Nonprofit News and Comment

GOVERNANCE

“Blue Cross to reinstate board fees, though at reduced level.” By Robert Weisman. Boston Globe. March 1, 2013. Andrew Dreyfus, president and chief executive officer for Blue Cross Blue Shield of Massachusetts at the annual Boston College’s Chief Executives’ Club of Boston annual luncheon at the Boston Harbor Hotel’s Wharf Room in June 2012. Two years after bowing to its critics and suspending five-figure annual pay for directors, Blue Cross Blue Shield of Massachusetts is reinstating the compensation — though at reduced levels and to fewer board members. The state’s largest health insurance carrier will pay part-time board members who chair committees a maximum of $54,500. That is down from the $78,60 before the public outcry over how much directors were paid at nonprofit insurers regulated as public charities. Blue Cross will pay other directors no more than $47,000, down from $58,600 in 2011. Despite the reductions, Blue Cross board members will remain among the best compensated directors at any nonprofit health plan in the state. Blue Cross board members attend up to five full board meetings a year, a strategic planning session, and about eight committee meetings, executives said. Boston-based Blue Cross — criticized in the past for having a well-connected board with minimal qualifications — has also named five new directors to replace six that recently left. That puts the head count at 17, but the goal is to whittle it to 14, while improving the board’s level of health care expertise, said chief executive Andrew Dreyfus.

“At U-Va., tensions persist between Sullivan and Dragas.” By Jenna Johnson. Washington Post. March 1, 2013. The University of Virginia’s president and governing board leader have, in public, maintained an air of united collegiality for the past eight months, hoping to move beyond the summer’s leadership crisis. Out of sight, tension has continued to build between U-Va. President Teresa Sullivan and U-Va. Board of Visitors Rector Helen Dragas as they struggle for control over the university’s agenda and priorities, according to several people close to the situation. In recent weeks, the conflict hit a boiling point. Days after Virginia lawmakers confirmed Dragas’s reappointment to the board in January, the rector sent the president a lengthy and detailed list of goals to meet this school year. Sullivan, apparently incensed, responded by sending the entire board an e-mail arguing that the 65 goals constitute, among other things, “micromanagement.” “The sheer number of goals is close to impossible to achieve, especially with only five months left in the academic year,” Sullivan wrote in a Feb. 6 e-mail obtained by The Washington Post. “I am not averse to stretch goals, but I also do not care to be set up to fail.” The university is still recovering from the events of the summer, when Dragas and another board leader asked Sullivan to resign in early June without publicly providing reasons. Faculty revolted, formally demanding Sullivan’s return and the resignation of responsible board members. They were soon joined by thousands of alumni, students, donors and others. After 18 days of upheaval, the board reinstated Sullivan. The crisis brought national attention to the school, which Thomas Jefferson founded, along with challenges facing public universities across the country. It also gave the leaders reasons to dislike and distrust each other.

GOVERNANCE

“Catalina Island Conservancy loses 3 more board members; They cite differences with the nonprofit’s executive director and issues with her employment contract. Ann Muscat is pushing for development of new tourist attractions on Catalina.” By Louis Sahagun. Los Angeles Times. December 24, 2012. The conservancy that manages nine-tenths of Catalina Island began caving in on itself last week as a scientist and three members of the board of directors, one of them a major donor, walked away over differences with the organization’s top executive. Their departures bring to 10 the number of scientists and officials who have quit in recent months citing what they say is Executive Director Ann Muscat’s controversial leadership style and differences over the direction she is taking the 40-year-old Catalina Island Conservancy. “The organization is imploding,” Roy Rose, a Catalina resident and businessman who resigned from the board last week, said Friday while standing on the veranda of his home overlooking Avalon’s cozy harbor. Rose, 77, said he had written the nonprofit out of his will, depriving it of more than $10 million. “I felt betrayed and misled,” Rose said. Muscat remains on the job by virtue of what sources said was an 8-7 vote by the board in a closed session Dec. 14. Some board members wanted to fire her immediately, but a majority preferred to keep her until a replacement is found, the sources said. On Dec. 17, however, the conservancy announced that Muscat had retained the full support of the board. The statement contributed to some of the recent resignations. Muscat, a marine biologist hired a decade ago, is pushing development of new tourist attractions to bring badly needed revenue to the conservancy and the island’s tourism-oriented businesses. The conservancy manages most of the island’s wild lands, operating on $12 million a year from donations and earned revenue. Some of those who left the conservancy disagreed with the emphasis on tourism over conservation. A more recent concern of some board members was the discovery that Muscat’s employment contract had been renegotiated earlier this year without their approval.

GOVERNANCE

“U-Va., e-mails show faltering efforts at crisis control after Sullivan ouster.” By Donna St. George and Jenna Johnson. Washington Post. October 6, 2012. days before the leader of University of Virginia’s governing board stunned Charlottesville with a surprise move to oust the school’s president, she was finessing a news release. It was June 2, the quiet hours of a Saturday morning, and U-Va. President Teresa A. Sullivan had no idea her presidency was in peril. Several board members had only just been informed. Dragas was negotiating with a public relations firm. Now she e-mailed Mark Kington, second-in-command on the board, a draft release that quoted Thomas Jefferson, the school’s founder, and spoke ambiguously about finding a leader to “define and guide the strategic direction of the University while securing the support and resources that will be essential for UVA’s future.” Thus began behind-the-scenes efforts to put the best public face on a leadership clash that has become a case study in crisis management. Over 18 days of turmoil, Dragas sought help from three public relations firms, one after another, according to e-mails The Washington Post recently obtained through a public records request. Pieced together with previously released correspondence, the e-mails show Dragas clearly understood the importance of public presentation. But she mistakenly believed the fallout would last a day or two. Most critically, she could never convince people of the need to remove a popular president. Her words were vague. The process was secretive. Passions were high.

GOVERNANCE

“Anatomy of a Campus Coup.” By Andrew Rice. New York Times. September 11, 2012. On a languorous Sunday in June, low season on the campus of the University of Virginia, Prof. Larry Sabato opened a perplexing e-mail. “My instant reaction,” he said, “was that I thought we’d been hacked.” The message, sent to the entire university, announced the resignation of the university’s president, Teresa Sullivan, obliquely citing a “philosophical difference of opinion” with the institution’s governing board. Sullivan had held the job for just two years, without any scandal, and Sabato couldn’t believe she had been pushed aside with so little evident justification. “I said that if this was true,” he recalled, “this was going to be a P.R. disaster of national proportions.” Sabato is accustomed to offering predictions — a prodigiously quotable political scientist, he maintains a Web site called Sabato’s Crystal Ball. And his opinions carry serious weight around UVA, an institution he has been immersed in since his undergraduate days in the 1970s, when he served as president of the Student Council. Sabato called around and discovered that the school’s deans had learned of the resignation just that morning at a meeting in which Helen Dragas, the real estate developer who led UVA’s board, warned that the university faced an “existential threat.” The professional educators who ran UVA were well aware that public universities everywhere were enduring a crisis. State governments have been slashing funding, driving per-student spending to historic lows, forcing schools to raise tuition, while controlling costs through salary freezes and other austerity measures. Founded and designed by Thomas Jefferson and renowned as one of the country’s finest state institutions, the University of Virginia is better off than most of its counterparts: it fears mediocrity, not insolvency. But along with other elite public universities, it is struggling to figure out how to continue providing a premium education with less government support. If anyone appeared equipped to manage the situation, it was Sullivan: she had come to Virginia after excelling in administrative positions at the University of Texas and the University of Michigan. “Everybody had the same reaction,” Sabato told me. “First, shock, and then a sneaking suspicion that there had to be something else.” That afternoon, in the 90-degree heat, Sabato looked on as Dragas gave an outdoor news conference. She promised to replace Sullivan with “a bold, strategic, visionary leader” but refused to answer when asked for the reasons behind Sullivan’s departure. Conspiracy theories abounded: that Sullivan was deposed by a Republican governor, or good ol’ boy alumni, or a cabal of Wall Street donors. Vandals spray-painted the six columns of the school’s neoclassical Rotunda with the letters “G-R-E-E-E-D.” The national news media seized onto the story, which seemed to dramatize a broader conflict between big money and public education. The conservative editorial page of The Wall Street Journal accused the protesting faculty of trying to create “an academic Green Zone separated from economic reality,” while liberal publications held up Sullivan as a symbol of a beleaguered egalitarian ideal.

GOVERNANCE

“The U-Va. board to meet for first time since crisis.” By Donna St. George. Washington Post. August 12, 2012. As the governing board at University of Virginia meets this week for the first time since the campus was plunged into crisis, some faculty and alumni are calling for a thorough examination of the events that led to the failed ouster of President Teresa Sullivan. Others want to just move on. The U-Va. drama is the story of a power play gone awry, with missteps and miscalculations on all sides. The divide has become a backdrop to an annual retreat of the U-Va. Board of Visitors, scheduled for Wednesday and Thursday at a Richmond hotel. It will be led by Rector Helen E. Dragas, with the help of an outside facilitator. Sullivan also is slated to speak. The event will bring together officials who last met June 26 in the Rotunda of Virginia’s historic flagship university for an epic end to 18 days of turmoil and protest over secretive efforts by board leaders to remove Sullivan from office. At that meeting — live-streamed and followed nationally by U-Va. supporters — the board took the highly unusual step of rehiring the president who its leaders, including Dragas, had forced out. Seven weeks later, the board is making its first public effort to recover. Four new members will be at the table. Dragas wants to forge ahead. Sullivan has spoken of reconciliation, and some of her allies expect her to take a larger role with the 17-member board in the future. But it is also clear that the June crisis has not been put to rest.

“Stars Shine Brighter When They’re on the Board.” By Pia Catton. Wall Street Journal. August 14, 2012. When the Museum of Contemporary Art in Los Angeles saw four members of its board resign in July, the news was especially damaging: These weren’t standard board members—they were artists, too. In New York, many of the boards at the city’s major performing-arts institutions—particularly in classical music and theater—include artists. Museums, however, rarely invite artists to join their boards because the artists could benefit unfairly from the inclusion of their work in a collection—or the exclusion of others. (MoCA was an unusual case: Artists were integrated into the board from its founding days.) In some ways, artists provide what their highly connected, high-net-worth colleagues cannot: artistic credibility and, sometimes, bankable star power. But to avoid “artist differences,” they must also be simpatico with the organization’s mission, its current leadership and the roles they’re asked to play.

“U-Va. board to meet for first time since crisis.” By Donna St. George. Washington Post. August 12, 2012. As the governing board at University of Virginia meets this week for the first time since the campus was plunged into crisis, some faculty and alumni are calling for a thorough examination of the events that led to the failed ouster of President Teresa Sullivan. Others want to just move on. The U-Va. drama is the story of a power play gone awry, with missteps and miscalculations on all sides. The divide has become a backdrop to an annual retreat of the U-Va. Board of Visitors, scheduled for Wednesday and Thursday at a Richmond hotel. It will be led by Rector Helen E. Dragas, with the help of an outside facilitator. Sullivan also is slated to speak. The event will bring together officials who last met June 26 in the Rotunda of Virginia’s historic flagship university for an epic end to 18 days of turmoil and protest over secretive efforts by board leaders to remove Sullivan from office. At that meeting — live-streamed and followed nationally by U-Va. supporters — the board took the highly unusual step of rehiring the president who its leaders, including Dragas, had forced out. Seven weeks later, the board is making its first public effort to recover. Four new members will be at the table. Dragas wants to forge ahead. Sullivan has spoken of reconciliation, and some of her allies expect her to take a larger role with the 17-member board in the future. But it is also clear that the June crisis has not been put to rest.

GOVERNANCE

“Senior U-Va. official resigns abruptly following leadership crisis.” By Jenna Johnson and Donna St. George. Washington Post. August 7, 2012. The departure of Michael Strine, U-Va.’s chief operating officer, came amid continuing questions about what role he played in the attempt to oust President Teresa Sullivan in June. Strine has been accused of being disloyal to Sullivan, who hired him a year ago, and too closely aligned with Rector Helen E. Dragas and other governing board members who sought the president’s removal. Soon after Sullivan was forced to resign in early June, Strine said he was not involved. But support for him at the flagship public university appeared to dwindle following Sullivan’s June 26 reinstatement. The president has expressed distrust of Strine, said a senior university official. Another person with knowledge of the situation said the resignation was forced. Strine’s resignation provides a glimpse at tensions that lingered on the Charlottesville campus even as top officials pushed a message of reconciliation and unity. Sullivan wrote in a statement Tuesday that Strine “recently determined that it would be in the best interest of the university that he step down and allow me to do some necessary internal restructuring.”
Strine was not in his office Tuesday afternoon, an assistant said, and could not be reached elsewhere for comment. In a statement released by the university, Strine said: “Though it is hard to step aside, I am confident that this step helps the university and those it serves.” Strine will receive a severance package of $847,308. That includes 18 months of pay, plus six months of pay for his wife, Sharon Strine, who worked in marketing and has also resigned, according to an agreement signed Monday. Strine’s annual salary was $450,000, a university spokeswoman said. Strine’s departure was widely anticipated in the wake of the June crisis. But many guessed he would leave only when he could publicly announce acquiring another job. Tuesday’s announcement came when the campus was relatively empty, with summer school over and the start of fall classes still weeks away.

GOVERNANCE

“University of Virginia president to step down.” By Daniel de Vise, Jenna Johnson and Anita Kumar. Washington Post. June 10, 2012. The University of Virginia’s first female president, Teresa Sullivan, will step down this summer after just two years on the job because of an apparently abrupt rift between her and the school’s governing board over the direction of one of the nation’s premier public universities. The announcement Sunday shocked the university community and signaled potential hard times ahead for the flagship university, an institution founded by Thomas Jefferson and unaccustomed to instability. The previous president, John T. Casteen, stayed for 20 years. When she exits on Aug. 15, Sullivan will have served two years and two weeks, the shortest presidential tenure in the school’s history. Sullivan attributed her departure to “a philosophical difference of opinion” between herself and U-Va.’s governing board of visitors. It was unclear when the rift began, but its existence surprised the Charlottesville community. The disagreement may be rooted in money. Helen Dragas, who chairs the board, portrayed an institution facing “an existential threat” from the combined effects of an economic downturn, state disinvestment and looming faculty departures. She faulted Sullivan’s administration for a culture of “incremental, marginal change” and said the institution needs a leader more adaptable to “the realities of the external environment.” The U-Va. board “feels strongly and overwhelmingly that we need bold and proactive leadership on tackling the difficult issues that we face,” Dragas said, including “hard decisions” on spending. The board presumably concluded Sullivan was not that leader. Sullivan is widely popular among university faculty and students. Some pressed Sunday for more details than the governing board was willing to provide.
Related stories:
“U-Va. board ouster of President Teresa Sullivan sparks anger.” Washington Post. June 11, 2012.
“U-Va. president’s ouster puts spotlight on governing board.” Washington Post. June 12, 2012.
“Board to Meet With Faculty Over Ouster of President.” New York Times. June 13, 2012.
“Three members of U-Va. board were kept in dark about effort to oust Sullivan.” Washington Post. June 14, 2012.
“U-Va. board leader wanted Teresa Sullivan to make cuts.” Washington Post. June 16, 2012.
“Leadership drama consumes U-Va.; board names Zeithaml interim president.” Washington Post. June 19, 2012.

GOVERNANCE

“Anne Mulcahy on women in the boardroom.” By Jena McGregor. Washington Post. October 6, 2011. At this week’s Fortune Most Powerful Women Summit in Laguna Niguel, Calif., former Xerox CEO and Chairman Anne Mulcahy sounded a warning to her fellow powerful women. After decades of taking pride in being trailblazers and pioneers as the first female board members at companies, women should now find taking such jobs as the first woman unwise, Mulcahy cautioned. “It’s a bad sign,” she told the audience, according to reporter Colleen Leahey. “Boards without women – blacklist those suckers. It’s 2011. They’ve had the time – it’s significant that they don’t have women.” I’ll resist invoking the Virginia Slims slogan for everyone’s sake. But it is dramatic how far we’ve come—from a time when being the first female director of a board was a common experience to a day when one of the most respected women in business suggests that female leaders have enough choices to say no; that in 2011, boards without female members are so behind the times that they should come with warning signs. All of which raises an interesting question. If given the opportunity to join an all-male board, should women really “blacklist those suckers,” as Mulcahy reportedly said? Are the challenges they’d face in being a member of that board so great as to outweigh the potential good they could do by joining? Or can women have more impact by joining a board where there is already some semblance of diversity?

GOVERNANCE

“Men dominate Bay State boards; Few women are directors at major corporations in Mass., nation.” By Beth Healy and Christina Reinwald. Boston Globe. September 27, 2011. A dozen Massachusetts companies that are among the Fortune 1000 have just one woman on their corporate boards – or none at all, according to a report to be released today by a Boston group that tracks board diversity. Massachusetts corporations are slightly ahead of the national average when it comes to hiring women to serve as directors, reports 2020 Women on Boards. That amounts to one or two women on a board of 10, or 16.7 percent – compared with 14.6 percent nationally. The local group is looking to bring attention to the issue and wants to push that to 20 percent by the end of the decade. “The bigger the company, the better they seem to do at diversity,’’ said Malli Gero, executive director of 2020 Women on Boards. “This moves at a snail’s pace. We think what’s missing is the public’s voice.’’ While other organizations also track diversity on boards, this group is looking to create a national grass-roots effort to put pressure on companies, through social networks. The group is also trying to gain traction among activist investors who can have an influence on large companies.

GOVERNANCE

“Cultural boards: Hedge funders, sports stars wanted; Cultural leaders share strategies on building better boards at a Crain’s panel discussion.” By Miriam Kreinin Souccar. Crain’s New York Business. March 16, 2011. The existing pool of deep-pocketed hedge-funders and financiers is no longer enough for New York cultural organizations trying to grow their boards. New York City Opera, which is looking to nearly double its board from 35 to around 60 members, is trying to tap into the entertainment industry, the real estate sector and even professional sports. “We already have many trustees in finance, and lawyers and singers,” George Steel, general manager and artistic director of the Opera, said Wednesday morning at a Crain’s arts and culture breakfast titled Board Games: How to Build and Keep a Strong Board. “Sports have a lot to teach professional arts organizations about marketing and merchandising.” Executives from these industries can also draw attention to an institution and help to raise its profile, Mr. Steel said, citing Saturday Night Live creator Lorne Michaels’ involvement with the American Museum of Natural History. “He has definitely produced a level of groovyness for that board,” Mr. Steel joked. Snagging wealthy and high-profile board members isn’t easy for many arts groups, especially smaller ones.