Berkshire Museum takes steps to improve 'best practices,' art sales net $47 million

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PITTSFIELD — Four months after their landmark accord, key points of dispute between the Berkshire Museum and the Attorney General's Office are back in play.

This time, the "people's lawyer" is securing pledges of managerial reform from the museum, as the office fulfills its statutory role as overseer of nonprofits and public charities.

The museum reports, for instance, that it is taking steps to improve how its trustees and executive staff run the institution, including the use of management "best practices" and the ability to avoid conflicts of interest.

The move comes after a year in which the museum garnered national attention for its controversial plan to sell artworks to close a deficit.

As part of a new embrace of best practices, the museum will revamp how it procures goods and services and will seek new bids for what could be a multimillion-dollar renovation related to its New Vision project.

The measures are described in a seven-page May 31 letter sent to the office of Attorney General Maura Healey, a copy of which was obtained by The Eagle.

The letter also makes public for the first time that the museum netted proceeds of $47 million from art sales, filling in a missing figure since sales and auctions in April and May. And it asserts that continued sales are needed, enabling the museum to take in the full $55 million permitted through an April 5 ruling by a single justice with the Supreme Judicial Court for Suffolk County.

Earlier challenge

In the months before Healey agreed in February to support the museum's plan to sell as many as 40 works of art, her staff rigorously and repeatedly challenged the integrity of the board's oversight of the 115-year-old Pittsfield institution.

A November letter from Healey's office to museum lawyers called in particular for information on work conducted by a trustee, Jeffrey S. Noble. Since 2011, Noble's firm, Hill-Engineers, Architects, Planners of Dalton, has been paid at least $578,000 by the museum, according to the institution's Form 990 filings to the IRS.

The museum defended its management record and "duty of care" in two courts. But now, the museum says it is "working on enhancing its procedures for systematic fiduciary oversight and financial controls."

In a May 31 letter to Courtney M. Aladro, head of Healey's nonprofits and public charities division, the museum's lead lawyer, William F. Lee, makes that pledge and lists several steps the museum is taking to improve its operations.

While the letter does not refer to previous allegations or concede the existence of poor management or potential conflicts of interest, it addresses earlier criticisms from Healey's office.

And it faithfully answers questions Aladro renewed in a May 2 letter, a copy of which was obtained through a public records request.

Aladro's May letter asked the museum to report on progress it is making on a range of management issues, in part by tapping an outside expert for advice on developing a business plan and further shaping a fundraising strategy.

Her letter also pushed the museum to detail how it will adhere to proper practices regarding conflicts of interest.

"Has the Board re-evaluated or re-examined its conflict of interest policies?" Aladro asked in the two-page letter. "What steps is the Board taking to ensure fidelity to those policies, and decision-making free from conflicts, moving forward as it works to implement the New Vision?"

In his reply May 31, Lee said the board recently distributed copies of an existing conflict of interest policy to trustees.

"Following review of the policy, Trustees reported any potential conflicts of interest as the policy requires," he wrote.

In an interview, Stephen Bayne, the trustee who serves as the board's treasurer, said the new request for proposals for the New Vision project will give all interested bidders a chance to participate.

"Our intent will be to run a competitive process for this," he said of future construction.

Beyond the conflict issue, the museum plans to look for outside help.

"More broadly, the Board intends to obtain outside guidance on the Board's corporate governance policies and processes, and conduct a session with the full Board and executive staff regarding corporate governance best practices," Lee wrote.

New subcommittees

In his letter to Aladro, Lee said that in April, as the museum board readied for the shift to interactive exhibits that will redefine its approach, it formed a new financial governance subcommittee.

"This subcommittee is developing a series of controls that are expected to be finalized with the Board's approval in August," Lee wrote.

One such control will concern how the museum chooses its business partners — and when it will require competitive bids.

"Among other measures, the Board plans to revise the process of purchasing goods and services to include pricing thresholds that will define when formal competitive bidding processes are to be used," Lee wrote.

Even before those new rules are in place, the museum's trustees decided to start anew with bids on the New Vision project.

The museum will create a new request for proposals for architectural and engineering designs for the project, Lee said. It will be issued once the board has firmed up a new time frame.

The museum previously announced that Noble's firm would be handling aspects of the New Vision.

In an interview two weeks ago, ahead of a June 7 board meeting, trustees said that while they were committed to a new approach to programming, they continued to discuss whether to retain a plan announced last July to remake the museum's entrance and create an atrium space.

Trustees also said they are discussing whether to go ahead with further art sales.

But Lee's letter to Aladro suggests that $47 million isn't enough and more sales lie ahead.

"Although this amount approaches the $55 million the Attorney General and Museum have both agreed the Museum needs, it does not meet the Museum's full financial need, and the Museum is assessing how best to proceed forward with sales of any of the other 26 works authorized for sale by the Judgment," Lee wrote.

Carol Bosco Baumann, the museum spokeswoman, said Lee's letter sought to clarify that more sales are legally authorized.

"The letter provides a reminder that the agreement with the Attorney General recognized the museum's financial need of $55 million to fund the endowment, make needed repairs and implement the interpretive plan. Proceeds from the first sale fell short of that figure," she said in response to questions about the issue.

An announcement will be made "soon" about whether additional sales are planned, Bosco Baumann said Wednesday.

The new subcommittee on governance includes Bayne, Stacey Gillis Weber and William M. Hines Jr. Its recommendations on new financial controls are expected to be voted on by trustees in August.

Another new subcommittee created in April focuses on "further developing" the museum's business plan. It includes Elizabeth McGraw, the board president; Bayne, the treasurer; and trustees Hines, Mike Addy and Caitlin Pemble.

That panel already has updated the museum's budget and balance sheet to reflect gains from art sales. And it shaped a different request for proposals that will be used to hire a consultant who is expected to be selected by the end of September.

AG's questions

In an open letter May 31, headlined "Berkshire Museum Outlines the Road Ahead," trustees said they planned to provide that information by the end of the year, after hiring an outside consultant.

Passages of that message spoke to questions Healey's office raised earlier that month.

Trustees said they planned to "secure the museum's future with a commitment to transparency, cooperation, and outreach."

A few weeks before, Aladro had asked the museum, in her May 3 letter, to explain how trustees plan to involve members of the community with the New Vision plan, how they will fill vacant board seats and how they will recruit help for their collections committee.

All nontrustee members of the collections committee have quit in recent months, Lee informed Healey's office in an April 10 letter, also obtained by The Eagle.

Aladro also pressed the museum to address fallout from its decision to sell art. In late May, the Association of Art Museum Directors called on its 243 members not to engage in art exchanges with the Berkshire Museum.

"In what ways is the Museum prepared to address potential professional organization sanctions or other reputational harm from the sale of the selected works of art?" she asked.

In his response May 31, Lee downplayed the impact of the sanctions, saying officials concluded that the museum can withstand them.

"The Museum assessed the risk of reputational harm and the impact of potential sanctions from professional associations," Lee wrote. "The Board determined that such considerations, though regrettable, would not substantially impair the Museum's ability to carry out its mission."

He said the museum's new interpretive plan will use "the tremendous depth and breadth of the Museum's own collection, and the Museum has not historically relied and does not anticipate relying to any significant extent on loans from other museums, thus mitigating the impact of disapproval by professional museum organizations."

Larry Parnass can be reached at lparnass@berkshireeagle.com, at @larryparnass on Twitter and 413-496-6214.

William F. Lee and Courtney Aladro Correspondence on Berkshire Museum by The Berkshire Eagle on Scribd


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