Charity Governance

SO YOU WANT TO WIN A PULITZER: NEW YORK POST BOTCHES AIG STORY

DATELINE: June 3, 2009, Chicago

On June 1, 2009, the New York Post reported that AIG was trying to recover a $490 million charitable endowment from the Starr International Foundation.  Paul Tharp, AIG Charity Grab: Bids to Claw Back Grants to Pay Bonuses.  There couldn’t be a more explosive story:  The most hated corporation in America seizing assets from charities to pay its executives larger bonuses.  We were so excited.  In fact, based on the article, we gave some consideration to filing a report under the IRS whistleblower program, hoping to cash in when the IRS revoked the Starr International Foundation’s tax-exempt status.  But we stopped and read the story closer before completing and filing IRS Form 211.  To be blunt, the story makes...

STALIN'S COMMITTEE TO SAVE DEMOCRACY: THE INTERIM REPORT ON THE FUTURE OF THE ROSE MUSEUM COMMITTEE

DATELINE: May 5, 2009, Chicago

As reported earlier this week, we attended a panel discussion on Saturday featuring Michael Rush, the soon-to-be ex-director of Brandeis’s Rose Museum.  Rush’s contract expires next month and there are no plans to renew it, according to Rush and others.  David Itzkoff, Criticism of Interim Report on Brandeis Art Museum, N.Y. Times (May 4, 2009).

The panel discussion at Chicago’s Artropolis focused on the problems of the Rose and other museums in difficult economic times.  You may recall that on January 26 of this year Brandeis’s board of trustees announced their decision to close the Rose Museum and sell some 6,000 works of art with the hope of bringing in $350 million in needed cash.  The trustees' secretive deliberations resulted in a public uproar, forcing Brandeis to reverse course, at least in its public statements.  Plans for the sale have been put on hold and there are claims that the museum will remain open or be repositioned.  

Brandeis constituted a committee (the "Committee") to explore the future of the Rose, aptly named the Future of the Rose Committee.  On April 30, 2009, the Committee...

THEY ARE COMING TO GET YOU: THE PRESS, THE NEW FORM 990, AND BARRELS OF INK

DATELINE:  May 4, 2009, Chicago

Our mother-in-law once reminded us:  “Never pick a fight with someone who buys ink by the barrel.”  The recent goings on at the Hackensack University Medical Center (HUMC) certainly prove her to be an insightful observer of the human affairs.

On April 26, 2009, the North New Jersey Reporter published a lengthy article entitled Tangled Web of Power: Hospital’s Influence Reaches Far.  In the story, Mary Jo Layton describes in great detail a series of...

A DISPASSIONATE LOOK AT THE LEGAL ISSUES FACING BRANDEIS UNIVERSITY

DATELINE: January 30, 2009, Chicago

Earlier this week, Brandeis University announced it was closing the Rose Art Museum.  The museum's renowned collection of contemporary art was to be sold, with the hope that the sale would produce hundreds of millions of funds that could be added to the university’s quasi-endowment.  One legal expert declared that the university had no idea of the size of the can of worms that it had opened when it announced the closing of the Rose.  The university has since backed away from the decision to sell the collection, but the university still contends that it will close the museum.  The question remains:  What will happen to the valuable collection, particularly given that the original proposal was percipitated by the university's financial crisis?

We alrady have received calls and e-mails about the decision from...

THE CURIOUS CASE OF IRA MILLSTEIN AND RUMPELSTILTSKIN

Of all the gin joints in all the towns in all the world, she walks into mine. 
    Humphrey Bogart (Rick) from CASABLANCA (1943)

DATELINE:  January 2, 2009, Chicago

Bloomberg reported yesterday that noted corporate-governance lawyer, Ira M. Millstein, of the Weil, Gotshal & Manages law firm issued an opinion stating that J. Ezra Merkin could continue accepting funds from Yeshiva University as long as Merkin disclosed his role.  Janet Frankston Lorin, Millstein Letter Helped Keep Yeshiva Money on Path to Madoff.  The article suggests that the opinion was issued to Yeshiva.  The article doesn't indicate whether Millstein was aware of an intention to invest all the funds with Madoff, who was another trustee.  As we have pointed out before, that results in what looks to us like redundant fees, which we believe is hard to justfiy. 

We have several reactions to the revelations about Millstein and the board's reliance on his opinion.  Our basic one is the simplest and most...

POOR GOVERNANCE PRACTICES AT YESHIVA UNIVERSITY WILL LIKELY WREAK HAVOC FOR THE UNIVERSITY’S DEVELOPMENT OFFICE

DATELINE: December 17, 2008 , Chicago

One thing is for sure, Yeshiva University needs a new public relations department.  It now has been reported by multiple media outlets that the university lost somewhere between $100 million and $110 million in the Madoff debacle, but the press office has been largely silent  The Yeshiva Commentator, which bills itself as the official newspaper of Yeshiva College and the Sy Syms School of Business, is reporting that President Richard M. Joel acknowledged in a mass e-mail to students that the university suffered a $110 million loss from a Madoff-related investment. Noach Lerman and Rafi Blumenthal, YU Endowment Shaken By Madoff Storm, Losing $110 Million.

According to the Commentator, the Yeshiva investment was through Ascot Partners rather than directly with Madoff.  Ascot Partners is described as a hedge fund run by J. Ezra Merkin, who until his resignation last week, was...

DID THE YESHIVA UNIVERSITY BOARD OF TRUSTEES MAKE INVESTMENT DECISIONS IN A CLUB ROOM OR A BOARD ROOM?

DATELINE: December 16, 2008, Chicago

The Yeshiva University board of trustees and its investment committee have some explaining to do in light of the reports last night in the New York Times and other media outlets that the university apparently has lost somewhere around...

THE ROBERTSON FAMILY TAKES A PAGE OUT OF HILLARY CLINTON’S PLAYBOOK

DATELINE: December 11, 2008, New York City

When we learned yesterday from CNBC that the Robertson Family lawsuit against Princeton University had settled, we jumped on a plane to the East Coast so that we could bask in the zeitgeist.  Our conclusion after learning the terms of the settlement:  The Robertson Family took a page out of Hillary Clinton’s playbook.  First, spend a fortune kicking the...

ELI BROAD AND THE PROBLEM OF MORAL HAZARD: CHARITY IN THE AGE OF THE BIG THREE

DATELINE:  December 1, 2008, Chicago

Eli Broad must be feeling a lot like Treasury Secretary Hank Paulson these days.  At age 75, Broad ranked 48th this year on the Forbes list of 400 richest Americans.  Forbes estimates his net work at $6.7 billion. 

Like Secretary Paulson, Broad’s name frequently appears in headlines.  He may not be the U.S. Treasury or the Federal Reserve, but when troubled charities require...

ACORN: “THIS IS ANOTHER FINE MESS YOU’VE GOTTEN US INTO, OLLIE”

DATELINE: November 16, 2008, Chicago

Last week, the Catholic Campaign for Human Development (CCHD), the national anti-poverty program of the U.S. Conference of Catholic Bishops, cut off its funding for ACORN, the controversial organization that was in the news during this just-completed election season because of allegations over voter registration fraud.  According to a November 13, 2008 press release CCHD cut off funding because of a major case of embezzlement which “raised serious concerns over ACORN’s financial accountability, transparency, governance, and organizational integrity.”  The press release then indicates that the allegations over voter registration fraud intensified CCHD’s concerns over ACORN's activities.  CCHD therefore extended its funding cut-off to any ACORN organizations.  We are not sure what the second cut-off adds to the first.  Maybe the first cut-off was similar to...