Wednesday, November 6, 2013

The Minnesota Orchestral Association Governance, Part 3

Orchestra Hall's Stage during the Lockout
Recently, I have not been the only person in the Twin Cities and Minnesota bothered by the lack of accountability of the MOA's Board of Directors.  I even received an e-mail from a reader who asked me how to wrestle control away from the Board.  These people disagree with the way in which the Board is managing the Association's business.  They disagree to the strongest degree with the lockout and the manner in which the MOA has responded in the labor dispute.  My sense, from reading blogs and comments to them, is that the community at large -- and it is a large, international one -- feels the MOA has ignored them, is not working in the best interests of the community, and doesn't understand anything about managing a non-profit arts organization. I think originally the musicians wanted to know what they'd done wrong or what they had not achieved to justify such a deep cut in their salaries and gutting the master agreement so completely.  That's changed, now.

Osmo Vanska has resigned.  The musicians are producing their own concerts and continuing with their community and educational outreach activities.  Indeed, one might point out that the musicians have actually accomplished a great deal in the last year given the circumstances.  They have been building a base of supporters.  They've given us more music.  What has the MOA given us?

MN Representative Phyllis Kahn's Proposed Legislation

Local, state and federal government officials have weighed in at different times about the MOA's lockout of the musicians, urging both sides to find a way to sit down, talk, and get the job done.  The MOA seems to turn a deaf ear to such pleadings.  They did, however, agree to work with a mediator that Governor Dayton had facilitated.  That looked like good news and possible progress until the MOA bypassed the mediator and mediation process in order to make their proposals to the musicians public, and then "sell" them in the media.  As the MOA management prepared to negotiate in good faith?  Can we believe anything they say now?  Much ink has been used to write about the Publisher and CEO of the Minneapolis Star Tribune, Michael Klingensmith, serving on the MOA Board and possibly giving the MOA unfair advantage with price breaks on full page ad rates.  And where is Graydon Royce?  I'm surprised that he hasn't done more investigative reporting on this situation.

Then, along came Phyllis.

MN State Rep. Phyllis Kahn doesn't just bitch and moan, she takes action.  I respect and admire her for that.  She has introduced legislation for the State Legislators to consider once they're back in session in February.  I read with intense interest the description of this legislation in the press release her office sent out and posted on her website.  She wants to establish broad-based community ownership of the Minnesota Orchestra, a la the "Green Bay Packers model."  The purpose is to retain the Orchestra, what she calls "...this cultural and economic asset..." for the state.  So what does her legislation do?  It does the following:
-- directs the governor to facilitate the formation of a corporation or other form of business organization,
-- this corporation would acquire the Minnesota Orchestral Association and the Orchestra
-- this corporation would identify a private governing structure (as opposed to one from the government)
-- the corporation would offer common stock to anyone who wanted to buy it
-- No individual or company (or pension fund or other investment entity) could own more than 5% of the common stock
-- this corporation would sell at least 50% of the stock to members of the general public but no one person or entity could own more than 1% of this block
-- this corporation may offer a class of preferred stock.  The corporation's governance documents must specify the rights that accrue to each class of stock, common or preferred.
-- this corporation's governance documents must insure that artistic decisions will be made by the people employed to make those kinds of decisions, not the Board of Directors

The press release goes on to list other orchestras in the world that have this kind of community ownership.  It looks to me like Rep. Kahn would like to see the state wrest control of the Minnesota Orchestra away from its Board of Directors.  To me, that means she's frustrated also with the Board's lack of accountability as well as its unresponsiveness to the community at large.  Businesses in downtown Minneapolis have been adversely affected by the musician lockout, as well as other music organizations, and especially students at local schools and colleges, concertgoers, people all over the world who listen to the MN Orchestra concerts via MPR whether on the radio or streaming online, Carnegie Hall, among others.  Rep. Kahn wants to insure, as she says in the press release, that the uncertainty of the past year does not happen again.

My Response and Recommendation

First of all, creating a corporation, a holding company, to direct the governance of the MOA will not insure that what's happened during the last 13 months won't happen again.  It will depend on the people involved and only increase the odds that it won't.  Second, the original founders wanted to keep the governing structure as a non-profit, and specified that no capital stock would be offered by the MOA.  Buying stock is an investment that usually means a monetary return on that investment.  This pushes the MOA closer to a for-profit operation with concerns about insuring that its investors enjoy a good return.

I propose that the state respect the wishes of the original founders who sincerely and genuinely wanted an association of people coming together to support and enjoy "the best music," as they stated in the first article of the original articles of incorporation.  They did not want a for-profit corporation.  They created an Association with a membership open to the general public -- anyone could join.  I think we need to return to that governing structure.  Rather than offering stock, the corporation offers membership, creating a group of people intensely concerned about the orchestra and its future, as well as the smooth and fiscally responsible management of the Association.  Each person who's a member has the right of one vote, either in person or by proxy.  In this age of technological communication, I propose membership be offered not only to Minnesotans but to anyone, anywhere in the world.

Membership could be a different levels of "dues" and participation, with certain benefits of membership, i.e. free concerts, possibly discounts on subscriptions, and so on.  This would not interfere with any donations made by non-members but increase the amount received yearly.  The membership would function like shareholders in a corporation as far as governance, i.e. electing the Board of Directors from the membership and being the people the Board is accountable to.  

Furthermore, I propose that the class structure of the Board be eliminated.  All Directors will be Regular Directors, except for those invited to be Honorary Directors, and have voting rights.  I think dividing the Board into thirds for staggering 3-year terms of service is a good idea, too.  The officers will be elected out of the Board, except for the President whose responsibilities for the day-to-day operation of the Association demands that he or she be an arts administrator with experience in non-profit management and orchestras.

Since the membership would be open to anyone, musicians could be members, vote for the Board of Directors, maybe even serve on the Board.  I really like Rep. Kahn's stipulation that artistic concerns remain with those who have been hired to deal with them, and not the Board.  The current President and Board have done their best to put the fiscal survival of the MOA ahead of its artistic survival.  You cannot ignore the artistic survival and focus only on the money.   They have followed for-profit methods of operation to address the financial crisis, also, which have not worked.  The MOA needs non-profit arts administrators in leadership positions, not bankers, attorneys, and accountants.

Non-members could still buy tickets, attend concerts, and make donations to the MOA -- anyone can.  Non-members could also advise the Board in specific matters, as the Board sees fit.  But the Board will be accountable to the membership again.  I would really like to see non-local musicians on the Board.  For example, the New York Philharmonic has Joshua Bell on their Board.  With classical music going through a difficult period of increasing audience among younger generations and showing its relevance to life in an age of technology and 24/7 connectivity, it would benefit the organization to encourage younger professionals to be members, also.

My last proposal?  Please invite Osmo Vanska back as Music Director....


David Fortner said...

You can't have people on your board who are "on both sides of the table", in other words, both employer and employee. In contractual negotiations, they would be negotiating both with and for themselves. Further, in most large non-profits, the primary functions of the board are financial contribution, development of new, major donors, and the overall long-range management of the organization. Day to day work is hired out. I see more problems with these proposed models than benefits and can't see how They would work. I agree with the voting rights aspects, but both permutations just have too many moving parts to be successful.

Anonymous said...

I thought all your articles were very interesting. I like your ideas about State Rep. Kahn"s proposal. I too think the organization should stay non-profit in every way. Unfortunately the Legislature does not meet until February. If anything is proposed in the Legislature, I will be very interested if it gets anywhere. I think Board members are not the only people who are reluctant to make waves in this situation. I doubt that the three men leading this board would allow themselves to be replaced either. One wonders what the Board members are expecting to receive for their actions this past year. I think you should send a copy of your Part 3 post to Ms. Kahn by mail. I think she would be very interested in what you have to say and might incorporate some of your ideas.You could also tell her the information you have put in your first 2 posts and how to find it. I'm not sure that Legislators read blogs. Thank you for your efforts.

Gina said...

Mr. Fortner is correct -- you can't have a person be both employer and employee, which is close to what would occur if a MN Orchestra musician sat on the Board. However, they DO need to hear from their employees and having them in the membership pool would make certain that they would be taken seriously. Right now, this Board definitely does not take them seriously. For all appearances, the Board is operating according to some plan unknown to anyone but them, and this plan does not allow, apparently, for anything to happen that does not appear in the plan, i.e. the musicians making proposals of their own, which they have done.

The President is responsible for the day-to-day operation of the MOA, and while he is the only Director paid a salary, he is still a Director. Under his is the administrative staff who carry out the work of day-to-day operations.

The Membership model worked from 1907 until the mid-1970's -- and even then there's no indication that it wasn't working. The Board just changed the requirements of the membership.

Gina said...

Thank you, Anonymous, for your suggestion to send Rep. Kahn the blog posts. I have sent them via e-mail to her, Governor Dayton, and Arne Carlson, as well as SOSMN, Orchestrate Excellence, and the Musicians of the Minnesota Orchestra.

Curt Carlson said...

If the statement that "you can't have a person be both employer and employee" is true, somebody had better let the musicians of the Berlin Philharmonic and the London Symphony know. They've been operating under contrary understanding since 1882 and 1904, respectively.

Gina said...

Thanks, Curt. I was thinking more about this, and it seems to me that there are other examples of self-governing orchestras.

Back to Mr. Fortner -- I would like to say that it's really easy to criticize but much, much harder to come up with alternatives. How about it, David Fortner? I challenge you to come up with a better alternate, or at the least, a viable one....(smile)

Plum in Minn. said...

Thanks for sending the excellent MN Orchestra blogs to Phyllis Kahn and others. I think you have stated so much that was unclear to me earlier. Well done!

Anonymous said...

The board's lack of accountability is a fundamental problem, which seems almost impossible to overcome without just starting over. I'm curious about the recent amendments to the bylaws. Is there any way to get a copy of the pre-2009 bylaws?
Thanks again!

Gina said...

Anonymous, the person to ask about that is Gwen Pappas, PR Director at the MOA. If pre-2009 bylaws are available, she will be able to provide them. When I requested the current bylaws, she indicated that she needed to find out from management if she could release them. So there is a question of whether or not they are public documents. SOSMN made the current bylaws public, which is where I got my copy. You could also ask them if they've seen pre-2009 bylaws in their digging. Don't be surprised if changes are not that momentous, although I think there'd be a change about life and emeritus directors and their right to vote.....