Arts Journal Weblog neighbor Andrew Taylor put up a good piece the other day about the sticky situation surrounding the now incarcerated investing magnate Alberto Vilar’s alleged indiscretions.
The U.S. government has charged Mr. Vilar with three fraud related counts including defrauding a client of $5 million and using a high six-figure portion of those funds to make good on several defaulted pledges to performing arts organizations; including high profile groups such as The New York Philharmonic and John F. Kennedy Center for the Performing Arts.
This is the last thing orchestra managers need to deal with. Mr. Vilar is now the second high profile tycoon philanthropist to come under the target of Federal investigators. The Herbert Axelrod’s scandal has tainted the New Jersey Symphony Orchestra is ways that are still being discovered and now Vilar alleged activities are going to drag the very organizations he cares about so deeply into his mess.
If you go back a few more years you can see where white collar crime began to really impact the orchestra business. The lot of scoundrels at the heart of the Enron collapse were responsible for half of the one-two punch which severely damaged the Houston Symphony (the other half being mother nature). When their planned six-figure donation check bounced, it sent the organization into a fiscal tailspin they are still trying to recover from.
Even in the heartland of America, the Columbus (OH) Symphony lost a board president due to an SEC investigation into alleged improper practices and thier interim executive director resigned following his involvement in a mutual fund scandal and resultant SEC imposed $100,000 fine ( update: it appears this particular situation in Columbus involving their former leaders reached a conclusion on the same day this article was originally published).
Worse yet, the four year old Vilar Institute for Arts Management at the John F. Kennedy Center for the Performing Arts now has to face the fact that its namesake donor is now the focus of a federal investigation. It doesn’t do much to help counteract the stereotype among many outside of the nonprofit world that arts managers are just a bunch a second rate administrators.
With the IRS and Senate Finance Committees already scrutinizing the way nonprofits work, orchestra managers are going to have to begin taking extraordinary steps toward organizational transparency and fiscal oversight just to insulate the organization from donor’s potential misdeeds. If not, orchestras are going to run the seemingly increased risk of getting caught up with and connected to corporate crime.