Authors: Reynold Levy
When answering the question most friends and colleagues asked me—What next?—I surprised them. Certain of what I did not want—another demanding, full-time spot running an organization, or a life quite as much in the public eye—my thoughts about the future had me traveling back to where I had begun: to solitude, reflection, ideas, and a return to teaching at Columbia University, my alma mater. Taking on occasional consulting assignments for foundation and nonprofit clients. Continuing to serve on the Board of Directors of First Republic Bank and as chairman of the board of the Charles H. Revson Foundation. Becoming a special advisor to the private equity firm General Atlantic. Enjoying my three-year term of service as a recently appointed member of the nominating committee of the Tony Awards.
But before I could embrace my new life, I needed to reduce to its essentials the leadership lessons of my professional journey. What were the keys to any success that I may have enjoyed, the “how-tos” and the “takeaways” from which others might benefit? How to get things done inside complicated organizations is a constant puzzle and a perennial challenge. Whether you work in government, business, or a nonprofit institution, I hope you will find as you read this book’s next, final chapter that Larkin is correct. Perhaps my eyes have cleared and come into focus with age and experience.
Building and sustaining vibrant institutions is a continuous process, something of a relay race. I carried my baton proudly and ran as fast and as far as I could. I know that I left the place much stronger than I found it.
My unwillingness to serve as a trustee of Lincoln Center after retiring as president is symbolic of my strong belief that institutions are far more important than those who serve in them. From this conviction it follows that my successor, Jed Bernstein, should not in any way feel crowded by the presence of a predecessor. My deliberate choice is also an expression of faith in the community of volunteers and employees who propel Lincoln Center forward.
I am confident that one could search in vain for a more talented staff and a more gifted, generous board of directors. With its sights raised, its aspirations amply realized, and its momentum very strong, Lincoln
Center’s prospects look promising. And with Katherine Farley at the helm as board chair, I am sure that Lincoln Center will not shy away from carrying out a broad definition of its mission as a performing arts presenter and educator, as a campus leader and a prominent civic actor.
New York City deserves as much, as do the artists and audiences Lincoln Center serves.
The world looks to Lincoln Center as a seminal source of creativity and artistic inspiration. That leadership role will assume many new forms in the twenty-first century. It should never be relinquished.
At Lincoln Center and thousands of other nonprofit institutions across America, the challenge of properly discharging trustee and executive accountability looms large. At stake is the proper governance and the quality of performance of the third sector.
It is not an accident that America’s nonprofits are sometimes referred to as the “voluntary sector.” In virtually all cases, trustees serve entirely without financial compensation. The role they are asked to play is nothing less than to hold the institution they help govern in trust for service to others. That means fully exercising their prerogatives in monitoring CEO performance, adhering to the organization’s mission, keeping the nonprofit financially sound, and controlling risks to the enterprise: economic, programmatic, and reputational.
When trustees and those who report to them perform poorly, troubles abound.
The New York City Opera vanishes.
Yeshiva University so mishandles its investment portfolio as to bring this 128-year-old academic institution, including the Einstein School of Medicine and the Cardozo School of Law, to the brink of bankruptcy.
The University of Virginia fires its president, Margaret Sullivan, arbitrarily and capriciously, and then quickly reverses course in the face of unprecedented, highly visible student, faculty, and alumni protests.
Such failures of governance are more prevalent than is commonly appreciated.
The Los Angeles Museum of Contemporary Art slides into desperate financial straits. Its board acquiesces in the appointment of New York City gallery owner Jeffrey Deitch as CEO. That news, and his decision to fire a highly regarded senior curator, results in the resignation of four trustees, the only visual artists on the board. Staff tumult
and negative publicity ensue. Deitch resigns less than thirty months after his appointment, leaving the museum in disarray.
The American Academy of Arts and Sciences Board of Directors publicly acknowledges that its CEO of seventeen years, Leslie Cohen Berlowitz, had misrepresented her academic record and was overpaid. The trustees did not discharge their duty to set and monitor compensation by ensuring fairness and a measure of comparability. They failed to perform as a responsible fiduciary.
The Corcoran Gallery of Art in Washington, D.C., agrees to a controversial takeover by George Washington University in a deal signed on May 15, 2014. Many charge that the museum has relinquished its mission in the transaction due to trustee unwillingness to preserve its independence by raising adequate funds.
The premature and failed attempt in 1988 to merge Mount Sinai Hospital and Medical Center with its counterparts at New York University inflicted significant financial and reputational damage. In the case of Mount Sinai, this mistaken course of action took more than a few years to repair.
From such illustrations there are many lessons to learn. Mercifully, there are also some safeguards, checks and balances to prevent such conduct or to expose and remedy it. Audiences, students, patients, and donors can vote with their dollars and their feet when universities, museums, or hospitals lose their way. Attendance falls, applications for admissions drop, and donations plummet. Journalists report on the travails of what are, after all, public institutions. Accreditation commissions and peer review procedures are healthy forms of institutional discipline and reform. Those with standing can resort to the judicial system for relief.
Contrast these forces at work monitoring nonprofits with their absence in the domain of private foundations. Of all the parts of the third sector, foundations stand apart for the pervasive weakness of their accountability. They have no real customers. Few if any grantees or aspirants to that status would dare to criticize foundation officials. Dwight MacDonald once observed in describing one philanthropic fund: “The Ford Foundation . . . is a large body of money completely surrounded by people who want some.”
Want some? Then never run the risk of biting the philanthropic hand that can support you. On any given day, there is very little media
coverage of foundation activity save in the trade press. Self-regulation by the Council of Foundations is weak and ineffectual. Public regulation by state attorneys general or the Internal Revenue Service is episodic at best.
Yet these entities constitute 15 percent of the $335 billion estimated by Giving USA to have been donated to charities in 2013, or $43.25 billion. And every penny of these benefactions is subsidized by the taxpaying public with generous incentives that have no equal in any other country in the world.
What prevents these relatively insulated private foundations from engaging in illegal, unethical, or unprofessional conduct? Who ultimately is accountable for the efficiency, effectiveness, and comportment of grant making? The trustee. In the definitive work on this field, Joel Fleishman identifies arrogance, discourtesy, inaccessibility, arbitrariness, the failure to communicate, and constant change in priorities as the besetting sins of a private foundation.
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These important entities in American life need reform and oversight.
My experience as chair of the Nathan Cummings Foundation and the Charles H. Revson Foundation suggests that their success relied heavily on the discipline and judgment of my fellow trustees. Such was the case as well when I served as the architect and CEO of what was then one of America’s largest asset-based corporate foundations, AT&T. Although AT&T answered to constituencies rarely encountered by private foundations—shareholders, customers, communities, tax authorities, journalists—the policies, operations, and procedures of corporate philanthropy remained largely the province of senior employees playing the roles of trustees and fiduciaries.
By asking the right questions; setting the appropriate measures; and insisting on responsiveness, openness, modesty, and professionalism, trustees can exercise a positive influence on both nonprofit performance and foundation conduct. Little else can.
And when trustees and those who report to them perform superbly, institutions take flight. Those who work inside them soar as proud professionals. Those who receive their services are changed for the better.
In my lifetime, institutions like New York University, Duke, Johns Hopkins, Stanford, the University of Michigan, the University of Texas, and the City University of New York have catapulted to levels
of accomplishment that once seemed highly improbable. Small liberal arts colleges like Amherst, Haverford, Pomona, Reed, Middlebury, and Vassar have distinguished themselves. And what about the Mayo and Cleveland Clinics? New York Presbyterian and Emory University Hospitals? The Los Angeles County Museum of Art and the Metropolitan? The Steppenwolf Theater Company and Lincoln Center Theater?
My list is partial and arbitrary. Yours will be as good or better, no doubt. Why? Because attracted to so many nonprofit institutions of higher education, health care, and the arts and to so many other fields of endeavor are professionals of uncommon talent. They are committed to their work. They aspire to excellence. When supported by trustees who take their measure, mind their missions, and invest in their future, hundreds, if not thousands, of these nonprofits flourish.
At their best, trustees and senior management struggle to strengthen the nonprofit institutions they are privileged to lead. America’s third sector is distinctive. It is large, sprawling, and influential, and its very pluralism strengthens the commonweal. Mediating between the powerful state and individual citizens, nonprofit organizations protect us from tyranny and help to support participatory democracy. And the high-quality services delivered by many draw patients, students, and tourists to our shores from around the world.
My journey through some of this territory may be useful to others. If the lessons I have learned prove worthy of emulation, I will be pleased. If those who occupy privileged positions as executives and trustees hold themselves more accountable to those they serve, I will be delighted. And if nonprofits take the lead in restoring the trust of Americans in institutions and their leadership, that is all to the good.
Consider the hospital president. What share of America’s approximately one hundred thousand deaths estimated by The Institute of Medicine to occur annually due to medical error happen on his watch?
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What about the spread of avoidable infections among inpatients? Hospital employees who don’t regularly wash their hands? The mistaken prescriptions or not administering them in proper doses? The breakdown of triage systems that occurs in overly crowded emergency rooms with unconscionable waiting times? The sleep-deprived residents and overworked, harried nurses whose impaired judgment adversely affects patient care?
Surely if senior executives and hospital trustees owe an obligation to the public, it is first and foremost to remedy these and other sources of medical harm. Carefully monitoring patient lengths of stay. Avoiding unnecessary readmissions. Assuring that the medically indigent are served with the same care and dignity as third-party reimbursable or self-pay patients.
Is measurable progress occurring in each and every one of these problem areas?
Consider the issues facing the private college or university president. How to keep the costs of room, board, and tuition affordable enough to lower the barriers to entry for youngsters from poor and working-class families. How to relieve a collective student debt of well over a trillion dollars, more than Americans collectively owe on their credit cards. How to resist pressures from parents, students, government, and prospective employers to transform colleges and universities from educational to vocational institutions. How to keep schools safe places for young men and women, where sexual harassment is shunned, emotional distress is detected and addressed, and attention and learning disorders receive ample attention. How to effectively use twenty-first-century technology without undermining the value of human interaction, professor to student, in the classroom.
Are these challenges being addressed frontally, and are trustees holding management accountable for demonstrable progress?
Consider the performing arts administrator. As the costs of labor gallop ahead of inflation and as ticket prices begin to approach premium levels, what can be done to protect access to the performing arts for the poor and the working class? How can the proper place of the arts in elementary and secondary schools be secured? Can performing arts centers resist succumbing to the coarseness of popular culture? Can they present the classics and promising new work of high quality rather than shallow entertainment? Can they identify and adopt new economic models to sustain themselves?
These threats and opportunities are not for the faint of heart or the unambitious. They are as complex and taxing as those any politician or corporate executive might confront. What’s needed are accomplished, skilled, and resourceful people to lead nonprofit institutions and occupy
seats in their boardrooms. People who yearn to serve beyond self, who wish to convert private resources to the public good.