Charity Governance

THE IRONY: TERRY GAOUETTE COULD EASILY BE CHARACTERIZED AS ONE OF THE MILWAUKEE PUBLIC MUSEUM’S BIGGEST BENEFACTORS

DATELINE: December 1, 2007

And someday if God's in heaven overlookin' His preserve
I know the men that shot him down will get what they deserve.

Joey, Joey,
King of the streets, child of clay.
Joey, Joey,
What made them want to come and blow you away?

Bob Dylan, Joey, appearing on Desire (1976)

It is hard to be critical of Terry Gaouette's decision to plead guilty to one misdemeanor count of falsifying a financial report. Steve Schultze, Ex-Official Gets Fine, No Time: He Pleads Guilty in Museum Case, Milwaukee Journal-Sentinel, Nov. 30, 2007. But we nevertheless find the plea to be an unfortunate action on Gaouette's part because, in our view, he was the one responsible adult in the room as the Milwaukee Public Museum's finances collapsed. That collapse was rooted...

LET US BE THE JUDGE: MORE TRANSPARENCY NEEDED FROM THE MILWAUKEE PUBLIC MUSEUM

DATELINE: November 12, 2007

Last Friday, Milwaukee Journal-Sentinel reporter Steve Schultze reported that Milwaukee Public Museum officials claim that the financial crisis that two years ago brought the once venerable and respected museum to its knees is over. Museum Officials Say Is Over, Nov. 9, 2007. Wasn't it...

MILWAUKEE PUBLIC MUSEUM: NOT ALONE IN THE WOODS

DATELINE: June 4, 2007, Chicago

We have written extensively during the last two years about the problems facing the Milwaukee Public Museum. In large part, the museum found itself in the precarious financial position due to governance failures. But even if the museum had been well run, it still might be facing fiscal woes. Sunday's L.A. Times carried an article that will have the museum world talking for some time to come. Written by Mike Boehm, the article's title—Nature Museums Nearly Relics Themselves—suggests that with the exception of several very large ones, natural history museums across the country...

EXPECT CHANGES IN MUSEUM LOAN AGREEMENTS FOLLOWING INCIDENT AT THE MILWAUKEE ART MUSEUM

Dateline, April 5, 2007, Chicago

Hey, we don’t mean to pick on Milwaukee, but because of the Milwaukee Public Museum story, we check the Milwaukee Journal-Sentinel’s Web site first thing each morning. And today we saw another story of note.  Bob Purvis, Man Damages Old Master Painting at Milwaukee Art Museum:  He has a History of Mental Illness, Director Says.  A 22-year old man is alleged to have put his foot through The Triumph of David by Ottavio Vannini.  The painting dates to 1640 and, according to the Journal-Sentinel, is worth $300,000.  The painting depicts the biblical figure David holding the head of Goliath. 

According to the David Gordon, CEO of the Milwaukee Art Museum, the attack involved multiple kicks, with the perpetrator allegedly...

MILWAUKEE PUBLIC MUSEUM: COMPASSIONATE CONSERVATISM COMES TO THE RESCUE

Dateline, March 30, 2007, New York City

Congratulations to the Milwaukee Public Museum—finally some good news.  Milwaukee’s conservative-leaning Lynde and Harry Bradley Foundation and another unnamed source have pledged $5 million to the museum’s recovery effort, according to Steve Schultze in today’s Milwaukee Journal-Sentinel—Gift May Spare Museum: $5 Million Donation Meant to Spur Fund-raising Drive to Avoid Bankruptcy.  The gift was announced by museum president Dan Finley at a Milwaukee County Board meeting on Thursday.  As is typical, the pledge...

THE B WORD HAS NOW ENTERED THE MILWAUKEE PUBLIC MUSEUM’S LEXICONN

Dateline, March 23, 2007, Chicago

On January 23, 2004, the committee was briefed on the 2003 financial audit by MPM’s previous outside audit firm. Two observations by the auditors provide early signals of concerns. First, the auditors noted that MPM had experienced net losses for two consecutive years. Second, the firm stated the “liquidity issues and cash flow management has required management’s attention.”  Within two months of this discussion, MPM’s banks were in the process of placing a general lien on all of MPM’s assets.

          From:  Interim Audit conducted by Milwaukee County Department of Audit (June 2005)

We haven’t heard anything about settlement negotiations with former Milwaukee Public Museum CFO Terry Gaouette lately.  There was supposed to be a hearing in the criminal proceedings on March 6, 2007, but nothing was reported by the Milwaukee Journal-Sentinel.  We also haven’t heard much about the much-ballyhooed fundraising campaign that has now been underway for at least a year.  And now we know why.  Apparently...

THE MILWAUKEE PUBLIC MUSEUM: LOOKING FOR A FIG LEAF IN MILWAUKEE?

Dateline: February 4, 2007, Chicago

Our own Jack B. Siegel was in Washington, D.C. yesterday speaking about interactions between charities and politicians.  Thank goodness Jack was in Washington, D.C., where it was a balmy 38F.  Otherwise he would have been in Milwaukee for the second day of the long-delayed preliminary hearing in the Terry Gaouette criminal case.  Jack, after freezing his little tootsies off on the walk to the courthouse, would have been...

THE MILWAUKEE PUBLIC MUSEUM: THE NIGHTMARE HAS BEGUN, BUT FOR WHOM?

Dateline: January 15, 2007, Chicago

Last Friday (January 12, 2007), Kenneth Kerznar, the former chairman of the Milwaukee Public Museum’s endowment committee, gave testimony in the first day of the preliminary hearing for Terry Gaouette, the former Chief Financial Officer of the museum, who has been charged with several felonies for his alleged role in the financial collapse of the museum.  We were not at the hearing, but Dave Umhoefer of the Milwaukee Journal-Sentinel does a nice job of summarizing the proceedings.  Dave Umhoefer, Testimony Casts Blame on Museum Officer: But Hearing Also Helps Former Finance Chief, Milwaukee Journal-Sentinel, Jan. 12, 2007. 

The nightmare that we predicted has begun.  Obviously Gaouette is experiencing a bad dream that he would love to wake up from.  But we can’t help but speculate on the cost of the trial to the museum.  We are already hearing conflicting testimony, which keeps the story alive on the front page of the paper.  It can’t help the museum's fundraising efforts. 

Milwaukee sounds a little bit like Italy,...

THE MILWAUKEE PUBLIC MUSEUM: D & O INSURANCE PAYS OFF FOR INDICTED FORMER CFO

Dateline: December 21, 2006, Chicago

Dave Umhoefer of the Milwaukee Journal-Sentinel reported in a December 7, 2006 article that Terry Gaouette is using a $5 million directors’ and officers’ liability insurance policy to finance his defense against criminal charges that are rooted in the 2005 collapse of the Milwaukee Public Museum.  See Dave Umhoefer, Museum Insurer Covering Ex-CFO: Gaouette's Already Been Repaid $77,760 For Legal Bills in Criminal Case, Milwaukee Journal-Sentinel, December 7, 2006.  Every director and officer of a nonprofit should take a close look at Umhoefer’s story.  The lesson is clear... 

MILWAUKEE PUBLIC MUSEUM: GAOUETTE MAY HAVE BEEN INDICTED, BUT THEY’RE ALL GOING DOWN

Peter Pumpkinhead told the truth
But he made too many enemies
Of the people who would keep us on our knees
Hooray for Peter Pumpkin
Who'll pray for Peter Pumpkinhead?

Peter Pumpkinhead was too good
Had him nailed to a chunk of wood
He died grinning on live t.v.
Hanging there he looked a lot like you and an awful lot like me

XTC, The Ballad of Peter Pumpkinhead from Skylarking (Sire 1986)

THE FACTS:  Today, the Milwaukee County District Attorney filed a nine-page indictment against Terry Gaouette, the former CFO of the Milwaukee Public Museum, charging him with one count of theft by an officer and three counts of fraudulent writings.

THE APPROACH:  We will begin this post by addressing the broader implications of the indictment, first focusing on the implications for those who were acting on behalf of the Museum in some capacity at the time of the debacle and then focusing on the implications for those running the Museum today.  We will then turn to the specific problems with the indictment.  We will then offer some conclusions.