AGENCY'S ANALYSIS OF THE REFINANCING OF THE AFRICAN-AMERICAN INSTITUTE

• Document Type: FOIA
• Collection: FOIA Collection
• Document Number (FOIA) /ESDN (CREST): 02775389
• Release Decision: RIPPUB
• Original Classification: U
• Document Page Count: 2
• Document Creation Date: November 22, 2024
• Document Release Date: October 3, 2024
• Case Number: F-2021-02479
• Publication Date: September 4, 1962

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COPY
4 September 1962
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SUBJECT:
Agency's Analysis of the Refinancing of the African-
American Institute
This memorandum is to recapitulate the situation with respect to
the AAI as we understand it.
The matter of CIA's financing of the AAI was initially raised by
members of the Board of the AAI who were concerned about the possible
damagetothatoriw,timsaditsrobecauseofCIA'sinvove-
ment.
The fact of CIA's involvement has apparently been discussed
in the foundation community and in academic circles, and can no longer
be considered confidential. The Secretary of State and Mr. McGeorge
Bundy were concerned about the situation and at a meeting between them,
of Ford, and McCone and Meyer of CIA, it was agreed 0:0(1)
that CIA should disengage, to allow the AAI to be funded by a coMbina- (b)(3)
tion of private foundation grants and overt government contracts. An
interdepartmental working group under a Department of State chairman has
been meeting over a period of some weeks at the request of the Secretary
of State to consider possibilities for refinancing AAI with overt govern-
mental funds and a Ford Foundation grant. The refinancing plan envisioned
a "package" which could be presented to the Ford Foundation for consider-
ation at its board meeting on September 22.
The Agency has reviewed AAI expenditures in detail and on August 29
Mr. Cord. Meyer, Jr. agreed with Mr. Waldemar Nielsen, President of AAI,
to provide AAI with a total for FY 1963. This is to include
AAI's operating and administrative costs (not covered by its government
contracts and income from private sources) until refinancing is worked
out, and is also to include a terminal grant thereafter. The size of the
terminal grant will therefore depend on h
It was made clear to Mr. Nielsen that CIA
will have no responsibility
for the AAI or any uncompleted projects/
to AAI.
We are informed that Mr. Nielsen is obtaining letters of intent from
the Agency for International Development and the Educational and Cultural
Affairs Bureau, Department of State to the effect that they will provide
AAI with a total of approximately in contracts. Nielsen
believed that with these in hand e�idth�bove commitment which CIA has (N( 1)
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made he will be able to approach the Ford Foundation for a grant to make up
the difference in operating and administrativexDeases not provided by the
above contracts. He estimates these at about a year.
Although we are hopeful that refinancing along the above lines will be
worked out successfully, and CIA will provide assistance as described above
to achieve this end, the Agency believes it prudent to point out to all
parties concerned the situation which will exist if these efforts are un-
successful. At current rates of expenditure pu funds
will be exhausted by April 1963 at the latest. AAI's contracts with AID
for ASPAU and other programs do not provide sufficient administrative and
overhead costs for AAI to continue in operation without additional finan-
cial support. AAI has continuing commitments under its ASPAU and other
AID contracts for African students in the U.S. and for American teachers
in Africa through 1966. In addition, AAI has made commitments for other
African students in the U.S., some at the specific request of State Depart-
sent, amounting to about
The Agency will not be able to continue underwriting the AAI because of
the top level decision to withdraw and, equally important, because of the
widespread knowledge which has developed about CIA's past and present in-
volvement in AAI.
If other funds are not obtained from the Ford Foundation or other sources,
we assume there would be no alternative to liquidating AAI in the most orderly
way possible and the transfer of ASPAU and other continuing contracts to other
agencies operating in this field.
The Agency would appreciate State's written assurance that this situation
is understood and accepted by all elements of State concerned incInding AID
and CU so that appropriate contingency planning may be made in the event that
refinancing of AAI is not possible.
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