’s restrictions require Marlboro College to undertake specific
actions regarding the fund if and when the College ceases to operate, the AGO has confirmed
with Marlboro College that it has abided by, and/or intends to abide by, the relevant restrictions.
16 The AGO cross-checked the AEA’s description of each such fund’s restrictions with available
underlying fund documents to ensure the AEA honors the respective donors’ intents.
11
requires that “spendable income from restricted Marlboro Funds… shall be expended in
connection with the Institute consistent with the purposes designated by the donors.” Under the
AEA, “if it is not possible or feasible to use the funds in connection with the Institute consistent
with the purposes designated by the donors, then Emerson may seek donor consent or court
authorization to use the funds for other purposes in support of the Institute.”
For these reasons, the AGO is satisfied that Marlboro College’s proposed disposition of
restricted assets to Emerson College abides by state laws governing public benefit
corporations.17
iii. Marlboro College’s proposed sale of its campus and related assets to
Democracy Builders is consistent with Vermont state laws governing
public benefit corporations.
By way of legal background, in winding down their affairs, public benefit corporations
may sell their assets. See 11B V.S.A. § 12.02(g) (“Sale of assets other than in regular course of
activities”). Indeed, as mentioned above, a public benefit corporation “may sell, lease, exchange,
or otherwise dispose of all, or substantially all, of its property… on the terms and conditions and
for the consideration determined by the corporation’s board, if”—for a nonprofit corporation
without members, like Marlboro College—“the proposed transaction… [is] approved…by the
board,” 11B V.S.A. §12.02(a)-(b)(1), presuming the corporation’s board operates in conformity
with applicable state laws (including “General Standards for Directors” pursuant to 11B V.S.A. §
8.30 et seq.) and its corporate bylaws.
Additionally, where one public benefit corporation sells assets to another charitable
nonprofit corporation that would qualify as a public benefit corporation under Vermont laws, fair
market value is not required. Compare 11B V.S.A. §12.02(a) (permitting public benefit
corporation’s to sell “or otherwise dispose of” assets “for the consideration determined by the
corporation’s board”) with 11B V.S.A. §11.02(a)(4) (requiring public benefit corporations that
merge with business corporations to transfer assets equivalent to their fair market value to an
organization they could have transferred said assets to in dissolution). That said, to the extent
such a sale produces proceeds, it is within the AGO’s purview to review how the selling public
benefit corporation applies them.
Here, as discussed above, Marlboro College was and is within its rights under state laws
governing public benefit corporations to undertake the proposed transaction with Emerson
17 Marlboro College is transferring its ownership and/or right of possession of certain archival
materials to the University of Vermont (“UVM”) under a Deed of Gift. The Deed requires UVM
to “manage and care for these collections according to accepted professional standards and in
accordance with its educational mission and objectives.” It also states that “[i]n the event that
UVM can no longer house the Marlboro College Archives Collection, UVM agrees in a
reasonable and professional manner to find another suitable home for the Collection and make
reasonable efforts to communicate with any existing MC stakeholders regarding the status of the
Collection.” To the extent these materials could arguably be considered restricted assets under
express or implied terms requiring their preservation for educational purposes, Marlboro
College’s disposition of these materials to UVM would be consistent with such terms.
12
College. Because Emerson College was not interested in acquiring Marlboro College’s campus
and related assets, Marlboro College elected to dispose of the same to a different party.
To that end, in November 2019, Marlboro College’s Board of Trustees established a
Campus Working Group (CWG) including Trustees, faculty, staff, students, alumni, and town
and county community members to (1) retain a consultant and a broker to market the College’s
campus and solicit bids and (2) recommend the favored bid to the Board of Trustees for
approval. Ultimately, the CWG recommended that Marlboro College accept the bid of
Democracy Builders, a Delaware nonprofit corporation recognized by the Internal Revenue
Service as a 501(c)(3) organization.18
According to the CWG’s recommendation to the Board of Trustees, “CWG easily
reached consensus to recommend Democracy Builders and its plan to develop Freedom College
on the Marlboro Campus as the CWG’s first choice based on the merits of Democracy Builders’
proposal and financial offer. Democracy Builders’ submission contained a strong and detailed
proposal that: [] Is in many ways consistent with Marlboro’s educational mission and strongly
aligns with the historical use of the campus[;] demonstrated a strong vision, a plan,
organizational capacity and a strong track record in creating and operating educational projects
like Freedom College[;] showed a commitment to the community by offering to making space on
the campus available to Marlboro College alumni for an alumni center, an interest in land
conservation and making some campus facilities available to community activities and
developing local partnerships, and potentially hiring some of the College staff who will not be
moving to Emerson; and [] was compatible with the Marlboro Music Festival’s summer lease.
Additionally, they demonstrated a strong commitment to stewarding the campus with an interest
in continued community access.”
The Board of Trustees accepted the CWG’s recommendation and, on May 22, 2020,
Marlboro College entered into the proposed Purchase & Sale Agreement with Democracy
Builders. According to the terms of the Purchase & Sale Agreement, Marlboro College is selling
its campus and certain related assets to Democracy Builders for more than nominal
consideration.19 Consistent with then AEA, Marlboro College will transfer the proceeds of the
sale to Emerson College for the purposes of the MIEC.
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—the AGO has no basis on which to object to the proposed campus sale.
18 Counsel for Democracy Builders has represented to the AGO that Democracy Builders would
provide the AGO notice upon registering as a foreign corporation in Vermont and requesting
and/or obtaining accreditation to operate in Vermont.
19 Pursuant to at least 1 V.S.A. § 317(c)(9), given the confidentiality of the Purchase and Sale
Agreement’s price term prior to the sale’s closing, the AGO is not publicizing said term at this
time.
13
*This is a corrected version of the Notice of Non-Objection. It corrects a footnote on page 1 and
reference to Democracy Builders on page 12.
III. Conclusion
The proposed dispositions of assets by Marlboro College to (1) Emerson College for the
purposes of the MIEC and (2) Democracy Builders are consistent with Vermont laws governing
public benefit corporations. Accordingly, the AGO has no statutory basis on which to object.
The AGO has provided a copy this Notice of Non-Objection to the Massachusetts Office
of the Attorney General to ensure continued oversight of Emerson College’s application of the
charitable assets in question. It has provided a copy of this Notice to Emerson College, as well.
This Notice of Non-Objection concerns the review of the AGO pursuant to 11B V.S.A. §
12.02(g). It does not implicate the jurisdiction of any other local, state, or federal agency that
may also have a role in reviewing the proposed transactions.* |