Charges Of Financial Irregularities At Symphony Of The Americas

When joining the board of a nonprofit performing arts organization, most folks don’t assume the job will include a political battle fought in the public arena for doing nothing more than acting as a steward of public trust. But according to a report in the 6/4/2013 edition of WPLG’s Local10.com by Bob Norman, that appears to be the case at the Symphony of the Americas (SoA) where members of the organization’s executive board claim they were ousted for attempting to investigate questionable spending practices of SoA’s executive director, Renee LaBonte, and the long-time maestro, James Brooks-Bruzzese.

ADAPTISTRATION-GUY-134In question are sketchy internal oversight measures such as LaBonte reportedly barring the board treasurer from signing checks and keeping the organization’s financial records at her personal home, both of which violate SoA’s bylaws. When asked about that issue by Local 10’s investigative reporter, LaBonte declined to answer other than to say the there are times when administrators sign checks and other times when the Treasurer signs.

Also in question are purportedly personal travel expenses by LaBonte and Brooks-Bruzzese that were paid for using SoA funds.

When former board president Beth Holland and Treasurer Raquel Cohen began an internal investigation and asking questions, they claim LaBonte and Brooks-Bruzzese organized a board coup by amending the bylaws and had both members removed. In response, more than ten additional board members resigned in protest as did the orchestra’s Symphony Society President.

Regardless of how the SoA debacle turns out, the situation is a representative example demonstrating just how much power and influence rests in the executive administrative and artistic leaders. It will be interesting to see if the situation continues to develop and the sort of transparent audit being called for by the ousted board members comes to pass.

Likewise, the situation brings to mind the Sarbanes–Oxley Act of 2002, which set into motion a series of enhanced accounting checks and balances to help prevent corporate executives from committing fraud along with providing added protections for corporate whistle blowers. Interestingly enough, Sarbanes-Oxley contains provisions that exempt nonprofit organizations from being subject to the accounting requirements due mostly to the unreasonable burden it would place on smaller and mid size budget organizations.

Following is a copy of the investigative report segment aired by WPLG and you can access the orchestra’s IRS form 990s at Guidestar.

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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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9 thoughts on “Charges Of Financial Irregularities At Symphony Of The Americas

  1. I have reached the following conclusion about non-profits in the USA: We need to do away with non-profit status as we know it. The model is broken and abused, and non-profits are now a haven for everything from poor behavior and judgement to downright criminal activity. I know this is radical, but there are simply too many non-profits, of which very few are truly charitable organizations, and very few are being run responsibly. I even question if symphony orchestras are charitable organizations.

    • I’m not so sure that jettesoning the entire nonprofit portion of the US tax code is the way to go here inasmuch as simply improving oversight and transparency. One of the reasons it is comparatively easy to abuse nonprofits is the lack of oversight and regulation but I wouldn’t go so far as to say it’s broken.

      the point about whether or not nonprofit performing arts orgs should qualify for nonprofit status is a separate, but equally meaningful, topic of discussion.

    • Excellent question, but I don’t know the specifics about their audits. It appears that the exec board members were attempting to do an internal audit but there’s no mention if this was in advance of an independent audit or not. But given the nature of what the exec committee was concerned about, it seems that a standard audit wouldn’t necessarily pick up on it and would have simply verified that travel expenses were travel expenses.

      Interestingly enough, annual independent audits are part of the recommended measures in Sarbanes–Oxley.

  2. Nice article, was looking up something on this online and it got here. I was wondering what type of “checks and balances” system they have in place or is it just that Labonte and Brooks-Bruzzese can just do whatever they want. I’d like to look at these tax forms a little more. Great read and hopefully this doesn’t taint all the good the Symphony has done.

    • The 990’s are certainly available and a resource all patrons should take advantage of, but they only provide a snapshot of an institution’s broader financial situation. In this situation, I would be surprised if they shed much light on the issues at hand but the matters related to the bylaws, cash handling, etc. certainly fall under the blanket of transparency. Ideally, the institution should be able to demonstrate that it has a clear accounts payable process and internal review structure in place that has been approved by the board and audited on a regular basis.

      A related issue here is that if the SoA receives any grants, it is common for the grant sponsor to require compliance with all sorts of best practices. In some cases, those requirements are numerous and quite detailed. As such, those granting institutions could demand increased scrutiny as well.

  3. A little 990 detective work reveals a few things that stood out. First, there is $200K in government grants. If I were the grantor, I would move immediately to ask questions. Secondly, travel expenses of $208K MIGHT be high (tho if for touring musicians, easily explainable) and, more troubling the statement that ONLY the ED reviews the 990 before submission and the declaration that no governing documents are available to the public. The latter are definitely policies the board should change. Surprising for a group with a relatively large government grant.
    There is definitely more to this story.

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