After Saint Augustine’s University entered into a multi-million-dollar loan agreement with a 26 percent interest rate, Self-Help Credit Union’s CEO offered the embattled HBCU a loan at a significantly lower interest rate of 9 percent, documents obtained by INDY and The Assembly show.
However, Self-Help’s $19.5 million loan offer also came with one big stipulation: two SAU board members, including its current chair, would have to resign from the board of trustees.
“This is not personal,” Self-Help CEO Martin Eakes wrote in a loan proposal shared with board members on November 4. “When a team or business collapses, the coaches are asked to leave to restore the confidence that the future course of action will be different from the past course of action.”
Eakes’s financing offer came several months after Saint Augustine’s entered into a credit agreement worth up to $30 million with Gothic Ventures, a venture capital firm. An initial $7 million loan carried the 26 percent interest rate and listed the main campus and 40 other pieces of property as collateral, prompting public concerns from Eakes, alumni, and community groups who have described the loan as “usurious,” “predatory,” and a “land grab.”
In response to the Gothic Ventures loan, Eakes offered the university a 10-year loan that included $7.5 million to purchase the Gothic Ventures loan plus any interest accrued, money to negotiate a pay-off of outstanding IRS liens, and an additional $3 million for the university to use as needed (see PDF below).
On top of the Gothic Ventures loan, the university owes about $9 million in unpaid taxes to the IRS, which has placed liens on its property. SAU owes millions more to other creditors and recently slashed its budget and workforce by half in order to shore up its finances. In December, the Southern Association of Colleges and Schools Commission on Colleges (SACSCOC) voted to revoke SAU’s accreditation, citing the institution for seven violations of its finance and governing standards. SAU remains accredited, pending an appeal hearing in February.
Among the requirements listed for the loan, Eakes said the financing would be conditioned on the resignation of both Brian Boulware, the current board chair, and James Perry, the former board chair. The loan proposal said Self-Help would “suggest” but “not require” that Boulware and Perry be replaced by two individuals to make the “strongest case to [SACSCOC] for continued accreditation.”
Eakes proposed that John Wilson, the former president of Morehouse College and director of the HBCU Initiative under the Obama administration, and Michael Curry, a retired bishop of the Episcopal Church of America, take over as interim chair and vice chair. Curry previously served on the university’s board for over a decade.
In response to a request for comment, an SAU spokesperson pointed to a previous statement Boulware made that Self-Help “didn’t really have an appetite” for financially assisting the university. The university did not respond to a question about why it turned down Eakes’s proposal in November.
Terms and Conditions
Self-Help, a credit union founded in North Carolina, specializes in lending to nonprofits, small businesses, and low-wealth borrowers, with an eye toward advancing economic equality for marginalized communities. Eakes also leads Self-Help’s affiliate organization the Center for Responsible Lending, which advocates for fair lending policies and battles predatory lenders.
Between the IRS liens and Gothic Ventures loan, Eakes wrote in his loan proposal that the HBCU was on a “crash course,” and the two debts would make it “nearly impossible for the university to carry on normal business operations.”
“I understand that this level of financing does not resolve all of SAU’s accumulated debts,” Eakes wrote in the proposal. “We believe that total financing of $40 million or more will be needed (including the amounts committed above) to meet that goal.”
In addition to Boulware’s and Perry’s resignations, the loan proposal also required the university to list all “real estate and personal property” as collateral, with Self-Help retaining the right to approve the sale of land. Any revenue collected from “significant sales,” which the agreement defined as over $1 million, would be shared in a negotiated ratio with the university to pay down any debts to Self-Help, continue operations, and increase the university’s endowment.
Eakes confirmed to INDY and The Assembly that he made the proposal in early November with an expiration date of November 15. In an interview, Eakes says he wrote the loan proposal at Boulware’s request.
In a sweeping press release titled “setting the record straight” sent to media on Tuesday, the university wrote that it had made “numerous attempts” to work with Self-Help between February and July of last year—attempts it said went “unanswered” and showed a “lack of willingness” from the credit union to help the university.
The university also said Eakes was motivated to put forth a loan proposal after “realizing the then-commercial certified appraised value of SAU’s property exceeds $207 million.”
Eakes confirmed Self-Help was in conversation with the university in early 2024, but no loan application was ever submitted. He added that he made his November loan offer to SAU only as a last resort, after urging Gothic Ventures to lower its interest rate. Kip Johnson, the managing partner of Gothic Ventures, previously told The Assembly when concerns about the loan arose that he was open to negotiating the terms if the university was interested. Johnson did not respond to a request for comment for this story.
The university said Eakes made his proposal in partnership with Jim Goodmon, the CEO of Capitol Broadcasting Company, which owns WRAL, the Durham Bulls, and the American Tobacco Campus in Durham. In an interview, Goodmon denied this, saying that while he was aware of the loan proposal, he had “nothing to do with that offer.” He added that he agreed with Eakes’s efforts in general to curb predatory lending.
The university also said in its Tuesday press release that Goodmon and other leaders from the AJ Fletcher Foundation, a Raleigh-based charity organization, “push[ed] for a merger” of Saint Augustine’s and Shaw University. Boulware previously discussed the meeting in a letter responding to a lawsuit filed by an alumni group, Save SAU, that sought to remove the current board of trustees. That lawsuit, dismissed in November due to lack of standing, alleged that the board “breached their fiduciary duties” to SAU by eliminating dissenting voices from the board and improperly awarding university contracts without due diligence or board approval.
Goodmon confirmed that the meeting happened, but says he and the other AJ Fletcher Foundation members simply offered to finance a study to examine whether a merger in some form of Shaw and Saint Augustine’s would work. Goodmon added that the offer is still on the table.
“As a business person,” Goodmon says, “I think they should consider everything.”
An SAU spokesperson says the university stands by its previous characterization of its meeting with Goodmon.
No ‘Easy Answer’
Marybeth Gasman, a professor at Rutgers University who studies HBCUs, has served on the boards of several historically Black institutions—including Saint Augustine’s University from 2011 to 2014. In an interview, Gasman told INDY and The Assembly that Self-Help’s condition asking SAU’s current and previous board chairs to resign is unusual—but she said that it seems fair in the circumstances.
“I think the lender has the right to say that,” Gasman says, “because the board hasn’t been successful. I’m not used to hearing that, but it’s their [the lender’s] money to give.”
Felecia Commodore, an associate professor of education policy at the University of Illinois Urbana-Champaign who studies HBCUs and board governance, says that part of a board’s duty to the institution is exercising fiduciary responsibility and loyalty, which requires board members to put the needs of the institution above their own. In that context, Commodore says the board’s rejection of Self-Help’s offer raises questions about whether the board is upholding its duty of loyalty by choosing not to pursue the lower interest rate, despite the leadership stipulations.
However, Commodore says it is also understandable that the board may be uncomfortable with an outside entity telling them how to run their institution, especially given its history and relationship with the Raleigh area as an HBCU.
“It does become a tricky kind of situation where, yes, this may help us solve our problem financially, our fiscal problem—or at least help—but does it then create or open up another door where we find ourselves vulnerable to outside entities being able to control our institution?” Commodore says. “I don’t think there’s an easy answer.”
Erin Gretzinger is a higher education reporter at The Assembly. You can reach her at erin@theassemblync.com.
Chloe Courtney Bohl is a corps member for Report for America. Reach her at chloe@indyweek.com.
Comment on this story at backtalk@indyweek.com.