Sometimes More Is More

The New York Times published an article last week about recent efforts by the Manhattan School of Music to improve its image and standing among American music conservatories…

Among the efforts examined in the New York Times article, written by Dan Wakin, is a new 3,000-square-foot, three bedroom, two-and-a-half bath apartment which will serve as the new president’s residence. In fact, the new residence coincides with the arrival of a new president, Robert Sirota, who recently served in a similar position with the Peabody Conservatory in Baltimore, MD.

Based on the photographs featured in the New York Times article, the apartment looks like a stunning example of world class residential luxury and elegance. So how exactly is a new penthouse apartment supposed to benefit the school?

According to Debra Kinzler, Manhattan School of Music’s Director of Public Relations, the residence, officially identified as the Peter Jay Sharp President’s Residence, is considered a university space and will be used for a multitude of events to benefit the conservatory as opposed to serving exclusively as the president’s residence.

“[The residence] was slated to begin in 2000 but we didn’t have enough money to complete the project at that time,” said Ms. Kinzler. “Eventually, the entire project was funded by the Peter Jay Sharp Foundation.”

The old adage of “you have to spend money to make money” is certainly an approach that is tried and true. Consequently, the Manhattan School of Music has decided to put that adage into practice with the creation of the Peter Jay Sharp President’s Residence.

In effect, there is nothing inherently wrong with this approach. One could even go so far as to say that upper class entertaining is one of the nonprofit world’s dirty little secrets which conservatories, and orchestras, are not immune. It is well known that many orchestras maintain slush funds of one sort or another for the purpose of entertaining high profile guests, paying for last minute travel, picking up the tab for goodwill gifts, etc.

This money usually finds a way to stay off the organization’s books and for good reason too. Musicians and patrons might wonder why an orchestra would spend a few thousand dollars for dinner at an upscale restaurant or to pay for same-day airfare to travel across country just to take advantage of a brief window opportunity to talk with a potential donor before another institution reaches them first. Furthermore, keeping these transactions off the books becomes paramount when an organization finds itself in the middle of difficult economic times.

Nevertheless, this topic has never been covered to date at Adaptistration simply because when used correctly by effective managers, spending a few thousand dollars to entertain or stroke the ego of the right person can pull in tens of thousands – if not millions – of dollars in donations and other gifts. Simply put, for better or worse, people of means are used to being treated a certain way and finding themselves in certain surroundings and slush funds help take advantage of those traits.

Nevertheless, slush funds and perks are not always the same thing. Most orchestras don’t make a habit of providing homes for their executive administrator (even if some do provide low interest loans so their executives can buy homes without having to go through the standard channels). In the case of Robert Sirota, his family will be able to enjoy rent-free living in an opulent residence amidst a city known for being one of the most expensive locations in the world to live.

Consequently, compared to his predecessor, has Mr. Sirota’s annual compensation been adjusted to reflect the savings he will experience by not having to absorb the associated costs of housing in the New York City area?

When asked that question on 02/09/2007, Ms. Kinzler said she did not know but would forward the question along to David A. Rahm, Chairman of Manhattan School of Music’s Board of Trustees. To date, Mr. Rahm has not responded.

In the end, the Peter Jay Sharp President’s Residence will likely pay off in increased donations. Hopefully, those donations will not only absorb the cost of the apartment but help provide for the institution’s students. At the same time, in light of the fact that they are providing the school’s president a luxurious living space, it would be appropriate for the institution to adjust Mr. Sirota’s compensation accordingly. At the very least, given the school’s $27,400 annual tuition, the Board of Trustees should defer that adjusted compensation until after Mr. Sirota has demonstrated that he can manipulate the residence to meet or exceed the institution’s fundraising goal.

You can learn more about the Manhattan School of Music’s new facilities by visiting their website at http://www.msmnyc.edu/default.asp