Past Chautauqua Presidents Dr. Arthur Bestor (L) & Dr. Samuel Hazlett (R)
As we turn the page on the Save the Amp campaign, the next chapter opens with opposing thoughts on the governing of Chautauqua. There’s a new committee, The Chautauqua Community for Open Governance (hereafter the Open committee), and these folks seem downright congenial by comparison. At long last, civil discourse on a topic without all the vitriol and drama. But I digress. The subject du jour is Open Governance.
To more thoroughly understand all the issues of Chautauqua’s governance debate, let’s begin at the beginning and have a closer look (by relevant excerpts) at the following documents that outline Governance in; Chautauqua, New York State (NYS), and Open Governance in the not-for-profit sector in particular:
- Chautauqua Institution Charter & Revised By Laws
- NYS Open Government (a.k.a. The Sunshine Laws ) Guide
- NYS Case Law Rulings (Chautauqua’s Challenge to the Sunshine Laws)
- NYS Guidance Doc for Not-for-Profit Boards
- Published not-for-profit Open Governance articles from one of the foremost authorities on the subject.
*Links to the complete documents can be found at the end.
Past Chautauqua Presidents – Judge Walter Braham (L) & George (Shorty) Follansbee
Excerpts from Chautauqua Institution Charter of 1902:
“The purpose and object of said corporation shall be to promote the intellectual, social, physical, moral and religious welfare of the people…members of the (Corporation) shall be…All persons being the owners by deed or being lessees of one or more lots or sections of a lot…membership of the Board of Trustees shall consist of 24 trustees, 20 of which shall be elected by the trustees and 4 of which shall be elected by the Corporation…trustees may by vote of two-thirds of their entire number alter or repeal the by-laws or enact new ones…the committee known as the executive board of the trustees may enact any rule consistent with law and the by-laws for the management of the business or property of the corporation”
Excerpts from Chautauqua’s By Laws – Revised and Adopted November 7, 2015:
“The purpose of the Board of Trustees is to support the mission of Chautauqua Institution…(and) exercise the government and control of Chautauqua Institution…The Corporation’s officers shall perform such duties as from time to time may be assigned by the Board of Trustees…The President shall be the chief executive officer of the Corporation and, subject to the direction of the Board of Trustees, shall execute the policies adopted by the Board of Trustees and in general supervise and direct all of the business and affairs of the Corporation.”
Excerpts from the Open Government Guide – Open Records and Meetings Laws in New York Sixth Edition 2011, Published to give guidance on the Freedom of Information Law (FOIL) & Open Meetings Law (OML), a.k.a The Sunshine Laws:
“In 1976, New York enacted an Open Meetings Law (“OML”). The enactment opened with a legislative declaration of purpose as follows:
It is essential to the maintenance of a democratic society that the public business be performed in an open and public manner and that the citizens of this state be fully aware of and able to observe the performance of public officials and attend and listen to the deliberations and decisions that go into the making of public policy. The people must be able to remain informed if they are to retain control over those who are their public servants.”
The defining factors here are “public business”, “public officials”, “public policy” and “public servants”. Chautauqua Institution is a private 501 (c) (3) not-for-profit Corporation and you will see below in the applicable case law rulings why Chautauqua does not, and should not fall under these definitions and their accompanying restrictions. The Board supports the mission and governs the Corporation that is Chautauqua Institution. Chautauqua’s administration, directs the business affairs of the Institution.
Sunshine Case Law Rulings: The oft mentioned challenge to the Sunshine Laws by Chautauqua Institution occurred in 2011 and the Institution prevailed in court as they should have. The court ruled: Rowe v. Town of Chautauqua, (4th Dept, May 6, 2011) The Chautauqua Institution has no power to act on the State’s behalf, thus it is not a public body and not subject to OML. Therefore, the information sought was not subject to FOIL, nor were the Open Meeting Law’s requirements enforceable. In another case ruling that is applicable re: Board. of Educ. of City Sch. Dist. of Buffalo. Although a not-for-profit corporation may fall within FOIL’s definition of a “state agency” if its purpose is governmental and it has the attributes of a “public entity,” the record established that respondent did not have those attributes, as its budget was not governmentally approved, it had a self-elected board, and it did not have its offices in a state-owned building.
Chautauqua’s Board of Trustees have no authority to act on the state’s behalf, its budget is not state approved, it has a self elected board, and owns its own offices. The Sunshine Laws were enacted to allow for full disclosure of state and local governance to inform the public and prevent/react to political abuse among elected/appointed public officials, public servants, and public bodies that serve their communities. The Sunshine Laws do not apply, as Chautauqua does not meet the aforementioned attributes. It is important to note the fundamental difference that unlike a State or local governmental body elected and paid by the public they serve. Chautauqua Institution was formed by its founders, and the public body (the Assembly) followed.
NYS Not-for-Profit Board Guidance Doc – In order to clearly define the responsibilities of Not-for-Profit Boards in NYS the Attorney General publishes a guidance document that outlines the primary legal duties of Care, Loyalty, & Obedience:
Excerpts from RIGHT FROM THE START: RESPONSIBILITIES of DIRECTORS of N0T-FOR-PROFIT CORPORATIONS, Guidance Document 2015 – 6, V. 1.0 – Issue date: May 15, 2015
“Whatever their mission or size, all organizations should have policies and procedures established so that (1) members of their boards understand their fiduciary responsibilities, (2) assets are managed properly and (3) the charitable purposes are carried out.”
“While the board is not usually involved in the day-to-day activities of the organization, it is responsible for managing the organization and must make decisions crucial to the life and direction of the organization…members of a board of directors must fulfill fiduciary duties to the organization and the public it serves. Those primary legal duties are commonly referred to as the duties of care, loyalty and obedience.”
Duty of Care – “The duty of care requires a director to be familiar with the organization’s finances and activities and to participate regularly in its governance. In carrying out this duty, directors must act in “good faith” using the “degree of diligence, care and skill” which prudent people would use in similar positions and under similar circumstances.”
Duty of Loyalty – “Directors are charged with the duty to act in the interest of the corporation. This duty of loyalty requires that any conflict of interest, real or possible, be disclosed in advance of joining a board and when they arise.”
Duty of Obedience – “A board has a duty of obedience to ensure that the organization complies with applicable laws and regulations, its mission and its internal governance documents and policies.”
The Board is also responsible for:
- Monitoring the Fundraising Conducted on Behalf of the Organization
- Assuring the Organization Makes Use of All Available Resources
Open Governance in the Not-For-Profit Sector
Graphic courtesy of Community-Engagement Governance™: Systems-Wide Governance in Action, Non Profit Quarterly March 2011 *Link to article at end.
Now that we understand the ground-rules under which Chautauqua’s Board has to operate, lets have a closer look at the concept of Open Governance within the not-for-profit sector, and how it applies to best practices for Chautauqua.
First we review the Open committee’s latest missive on the topic. Chautauqua: A Beacon of Light, March 2016 states that Chautauqua’s rules of governance are outdated and the Amp project decision making process failed our community. They suggest that had the process been open and transparent that a community consensus would have been achieved and the divisions that roiled Chautauqua could have been avoided. They state that important decisions should not be made by 24 Trustees behind closed doors, and call for open Board meetings along with having all the members of the Chautauqua Corporation vote on major decisions, including Trustee appointments. They go on to suggest that Chautauqua should not be compared to other 501 (c) (3) organizations that are exempt from the Sunshine Laws because it is unique in the fact that there are so many individual property owners who are impacted by the Boards decisions. These are primary among a host of other points they put forward.
First let me take issue with their statement that if the Amp process had been open and transparent from the beginning that community consensus would have been achieved and the divisions avoided. That begs the question as to whether you believe that Chautauqua started the Amp process attempting to keep the central portion of the ceiling and roof, thus potentially qualifying as a rehab. For the sake of argument let’s proceed from that premise, because it’s what I believe happened. When admonishing me for planned events taking a wrong turn, my Chautauqua Grandma used to say “the road to hell is paved with good intentions”. I believe Chautauqua intended to keep the central portion of the ceiling and roof but as the planning and bidding process unfolded it became painfully clear that it was not possible to do so for a variety of reasons. The inevitable choice was made to build a new Amp. So, save the Massey Organ, the complete demolition of the Amp, whether disclosed in open forums from Day 1, or two years later, was going to be attacked by the very same group of people who rose up against it, no matter the timing of the disclosure. Frankly in hindsight, it could be argued that the divisions could have been wider, deeper, and lasted longer, as the zealousness demonstrated by the Save committee and their followers proved nothing less than a rehab would have been acceptable.
Past Chairman of the Board Bill Clinger & Judy Clinger
The origins of the relatively new open governance movement in not-for-profit organizations has been an attempt to make sure Boards didn’t become too inwardly focused and isolated from the stakeholders, constituents, and communities they serve, and ultimately lose accountability. Dr Judy Friewirth, Psy.D. addresses this in her article Transforming the Work of the Board: Moving Toward Community-Driven Governance – Thursday, December 15, 2005 – Nonprofit Boards and Governance Review™
“I would argue that engaging constituents, stakeholders, and the community in both meaningful discussions and active participation is a significant component of governing; in fact, boards cannot be truly accountable to the community unless active engagement is part of their basic responsibilities as a board…In a community-driven governance model, the traditional closed boundary around the board opens so that direct information and dialogue between the board, constituents, and an organization’s staff are more fluid and ongoing. Additionally, constituents are full members of the board, not just as token representatives,”
Chautauqua’s Board is entirely made up of its primary stakeholders and constituents and has been since the beginning. 19 of 24 Trusteess own homes within the grounds. The balance rent for extended periods during the season. They are firmly rooted in Chautauqua, and most of their families have been for generations. They serve on the Board without the commensurate compensation of a public sector Board seat because of a deep love for Chautauqua and for the chance to give something back by positively influencing the governing of Chautauqua.
Dr. Friewirth continues:
“In reality, who is better equipped to understand constituent needs and challenges and determine organizational responses to them: an expert or professional from outside the community, or someone who has a personal stake in the quality of services and/or direction of the organization? Shouldn’t “lived experience” be considered a valuable asset for boards?
From L-R Past Chautauqua President Dan Bratton & Board Chairs Howard Gibbs & David Faust
The Trustees are, beyond question, involved members of the community they serve with a personal stake in the quality of services Chautauqua provides. Every decision they make in Board meetings affects them directly. From real estate values and the cost of gate tickets to the impact of other rules, regulations and policies implemented. How many of the following not-for-profit organizations with the scope and reach of Chautauqua have all of their Board members as constituents? How many national arts organizations have their Board members in attendance at the majority of their events? How many colleges/universities have their Board members on campus and active in their community? How many charitable organizations serving the disadvantaged have any constituents as Board members? The answer to all these questions is very, very few. The obvious exception is local churches whose parishioners make up a majority of their Boards.
Chautauqua is unique in that area as they’ve been practicing Open Governance since long before it became fashionable. Chautauqua’s Board is comprised entirely of Chautauquans…period! Four of the Trustees have been voted on by the Corporation since the turn of the 20th century. As David Starr wrote in his Chautauqua Challenge during Chautauqua’s darkest days between the 1933-34′ seasons:
“Remember the purpose for which the Chautauqua was organized: Keep within the landmarks. Put none but true Chautauquans on your Board of Trustees. Men and Women who believe in and love it…Big sounding names will not fill the bill…The Trustees are your representatives.”
As Mr. Starr puts it, “big sounding names will not fill the bill.”It’s not as if the Board is littered with outside experts or influential people who barely come to Chautauqua and whose primary purpose would be to increase fundraising. They do not rule on high from ivory towers. They are your friends, neighbors, and casual acquaintances passed on the brick walk. Your kids/grand kids are likely to be at Club with theirs. On any given day they could be playing tennis on the court next to you, or be in the foursome in front of you on the Lake course.
Chairman of the Board Howard Gibbs explained how the Board makes decisions in an interview with Daily Editor Alfreda Irwin during the 1979 CSO debate. At that time Chautauqua’s leadership was under fire and being questioned, and open forums were held as many Chautauquans asked for a more open decision making process. I posted about this in great detail here: https://driftoftheday.wordpress.com/the-chautauqua-of-the-future-a-look-back-at-the-1979-cso-debate/
“An area in which we continue to grow is openness on the part of the Board… I am personally committed to an open policy, where the Board is responsive to expressed needs and functions through a committee system. The Board committees can and do include some members who are not Trustees…by the State charter, the Chautauqua Board of Trustees bears the accountability for the way Chautauqua functions. We can’t delegate that to anyone. Decisions can’t be made by referendum,..but neither can decisions be made in isolation or in a vacuum.” ~ July.19, 1979 Chautauquan Daily
Past Chautauqua Board Chair Howard Gibbs (L) & President Dr. Hesse (R) Circa 1979
Now let’s have a closer look at the topic of open board meetings as suggested by the Open Committee. As Howard Gibbs said decisions of the Board can’t be delegated or made by referendum and the Board’s committees still do include those qualified Chautauquans who are not Trustees. The open forums in 1979 and subsequent years, including last seasons were necessary to inform the Assembly and for the Board to gain feedback from the community, in addition to that received through informal channels. Can more be done in the future to engage the rest of the community? Of course it can, and one would certainly think Chautauqua’s leadership learned a valuable lesson from all of this as they have stated that increased openness will be practiced going forward as the Assembly is further informed and engaged.
Now onto the bigger questions and my humble opinion on that. Should Board meetings be open to the public, and taking it to the logical extreme, important decisions, and Trustees appointments, voted on by members of the Corporation? In a few words, absolutely not, wouldn’t be prudent. Boardroom confidentiality is critical if a Board is to create and maintain an atmosphere in which full and frank discussions can thrive, and consensus can ultimately be reached. Public disclosure of deliberations may hinder the free exchange of ideas and rigorous discussion within the boardroom that is fundamental to the decision making process. Losing the cloak of confidentiality is particularly problematic if Trustees worry that their opinions could be disclosed to outside parties. The primary case in point is the malicious and mean spirited attacks on Tom Becker by the Save committee’s mouthpiece. Since the Board meetings were private, Tom was the public lightning rod out in front of the Board, who were characterized by the mouthpiece on social media as “goose stepping nazis” among many other less than civil descriptions put forth. I surely hope that behavior was the ill conceived exception to the rule as we all move forward as a community. A more realistic scenario that could occur with open meetings is Trustees getting lobbied for their votes on a particular topic by well intentioned, but overly involved members of the Assembly. They deserve the protection of confidentiality to do their jobs as dedicated stewards of Chautauqua, and avoid the possibility of any sort of interference. Yes, by all means shed some more light onto the decision making process by informing and further engaging the Assembly in general, but keep the Boardroom doors shut.
To paraphrase from Lincoln’s Gettysburg address, Government of Chautauqua, by Chautauquans, for Chautauqua. All things considered, an illuminating example of not-for-profit Open Governance, that has been ahead of its time from the start.
First & Current Chautauqua Presidents Lewis Miller (L) & Tom Becker (R) – Photo Courtesy of Kreable Young/The Chautauquan Daily
All other photos courtesy of the Chautauqua Institution Archives
Below in green you will find links to the referenced documents/articles quoted above that will be opened in a separate tab:
Chautauqua’s Charter of 1902 Chautauqua’s Charter of 1902
Chautauqua Institution By Laws – Revised and Adopted November 7, 2015 Chautauqua Institution By Laws
Open Government Guide – Open Records and Meetings Laws in New York – Sixth Edition 2011 – Prepared by: Michael J. Grygiel, Esq. NY Open Govt Guide
Right From the Start: Responsibilities of Directors of Not-For-Profit Corporations – Guidance Document 2015 – 6, V. 1.0 – Issue date: May 15, 2015 Submitted by Eric T. Schneiderman – NYS Attorney General NYS Responsibilities of Not for profit boards
Transforming the Work of the Board: Moving Toward Community-Driven Governance – Part 1 – Thursday, December 15, 2005 – Judy Freiwirth, Psy.D., © Nonprofit Boards and Governance Review ™ Community-Driven Governance Nonprofit Governance Review
2014 Director Compensation Report – October 2014 – Frederick W. Cook & Co., Inc. The 2014 Director Compensation Report
Drift of the Day 