DATELINE: August 9, 2007, Chicago
Imagine our surprise yesterday to receive a press release from the Friends of the Barnes Foundation. They were announcing that three Montgomery County, Pennsylvania Commissioners, one Lower Merion Township Commissioner, and one member of Congress had joined together to write a letter to Pennsylvania Attorney General Tom Corbett requesting him to exercise his parens patriae authority to stop the move by the Barnes Foundation from its Merion, Pennsylvania campus to the Benjamin Franklin Parkway in downtown Philadelphia. Our jaws hit the floor....
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The Barnes Foundation was established in 1922 by Dr. Albert C. Barnes to hold a now world-renowned collection of Impressionist, Post-Impressionist, and early Modern arts by the likes of Renoir, Cezanne, Matisse, Picasso, Rousseau, Modigliani, Soutine, and de Chirico. Unfortunately, Barnes imposed what turned out to be a set of ridiculous restrictions on the display of the collection. The restrictions limited the ability of the Barnes Foundation to generate sufficient revenue to properly maintain the collection. The story is beautifully summarized in a September 24, 2002 press release.
In 1992, the Court found that The Foundation's Merion gallery was in a state of disrepair and greatly in need of renovation and upgrading. It also found that the works of art should be removed during the necessary renovations. The Foundation requested permission to place a portion of its collection on tour in order to raise funds needed for the renovations. Ultimately, the Court approved the tour and the three-year renovation project began. The renovation of the Merion facility, and the heightened public interest that resulted from the tour, brought about an increase in the number of people wishing to view the Gallery and Arboretum. Concerns about increased traffic and congestion provoked an adverse reaction from the Merion facility's neighbors and township officials, who sought to restrict access through zoning citations and lawsuits. In just the three years following completion of the renovations, The Foundation was involved in at least fifteen hearings before the township zoning board, as well as three appeals to the Montgomery County Court of Common Pleas.
As a result of the restrictions placed on The Foundation by local zoning authorities, the substantial costs of litigation, and the Bylaws' detailed covenants in such areas as Board size and lending of works, The Foundation has been required to use its entire endowment for legal expenses over the past few years, leaving it in a precarious position of deficit spending and without any permanent long-term source of funding. An August 2002 financial report by Deloitte & Touche indicated that The Foundation had incurred $1.36 million in losses from its operations in 2000 and 2001; that The Foundation is projected to operate at a deficit of more than $800,000 this year; and that The Foundation likely will run out of cash by the end of the year. Without a new and immediate infusion of financial support, The Foundation may be on the verge of insolvency.
In view of that history, the Barnes Foundation petitioned the Montgomery County Orphan's Court to permit it to change its bylaws so that the collection could be preserved and Barnes' mission could be achieved. From the outset of the litigation, a move to a new location was contemplated. In legal terms, the petition was grounded in the law of equitable deviation and cy pres. The Barnes Foundation was asserting that the court should lift the restrictions imposed by Dr. Barnes because the means for accomplishing the purposes that he attached to his gift had become impossible. During the next several years, the case proceeded through the Pennsylvania court system, with the Pennsylvania Supreme Court finally upholding lower court decisions sanctioning the move. Plans to move the collection are well underway. A distinguished committee has narrowed the list of possible architects for the new facility down to six internationally-known architects. More important, the Barnes Foundation has already secured $150 million for the new facility, with an additional $50 million being sought for long-term stability.
THE QUESTION. So do the Friends of the Barnes Foundation and the government officials have any chance of prevailing in their latest efforts to keep the foundation's fabled collection in Merion? Not a chance in Hell. And they shouldn't prevail. They are wasting everyone's time and money with this ridiculous request.
The Friends and the officials don't seem to understand that charities are private entities. Their property is private property. The board of trustees or directors is charged with making decisions with respect to a charity's property and activities. The state may choose to subsidize a charity through tax-exemption and other benefits, but the charity is still a private entity. The government has no business interfering with the internal operation of a charity so long as the trustees or directors are properly discharging their duties, the charity efforts are directed at furthering its mission, and the charity is in compliance with the law.
The law does recognize the occasional need for the state to intervene when restrictions imposed by donors on charitable assets become impossible to achieve or implement. In Pennsylvania, the attorney general has authority to oversee such interventions. But there is a critical point underlying such interventions: The state is intervening not to impose its views of how the assets should be used (a political outcome), but as a party of last resort to see that the mission is preserved to the extent possible. That is what the litigation in Pennsylvania was all about. The Pennsylvania Attorney General was very much aware of and involved in that litigation.
When the court ruled that the Barnes Foundation could move, it reset the means for accomplishing the foundation's mission. At that point, the Barnes Foundation returned to the world of private property and governance. It now must comply with a new set of restrictions. Until compliance with those restrictions becomes impossible, the State of Pennsylvania has no legal interest in or jurisdiction to alter those restrictions.
It is very nice that Montgomery County has recently offered $50 million to assist in retention of the Barnes collection in Lower Merion Township. But the Friends, the County, and the government officials arrived at the altar too late. The bride and groom have already returned from their honeymoon. In fact, the kids are soon headed off to college. Litigation must come to an end, particularly when parties with no legal rights in the matter seek to overturn a decision of the highest court in Pennsylvania. The Pennsylvania Attorney should send a one-sentence letter to the Friends of the Barnes Foundation and the government officials that not so politely says "Mind your own business."
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