It is unfortunate that we didn’t write the post that we had been thinking about over the last couple of days. As regular readers of this site know, the Milwaukee Public Museum’s crisis has been unfolding over the last month. We detected a shift to the back pages of the Milwaukee Journal-Sentinel over the last couple of days. In our own minds, we predicted that the next big story would come in mid-June with the release of the audit, or if earlier, with the resignation of the Museum’s president, Michael Stafford. We were on the money. Mr. Stafford...
| Our Guide, Avoiding Trouble While Doing Good, A Guide for the Non-Profit Director and Officer, focuses heavily on the board's role with respect to financial matters. You should buy a copy of our Guide today. Call us at 773-325-2124 for additional information, or visit our website at http://www.charitygovernance.com. We also do on site training. In June, we will be speaking at two conferences on non-profit governance, including one where will be leading an all-day training session. A significant portion of both of our presentations will focus on financial reporting issues. You can be the Milwaukee Public Museum's plight will be a case we will use in those presentations. Give us a call if you want to head off problems with some serious training for your board and staff. |
resigned his position this morning, and when we checked the Milwaukee Journal-Sentinel’s website, Mr. Stafford’s resignation had made its way to the headlines.
It may come as a surprise, but we are sorry to see Mr. Stafford go. While a thorough investigation by the Wisconsin Attorney General is in order, such an investigation is not going to get the Museum back on its fiscal feet. In the last several weeks, we have read about a lot of problems, but really haven’t seen a concerted fundraising campaign put into place. Mr. Stafford’s strong point was fundraising, according to newspaper accounts. So just when he is most needed, he is gone.
We are disturbed by the Museum’s board chairman David Meissner’s comments concerning “predatory politics and headline grabbing.” Politicians and newspapers are not to blame for the Museum’s fiscal crisis. The Museum is run by a board of directors. The Milwaukee Journal-Sentinel said today that the Museum’s board was “caught-off guard.” The public may have been “caught-off guard,” but it is hard to understand how a board of directors can be caught-off guard. They have access to the information. They are supposed to be reviewing budgets and financial information at their meetings. As we demonstrated several weeks ago (with the Milwaukee Journal-Sentinel subsequently confirming our analysis several days ago when they published their own graphic showing past financial trends), the “quiet slide into insolvency”—not our characterization, but the Journal-Sentinel’s—was a long time in the making. WHERE WAS THE BOARD?
Now does Mr. Meissner really believe that an organization seeking $70 million in public subsidies can inform the public negotiators that there is a slight deficit during negotiations, and shortly after the negotiations are concluded, let slip that just maybe the deficit is five or ten times larger than indicated? And that’s last year’s deficit. “In case you are interested, this year’s projected deficit will be in the neighborhood of $7.0 million.” Does he really think public officials are not going to explode? We don’t have to determine whether there was deception to answer that question. The Museum could have been run by divinity students and the reaction would still have been the same. As an institution, the County Board has every right to be angry whatever the reason for the misinformation. However, we are unwilling to let the County Board completely off the hook because they did have representatives on the Museum’s board.
The Museum’s problems are deeply rooted in poor management and lack of oversight. And that poor management has been evident throughout this crisis. Specifically
The Museum has not followed the consultant’s recommendations regarding staff reduction. Mr. Meissner has stated that "To lay off people, it hurts." We agree and are symphetic. But where is the cash coming from to pay the remaining employees? Nobody has offered any public explanation as to why the consultant’s recommendations were disregarded. Why does a cash-strapped organization pay a consulting firm over $200,000 only to ignore one of its central recommendations?
Toward the end of last week, we heard about the addition of a public relations person to the Museum’s management team. We certainly haven’t seen any evidence of that yet. Where is the Museum’s side of the story on its website? Why is the Museum’s chairman evidently “picking fights” with the one group that can save the Museum? Why hasn’t there been more explanation of plans to turn the ship around? People are not going to contribute large sums of money to an organization unless they are confident in the turnaround plan. There has been no visible promotion of any plan to turn things around. Once again, where is the board? We would like them to comment about past governance failures, but we know they won't. But they could become more visible cheerleaders for the Museum's future and its mission.
The Museum first blamed the problems on highway construction. That was smart. Tell everybody that the construction (and implicitly the hassles of venturing out to the Museum) are so bad that nobody wants to come to the Museum.
Dribble out the financial facts. First we hear about a $400,000 deficit. Then a $4.0 million one. Then a $2.0 million one. And then the $7.0 million number drops. That apparent inability of management to assess the extent of the crisis doesn’t exactly create a lot of confidence in its ability to develop creditable solutions that must be rooted in finances. This is why a system that generates timely and accurate financial information is so critical to every organization.
Then there was the report about the invasion of the endowment fund held by a separate legal entity. Incredible.
We are coming to the conclusion that the Museum’s survival is now very much open to question. The County is not rushing in with money. Large foundations don’t seem to be coming forward. One can only wonder how advanced ticket sales to the Vatican exhibit are doing in light of all this commotion. Now the Museum doesn’t even have its chief fundraiser. Somebody had better do something because this course is all leading to one outcome that is quickly becoming inevitable.
One almost senses that the large Milwaukee foundations may be sending a message. "We aren't going to fund organizations that run into financial problems because of poor governance and oversight." If that turns out the case, the Museum's fiscal crisis may have a silver lining.
At this point, one could make the case that Museum officials should just call everyone's bluff by announcing that the Museum was closing it doors. At least then, everybody would know whether anyone really cares.
If you liked this post, please visit http://www.charitygovernance.com for a description of our Guide/Tutorial for non-profit directors and officers entitled “Avoiding Trouble While Doing Good: A Guide for the Non-Profit Director and Officer.” Copyright 2005, Auto Didactix LLC. All Rights Reserved. You may not copy any portion of this post to a computer "clipboard" for re-posting anywhere or e-mailing, or otherwise reproduce this post. If you want others to review this post, you may provide them with a link to this web blog. Any use of the material or ideas in this post by reporters or other publishers shall make reference to Jack Siegel, author of "Avoiding Trouble While Doing Good, A Guide for the Non-Profit Director and Officer" and this web blog. For additional information call 773-325-2124THE FOREGOING IS NOT AND SHOULD NOT BE TAKEN AS LEGAL ADVICE. IF LEGAL ADVICE IS REQUIRED, THE NON-PROFIT OR OTHER PARTY IN QUESTION SHOULD SEEK THE ADVICE OF QUALIFIED LEGAL COUNSEL.
