Thanks For the Cash But We’ll Need To See Your ID

There’s a 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.

About Drew McManus

"I hear that every time you show up to work with an orchestra, people get fired." Those were the first words out of an executive's mouth after her board chair introduced us. That executive is now a dear colleague and friend but the day that consulting contract began with her orchestra, she was convinced I was a hatchet-man brought in by the board to clean house.

I understand where the trepidation comes from as a great deal of my consulting and technology provider work for arts organizations involves due diligence, separating fact from fiction, interpreting spin, as well as performance review and oversight. So yes, sometimes that work results in one or two individuals "aggressively embracing career change" but far more often than not, it reinforces and clarifies exactly what works and why.

In short, it doesn't matter if you know where all the bodies are buried if you can't keep your own clients out of the ground, and I'm fortunate enough to say that for more than 15 years, I've done exactly that for groups of all budget size from Qatar to Kathmandu.

For fun, I write a daily blog about the orchestra business, provide a platform for arts insiders to speak their mind, keep track of what people in this business get paid, help write a satirical cartoon about orchestra life, hack the arts, and love a good coffee drink.

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