How Much Could New York State Have Done to Prevent City Opera's Financial Disaster?
James B. Stewart focused on endowment mismanagement in his Friday New York Times article on the New York City Opera's bankruptcy and spread the blame around: not only were board chair Susan Baker and general and artistic director Paul Kellogg responsible for "a shocking lack of financial discipline" leading up to the 2008 and 2009 withdrawls that took $24.1 million from the endowment, but New York's attorney general Andrew Cuomo was also at fault for failing to carry out state law and provide effective oversight.
According to Stewart, nonprofit organizations must receive approval from the attorney general's office to cut into their endowments. The NYCO got that approval in 2008 without notifying the Wallace Fund, whose restricted funds were going to be use. That notification is part of state law, and the AG also didn't contact the fund managers.
When NYCO went back to the attorney general's office in 2009, its came with a turnaround plan that it said would result in a surplus in 2010-11 and a $2,000,000 endowment replenishment. Given the seven-figure deficits that NYCO had been running for years, the plan seemed far fetched; nonetheless, the company once again got state approval.
As little serious oversight that the attorney general and his staff gave, it's up for debate as to how much they should have provided. Imagine the outcry if the attorney general had stopped the moves. Nonprofit organizations are independent for a reason, and if we don't want the government involved in running our cultural efforts, we can't blame it when they fail.
According to Stewart, nonprofit organizations must receive approval from the attorney general's office to cut into their endowments. The NYCO got that approval in 2008 without notifying the Wallace Fund, whose restricted funds were going to be use. That notification is part of state law, and the AG also didn't contact the fund managers.
When NYCO went back to the attorney general's office in 2009, its came with a turnaround plan that it said would result in a surplus in 2010-11 and a $2,000,000 endowment replenishment. Given the seven-figure deficits that NYCO had been running for years, the plan seemed far fetched; nonetheless, the company once again got state approval.
As little serious oversight that the attorney general and his staff gave, it's up for debate as to how much they should have provided. Imagine the outcry if the attorney general had stopped the moves. Nonprofit organizations are independent for a reason, and if we don't want the government involved in running our cultural efforts, we can't blame it when they fail.