Quick query:

Do any of you think that today's headlines, and the preceding/subsequent news regarding alleged Smithsonian leadership mishandlings, will have any ramifications for the museum industry by association?

Most of us who are waist-deep in this stuff know that's an apples-and-oranges comparison, but given the number of "rubes" that sincerely seem to believe that the city/state owns each museum within its borders, or that "the Smithsonian" operates every museum in America as a government ward, well......

You must listen to NPR - only place I even heard any coverage.

I think it doesn't shock the 1200 or so of us that actually care about it in this country, and given we work in the business the deleterious effect of the imposition of politics into museum management isn't news. It happens in scales ranging from the small volunteer local group up into the theoretical biggest and best, apparently.

Yawn, ho hum, please pass me another?

A good friend with great insight once told me nobody was more impressed with working for the Smithsonian than those that worked for the Smithsonian.

I just don't see any reaction pending from John Q Public.

dave

I think most people will look at the Smithsonian situation for what it is: a person in authority misusing their authority for personal gain. I don't see any fallout industry-wide. -- Ray

The Smithsonian has had problems for a number of years. What I would call them too big problems. I was a contributing member for about sixteen years. But the constant pleas for yet more money at least monthly and sometimes even weekly finally convinced me to take my donation dollars elsewhere. They actually have a telemarking firm that works their mailing list for funds. I'm still getting calls and mailers to sign up for their harassment nearly ten years telling them to take a long walk off a short pier. The funding drives are not for specific objectives, but just more money for the general operating fund. IMHO, a good example of how to irritate your donors.

I've also read a while back in Science News Weekly that the scientific side is very demoralized as well and there have been some serious missteps, i.e. the multiple mirror telescope which appears to be a failure and is in the process of being rebuilt as a conventional telescope.

I did a quick bit of research and was pleased to find that about 85% of the Smithsonian's funds go to program expenses, which is a pretty good ratio in my opinion. They also appear to not spend a lot to raise those funds. What I couldn't determine was how much the telemarketer skims off what they raise, hopefully it's also a fair and reasonable amount.

http://www.charitynavigator.org/index.c ... d/4474.htm

I do agree with your comment about pestering people though. It gets annoying when you feel like the more you give, the more they ask for...

How do other non-profits handle this? Obviously the folks that are giving are your best potential source for more donations. Should you ask for more, or should you give them a break?

Last Christmas I put a donation in the kettle for the Salvation Army as I walked into my local warehouse club store. About 1/2 hour later, when I walked out, the fellow stopped ringing his bell for a moment as I walked by. I realized that he'd done so since I'd already donated. I was impressed he remembered who had donated, and thought it was a nice gesture.

I too get frustrated with charities that continually send you more letters and requests for donations. I told one charity that the money I'd donated was intended to help the poor, not pay for glossy mailers. After doing a bit of research on that organization, I realized they were apparently more interested in fund raising than in helping the poor, or so the numbers would suggest.

How can we handle this issue as tourist railways? Do you give folks who donate a break before asking for more, or do you say "Ha! I've found a live one!" and send another request in a week or two?

How do you balance the risk of annoying them with the potential for more donations?

The lesson that should be obvious here is that even if you are well funded and regarded, big and influential, and you can draw from the best candidates, the management can run amok and create disruption and embarassment. This has implications for (would be) board members.

In the past, there were rather "animated" posts on RYPN that asserted that the Board's first and only job is raising money and getting the hell out of the way. Unfortunately, a variation of this argument was poposed in recent TRAINS magazine article. While not casting any aspersions on the Smithsoian board-it shows that oversight can't be limited to a pat on the back for scoring a big grant.

This is not the first tax exempt (google "Pennsylvania Higher Education Assistance Agency" or "PHEAA") nor will it be the last that finds light shed on its finances. Moreover, this isn't the first brush with embarassment by the Smithsonian, so this is very "disappointing" and "unfortunate".

Moreover, the scrutiny is increasing. In addition to increased scrutiny from the IRS and state charity regulators, there are new eyes looking at tax exempt. (Guidestar, etc) There's also a new environment as a result of the scandals of a few years ago. Although much of the new financial regulation that applies to publicly traded companies doesn't directly affect the tax exempt world, there has been "trickle down", and new auditing standards require greater consideration of fraud and greater documentation. For example, a new audit standard now formally disallows accepting oral evidence alone as sufficient-although GOOD auditors have known accepting a client's explanation on a matter, without "hard" evidence is lousy auditing for years.

So once again, here's the deal in a tidy little package. Board membership is a fiduciary obligation and your first obligations are not to fundraising, but to proteting your tax exempt status and reputation.


Told you so.

I have been closely associated with the Smithsonian for the last decade, including a term as Chairman of the Board of the National Museum of American History and a member of the National board for six years. There is much more to this than you read in the Washington Post and I feel obliged to give some of the other side, recognizing, sadly, that Secretary Small should have paid more attention to some of the rules - although his transgressions were careless and certainly not fraudulent.
The Smithsonian is a unique federal entity that receives about 70% of its funding from Congressional appropriations and the balance from a variety of grants and contributions. At the beginning of the decade it had the herculean task of finding the funding for a new American Indian Museum and the new Air and Space Museum at Dulles Airport plus major funding for the renovations to the Natural History and American History museums and to a lesser extent the Patent Office, plus dealing with a squeeze in appropriations resulting from federally mandated salary and benefit increases beyond the annual increases in appropriations.
Larry Small became Secretary in 2000 and from then until now he raised $1 Billion in private donations for the institution. That is one thousand million dollars. In his immediate prior job he earned $4.2 million per year. Almost exclusively as a result of his efforts the projects described above have been funded at an enormous savings to the taxpayers.
Yes, Larry Small earned twice as much as the President, but he accomplished far more for the Smithsonian than the President did. The benefit-cost ratio for his services is enormous and the beneficiaries are the American people.
Larry operated the Smithsonian with the same style and standards he applied when he was in the private sector and that is what it took to get the job done. You simply are not going to court multimillion dollar donors by taking them to lunch at McDonalds.
So the Washington Post and the beltway wolfpack have suceeded. I wonder where the nation is going to find another Secretary who can raise a billion dollars in the next seven years.
Pete Claussen

Sandy,

What's the backstory for the kerfuffle you speak of for those of us unable to tune into NPR (or This American Life...for that matter.)

KL

"Larry operated the Smithsonian with the same style and standards he applied when he was in the private sector and that is what it took to get the job done. You simply are not going to court multimillion dollar donors by taking them to lunch at McDonalds. "

This is an interesting statement and illustrative of the problem some private sector executives have in making the transition to the tax exempt world. When you accept the job, you need to examine the habits, conventions and protocols that you have utilized for their conformity to the requirements of the new environment. The fact that you had a certain "style", earnings or latitude with your expense account doesn't matter anymore. The "job" is different and anybody that has the moxie to get 4.2 mill, should have figured that out.

The large percentage of government support the SI receives makes actions more susceptible to the "appearance of impropriety", which can be "problematic" even if perfectly legal and acceptable.

Being a rainmaker isn't enough-partially because of widespread ignorance-which starts with the misunderstanding of the term "non-profit" (notice, tax exempt is more accurate), the public and public authorities apply expctations of frugality that aren't used elsewhere.

Once again, the lesson is clear: money isn't everything.

As a matter of personal opinion, this post expresses a little too much support for lavishness and extravagence-and as a guy who opens his wallet regularly without hearing the pop of a bottle of Dom, is a little disconnected from Joe-Sixpack. Its a little reminiscent of the refusal of Penn State to disclose Joe Paterno's salary because of his supposed invaluability in producing winners, giving money to the University, etc. when they regularly ask the Commonwealth for one thing (more).

First, I will remind you that if you have a computer and online access (high-speed preferred), you can listen to a great many NPR stations online through their websites; two examples local to me are www.wamu.org and www.wypr.org .

Washington Post's coverage at:
http://www.washingtonpost.com/wp-dyn/co ... 00697.html

It made top of the front page yesterday.

Yes, Washington (and the Post in particular) tends to act as if it's the center of the universe, that everything revolves around it, etc. and this news probably won't make, say, the Fargo newspaper, but it's guaranteed at least some coverage in USA Today, the bigger papers (LA Times, NY Times, Chicago Tribune, etc.)--papers read no doubt by the same "rich" or corporate folks whom boards should be courting for donations.

Seems to me that 203's post is dead on target!! They brought him on board in large part believing he had what it took to successfully find the huge monies needed for them to meet the identified challenges lieing immediatly ahead of them. He did that in spades.
Darn shame that he( or those near him) didn't pay closer attention to the relatively minor issues that his enemies (jealousy??) used to drive him out of office, as the SI and we the American people are surely the poorer as a result.
Damaging as the whole mess has been the SI name will continue to carry much deserved respect within the larger American community and not long from now this whole thing will be forgotten and the long term good his efforts enabled will endure for generations!
Ross Rowland

While I largely concur with Ross and Pete, a couple things do come to mind:

At some point, having earned several millions and provided for my comfort and that of my family, and having decided to work for the public good by taking on responsibilities in the nonprofit educational sector, why would I even consider taking a salary based on my previous private sector earnings? An honorarium sure, to assure I don't lose money on the deal, but a multimillion dollar compensation package? While I can only try to imagine myself in such a position, it comes off as a little smelly to me, and could certainly be off-putting to other less advantaged potential donors.

Entertainment provided as in-kind donation would more encourage me to open my pockets and help out than entertainment purchased for me at top dollar. Makes me wonder what the organizations priorities might truly be. If the owner of this restaurant thinks enough of the museum to treat me like a king out of his own pocket, he is setting a good example I'd be more inclined to follow.

Perhaps these are values of a confirmed middle class blue collar worker, but most of the country shares them, and it would be wise for the powers that be to bear it in mind.

dave

For what irs worth (not very much, I'm sure) there was coverage of this in yesterday's Albany (GA) Herald. I don't see it impacting Thronateeska's position in this community.

Pete is exactly right. You certainly do not take a potential large donor to McDonalds for lunch if you want a contribution. If you are a railoroad museum you had better not have the donor take one look out his limo window and say "Oh my god, not another junk yard." This is especially true when you are THE United States history museum and located in Washington DC to boot.

As for the salary of a man like this I am reminded of what Babe Ruth told the reporter who ask him why he should make more money than the President of the United States. The Babe simply answered "I had a better year than he did." I am about as blue collar as it gets and I understand this very clearly.

John Bohon

For me, it was not the salary, but the other extravagant use of money for $4000 chairs and such in the office, and a housing allowance for a house that had no mortgage and was not used for entertaining clients.

Worse, this came on the heels of similar financial indescretions by the president of The American University, also here in DC. I think if you're making a salary in the high six figures or more, one should be careful about padding the expense account and allowances as well.

Wesley