Earlier this week, Paul Alter submitted a comment and asked “Who owns a symphony orchestra?” Although the simplistic answer to that question is “no one” perhaps a more complete answer is to look at ownership from the perspective of control. Within that context, Paul’s question is much easier to answer…
Fortunately, Paul’s question touches on each of the primary stakeholders in an orchestral ensemble:
Who owns a symphony orchestra?
-The boards of directors seem to think they do.
-Some managers act as if they do.
-The cities obviously do not, even though they brag on the local orchestra when touting their civic virtues.
-The people who contribute money do not, even though they keep the orchestras alive.
-The audience members do not — they are just a necessary evil as far as management is concerned.
-The musicians, with some notable exceptions — LSO, VPO, BPO, do not.
If a [Symphony Orchestra] folds, who gets the money? Would it be
possible to rig it so that somebody benefits financially from it?
Let’s look at each one of Paul’s points one at a time:
“The boards of directors seem to think they do.”
Out of all the stakeholders, the board of directors is the only constituent granted the legal authority for all aspects related to governance. In short, whatever decisions they make are binding. That doesn’t mean they run the day-to-day operations, instead, they hire managers to do those things on behalf of the organization. In turn, the board oversees those efforts and ensures the organization complies with Federal, State, and Local laws. In this regard, the board of directors has the greatest level of direct, legitimized, control.
“Some managers act as if they do.”
Although managers don’t retain any direct control over an orchestra in the same legal sense that the board of directors do, they can certainly display a considerable amount of indirect influence over the board of directors. This is accomplished by shaping how board members think and controlling the frame of reference for strategic decisions. Managers have an even greater level of influence on the day-to-day operations and all of the best strategic planning and oversight in the world is only as good as its implementation. When
examined from this perspective, managers do have a great deal of control although when push comes to shove, the board makes the final decision.
“The cities obviously do not, even though they brag on the local orchestra when touting their civic virtues.”
No argument there and the degree to which local governments are involved in helping their respective orchestra grow and prosper vary wildly from one city to the next.
“The people who contribute money do not, even though they keep the orchestras alive.”
I suppose this depends on the size of the donor. The other “Golden Rule” (he who has the gold, makes the rules) appears to be a universal truth on some level and orchestras are no exception. This level of control is compounded by the fact that many large donors are also members of the board of directors, thereby providing them with a degree of legitimate authority.
“The audience members do not — they are just a necessary evil as far as management is concerned.”
Yes and no. Although audience members, frequent and infrequent, have no real authority over an organization, collectively there are some areas where they can exude a great deal of control. For example, if an orchestra makes a significant change to their programming most managers will not react much if a few complaints come in. However, if they receive 70 irate messages from patrons all threatening to cancel
subscriptions or stop buying single tickets, you can bet that this issue will be addressed ASAP in the next Artistic Planning meeting. At the same time, in a collective sense once again, audience members ultimately decide the fate of an ensemble by their overall buying trends. If an orchestra can’t sell more than 30 percent of a house, you can bet bad things are in store for the organization’s future.
“The musicians, with some notable exceptions — LSO, VPO, BPO, do not.”
Even in the examples Paul uses, I would say that those musicians have no more or less control than musicians in any other professional orchestra. Ultimately, the musicians have no legitimate level of control beyond what they influence via collective bargaining. It is through the collective bargaining agreement, which the board of directors is legally obligated to uphold, where musicians are able to
influence the artistic and strategic direction for an organization. This document singlehandedly defines the operational and strategic environment for the managers and board of directors.
“If a [Symphony Orchestra] folds, who gets the money? Would it be
possible to rig it so that somebody benefits financially from it?”
If an orchestra files for bankruptcy and has to liquidate their assets, this procedure is implemented via the terms approved by the respective bankruptcy court. In this process, a judge must approve a plan for repayment over time of all or a percentage of the debts owed to creditors. In this case, everything an orchestra owns as an asset will be liquidated and the proceeds will be distributed to the creditors. As for whether or not someone can manipulate a system to benefit from an orchestra filing bankruptcy, that would have to be examined on a case-by-case basis. Nevertheless, it is probably good to remember that no system is foolproof when it comes to abuse which is why institutional transparency is a must for any nonprofit organization, especially orchestras.
To learn more about orchestras and the role of each stakeholder, I composed a series of essays which examine each of those components in much greater detail than above. All six of those essays can be accessed here.