Trustees Update #9 2019/20 – Continued

Following from the Full Trustees Update #9 here,  please read some additional information below.

The relationship between Yayasan Kul-Kul (YKK) and Green School International (GSI) (formerly known as GSSO)

The Trustees are united in their belief that the YYK-GSI relationship is being conducted for the best interests of Green School Bali (GSB). There are clear benefits in the short, medium and long-term. The purpose of YYK and GSB is to bring sustainability in education to the world.

A not-for-profit, foundation-led approach to growing a global network of Green Schools was attempted, with all good intent and in various iterations, including with goals of applying for grants.  Over the course of a one year period of time we were not able to move the global effort forward. So the decision was taken to move forward with the current for-profit operating model.

Within the next 18 months, there will be four Green Schools around the world and the YYK-GSI relationship has enabled this to happen. The professional team at GSI has already brought expertise in school management to YKK and GSB through advice and support for program feasibility studies, financial modeling, and marketing and admissions, among others.  All members of the GSI team have bios and backgrounds available for review should you have any questions about who those team members are.  

Over the next one or two years we will see teachers having new professional development and rotation opportunities, parents/students will be able to access new schools globally and sharing of experiences between the new schools will, we believe, result in improved academic programming. Longer-term, YKK will benefit from royalties from new schools, and as Green School gains more renown globally, students will have increased access to universities and even, we believe, have greater career opportunities based on the strength of the global Green School brand.  We are taking great care with the brand in other schools, and we understand the complexity of those relationships and that their work reflects on us and vice versa. 

For-profit vs not-for-profit operating models

The issue of mixing a for-profit operating model (GSI) and a not-for-profit operating model (YKK) is a point which the Trustees have in recent months been considering.  To this end, we will initiate and help to facilitate a process whereby a new and independently-managed / governed yayasan (foundation) will be established in Bali for the purpose of soliciting, collecting and disbursing donated charitable funds, including for the GSB Local Scholarship Program (LSP). This will include all donations received via the US-registered 501(c)3 organization, Campus Tours, Green Shop sales proceeds and fund-raisers.  This is a comparable model to that followed by other reputable global schools. Governance and decision-making for disbursements from the new yayasan, including decisions about the LSP, shall be the remit of the founders and trustees of the new yayasan, and this new yayasan will not be controlled by (directly or indirectly) GSI, YKK or the co-Founders of Green School Bali.

As part of the Trustees’ consideration of the mixing of for-profit and not-for-profit operating models, going forward we will no longer be referring to Green School Bali as “not-for-profit”. This is being done so as to avoid any confusion as to how, going forward, Green School International is being operated globally. Indonesian law does not characterize yayasans as being strictly “not-for-profit” per se – they must, quite simply, be operated according to their stated purposes and objectives and according to the laws and regulations governing foundations. While YKK itself is not a business entity, Indonesian foundations are permitted to conduct business to support the achievement of their purposes and objectives, including by participating in another business entity, as is intended via the relationship with GSI.  Therefore, going forward, Green School Bali will simply be referred to as an international school operating through YKK.

We believe that Green School Bali can and should be operated on a sustainable basis with the aim of earning surpluses. YKK, after 10 years of operating history, remains in a cumulative deficit position financially and this is not sustainable.  Growth in student numbers is, in our view, one important element to make GSB sustainable and to serve as an example for a sustainable school operating model. We acknowledge that this takes careful planning, consideration and campus development.

Demonstrating that it can be financially sustainable is necessary and in the best interests of Green School Bali.  This is especially important now to allow GSB to continue operating in our current location beyond 2027 (the date at which the current land leases expire).  A financially sustainable and thriving GSB also helps to propel our movement globally and attract the best talent to GSB. 

We acknowledge that there may be certain community members who are not comfortable with Green School Bali being part of a “for-profit” global operating model. This is, however, the model which has been shown, in the opinion of the Trustees, to be the most efficient in terms of attracting capital to scale and grow a network of Green Schools globally. This model will also provide necessary capital for Green School Bali to extend its land leases, grow capacity and, in short, ensure it’s own sustainability. The Trustees support this model and the on-going association of YKK with GSI which, as mentioned above, the Trustees believe to be in the short, medium and long-term interests of Green School Bali.  

We have taken these decisions with great care, with reference to our founding philosophy, respect for what has already been established, care for our wonderful staff, and in light of our goals for the future. We respect each individual community member’s choice as to where they choose to be in light of this communication.

Composition of the Trustees

The Trustees recognize that its current composition may be lacking in certain key areas of required expertise and we will be formalizing a document by the end of February 2020 which sets out the required skill sets and selection criteria for YKK Trustees. 

Global best practice for the governance of globally-focused, purpose-based education institutions is not community-led but is rather merit-based, on the principle of attracting the best talent for given areas of expertise (e.g., teacher development, branding, finance, etc).  The Trustees act as the guardians of the mission of the Yayasan and there is no one “magic” formula for how such should be. 

The Trustees continue to hold to the view that the alignment of YKK with GSI and the globalization of the Green School Way is best achieved with input from the community but with ultimate decision-making authority being held by a diverse group of competent individuals aligned with the global goals of GSI and, for now, the co-Founders. Input does not, however, mean having matters dictated by either GSI or the co-Founders.  

Green School International will only be as strong as Green School Bali and thus it is very much in the interest of GSI to see a thriving and well-funded GSB.  

Questions about the quantum of rent being paid by GSB

John and Cynthia Hardy funded the land leases and construction of GSB from its beginning in 2006. Up until 2013, no rent was paid by GSB as it could not afford to do so. In 2013, a discounted rent of approximately $350,000 per year came into effect based on an agreement between YKK and its landlord PT Bambu Bambu. The rent was indexed to inflation and further increased based on additional capital expenditures made by the landlord and the discount was phased out based on GSB’s ability to pay. GSB currently pays rent amounting to approximately $700,000 per year — this amount is based upon an independent, professional appraisal of the land and buildings which was conducted in 2015.  Approximately US $8 million has been invested by the co-Founders/landlord since the founding of GSB more than 10 years ago. Less than half of the funds invested into building GSB have been recouped by the payment of rent to date.

YKK financial audits

For a number of years now, YKK has been subjected to an annual financial audit by the Indonesian affiliate of the global accounting firm RSM, a reputable audit firm, with the most recent audit covering the period through 31 July 2019.  The annual audit reports are all available for review upon request from the School’s finance department. It should be noted that the audits have never uncovered any wrong-doings by the Yayasan or the Trustees. 

John and Cynthia Hardy as co-Founders of GSB

The legal founders of YKK were in fact a group of Indonesians asked by John and Cynthia Hardy more than a decade ago to serve as the school’s legal founders.  Only one of the original legal founders, Ibu Ika, remains connected with Green School Bali to this day. While John and Cynthia are respected as the co-Founders, it is not a factual statement that they remain in control. They are, out of respect and honor, consulted with respect to Trustees being appointed to YKK, and their opinions are noted but they do not have any formal or informal veto or appointment rights.  It is, however, a fact that any direct descendant of John Hardy may, at his or her own choice, take one seat on the board of Trustees in order to respect the Hardy legacy. This does not, however, in any way amount to control or undue influence over the Trustees, and does not, in our view, amount to YKK being operated in a way which favors the co-Founders rather than the School. 

Concerns raised about Green School’s image based on our carbon footprint as a “destination school” 

We acknowledge it is true that we are primarily a destination school and the issues with Indonesian visas make it challenging for our community to achieve a collectively low carbon footprint. We expect the school leadership team to continue to focus on the children and their learning. We also expect the team to create space for parent conversation and to support the development of community-driven solutions. Collectively, we can improve our impact; and we encourage all families to participate in the existing Carbon Zero program run by GSB.

Green School in Uluwatu (Bukit Peninsula), Bali

We have recently received questions from community members regarding plans for developing an additional Green School in Bali (Uluwatu/Bukit Peninsula) we wanted to explain that as we shared with the Board of Learners at our joint meeting last November, at this stage, Uluwatu is simply “on the list” of several potential locations that GSI is considering as a possible market for a future Green School. Specifically in the case of Uluwatu (Bukit Peninsula) the initial very early stage thinking would be for this to be an Early Years and Primary-only program in a market that geographically and demographically quite different than that of GSB. No decisions have been made, however, and GSI is only now in the process of working with a potential partner/school developer in south Bali on the preparation of a comprehensive feasibility study. We are happy to keep all community members informed as to progress, including if and when a decision is made to proceed.

In closing, we understand that there is a lot of information contained in this email and that some members of the community may have questions. We ask that you e-mail questions to: trusteesquestions@greenschool.org and over the course of the next week we will reply to the entire community with a summarized list of Questions & Answers. Please note that we will not be replying to individual questions directly.

Yours sincerely,

The Trustees of Green School Bali

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