A Battle between Ownership and Stewardship (Act 4) - Resolution and Conversion (Concluded)
The Story of the Philadelphia Art Alliance in Several Acts
Sorry for the long hiatus! We’re in the midst of a multi-year project to lay in the foundation of a large set of gardens around our home, so each April through July are a rush of bed building, earth and stone moving, germination, sowing, and amending/editing previous garden drafts. This year, that project combined with a perfect storm of work obligations to keep me away from the writing desk. It’s good to be back in the saddle.
Since we’re rejoining this story after a bit of time, if you want to refresh, here are the acts:
Stewardship and ownership tensions
Leading up to the final resolution, the financial situation at the Alliance was growing critical. A fiscal cliff was looming. Long-term debt and fixed operating costs were eating away fast at the “endowment” that had been created through liquidating an adjacent parking lot a decade earlier, leaving about six months before the organization would reach insolvency.
In a last ditch effort, the Alliance board turned its attention to restructuring the only financially marketable asset it had, the mansion. The board assumed that if the Alliance could liquidate its real estate, drawdown from the resultant endowment would allow the organization to carry the mission forward. But even a top-market sale value of about $15M wouldn’t yield enough to operate the mission and maintain the building when all was said and done. Even if such a “liquidation event” could have re-infused the organization with some cash, the question remained, to what end? The real problem remained: declining relevance and lack of vision, or at least a lack of vision that could be executed at that juncture. We were squarely in the too-little-too-late zone.
The above crisis and sense of impending doom, however, was solely the product of viewing the situation through the narrow lens of the private sector, its values and assumptions. If the fundamental job of the board was to think like a private owner, to preserve an institution and legal formation called the Philadelphia Art Alliance and its titled assets, then the situation looked gravely finite indeed. If the job was to think like a steward, ensuring that those same assets were used in the highest and best interest of the public–toward the general purpose of supporting the arts, let’s say–then the situation presented a number of potential new futures. Widening the aperture from one of ownership to one of stewardship reframes the fundamental question on a timeline that is not defined by the comings and goings of individual people, legal formations, or accounting years. It makes the question about our current obligations to ensure that nonprofit assets are put to their highest-best social good, both for now and, to the extent of our vision, the future.
For a while the board of the Alliance was stuck in the private owner mindset, unable to see from the more hopeful vantage of steward. While we examined many potential paths for continuing the Alliance’s legacy nonprofit, the arguments were stacked against it. Despite the growing rationale for taking a very different route and the high degree of fatigue everyone was experiencing, we could not move beyond scenarios that focused on keeping the Alliance entity and mission alive.
The gradual shift toward a stewardship mindset only occurred when–after many meetings and much lobbying–the Chairwoman and the board as a whole were able to start to see the situation not as a problem of failure to perpetuate the Alliance, but rather an opportunity to apply stewardship thinking and re-imagine the value of the Alliance’s legacy and assets in service to the needs of the arts community. Stepping back from the myopic view of institutional perpetuation reveals a much broader landscape of possibility for the resources nonprofits govern. After all, these assets may be titled to an entity called the Art Alliance, but they really belong to (serve the benefit of) the people of the Commonwealth of Pennsylvania and beyond.
Resolution and conversion
At long last, we broke through by setting aside the assumption that perpetuating the Alliance was the ultimate mission. Notably, this breakthrough was precipitated by leaning into the quid pro quo of selling the mansion with the proceeds benefiting the Alliance that would allow it to continue in some form. The market of buyers at the full value (ca. $15M) were limited to private developers wanting to convert the mansion into commercial or multi-family residential, or a super-rich eccentric with an appetite for the perpetual upkeep of Gilded-Age opulence. Because the mansion is historically protected (so it can’t be demolished) and sits in one of the most monied and entitled residential enclaves of the city (read, NIMBYs with really expensive attorneys), developers were not rushing to make offers. Similarly, the number of eccentric billionaires interested in historic real estate of this scale are few, especially with a glut of brand-new, turn-key, ultra-lux condos just down the block catering to the super rich set. And despite interest-in-principle from several charities, there were certainly no nonprofits with both the interest and ready means to make such an acquisition.
The limited market for sale was not the only barrier to liquidation. The majority of the board felt strongly that the building should continue to directly benefit the public and that it should remain a nonprofit asset. There was chafe against the idea of the mansion once again becoming an enclosed asset in private hands. It was not Catherine Wetherill’s intention. Acknowledging this reticence was the first inkling that the board was beginning to think like stewards and not owners.
Soon the idea of converting the real estate into cash dissipated and gave way to a new vista of exploration: if the Art Alliance, as historically organized, would cease to be, how might its assets and legacy find new life and continued stewardship as nonprofit resources? One of the nonprofits that had expressed interest, but did not have the money to purchase the building outright was The University of the Arts (UArts), whose main campus was only blocks away. The President of UArts wanted more gallery and teaching space as well as a birth on Rittenhouse Square with the potential for institutional frottage with its Robber Baron residents.
When nonprofits wind up their operations, the rule is that any remaining assets need to either be sold and the proceeds accruing to a nonprofit of like mission to the one being wound up, or the assets simply need to be transferred (donated) to a like-missioned nonprofit. A nonprofit can’t liquidate (or donate) its assets to benefit a private individual or company. Once we had settled on the idea of the Alliance not continuing its own charitable operations, the option to simply transfer the assets, principally the real estate to a like-missioned nonprofit became real and presented a far easier route, sidestepping the challenges of finding a buyer with purchase capital. Also, there was the issue of millions in deferred maintenance that any new title holder would need to accommodate. In our analysis, the best case would be to find a steward with the financial and staff capacity just to restore and maintain the mansion.
Over several months, we conducted formal, mutual due diligence between the Alliance and UArts and an alignment of mission, intended future use, and willingness to undertake the needs of the building. Instead of an acquisition, we settled on a merger for the form of the transaction, which would wind up the legacy nonprofit corporation of the Alliance, settle all debts, and transfer the remaining assets to UArts in one swoop. In the end the arts education mission of the Alliance provided a fertile rationale for the redeployment of its assets to a major institution of artist education.
Personally, I had significant reservations about UArts as the recipient of such substantial assets, but recognized it to be the “worst solution, except for all the others”, to crib from Churchill. My concerns stemmed from a cynical undercurrent throughout the negotiations. UArts was promising to keep alive the legacy and memory of both the Alliance and the Chairwoman, in particular (since deceased) as terms of the merger. This seemed more political theatre by UArts leadership than genuine interest in that dimension of stewardship. I may be misreading, but I’m deeply skeptical of the values, model, and motivations of higher education in the 21st century. Its original mission and educational purpose are compelling. Its contemporary business model, however, has been failing for decades, to which universities have responded by doubling down on neoliberal financial moves. They are de-investing in research and teaching staff and capitalizing on assets, such tech transfer/IP capture, athletic franchises, and real estate speculation masquerading as mission-related facilities development, all in the interest of a last-ditch effort to salvage a broken business model. (More on that, perhaps, at a later date.)
It was interesting to observe the stance of the Alliance board, even at this stage, still wrestling with the feeling that they were giving away the real estate in a negative way–falling chump to a bum deal. So fixated are we on the quid-pro-quo of private sector ontology where all transactions have a return of some kind, it’s hard to conceive of another kind of benefit, one that entails a “return to community” as opposed to a “return to entity”. This cultural struggle is all the more ironic in the nonprofit sector, whose everyday stewardship of commons assets accrues benefits to the community and is supposed to eschew–even exist as a counterbalance to–the wicked transactional hold of the market ledger.
David Bollier and Silke Helfrich, two of today’s foremost scholars on commoning, write about the idea of “gentle reciprocity”, which is about engaging in a less rigid form of reciprocal relationships. Gentle reciprocity entails giving and sharing, but absent a strict accounting on the ledger or expectation of return, leaving it to a matter of some faith that the universe will return the favor. Though the journey was long, the Alliance board arrived at a place of stewardship and gentle reciprocity. For UArts, the journey of stewardship has begun with mixed success. The building has been stabilized, with the worst deferred maintenance addressed. Promises to maintain some curatorial legacy of the Alliance through a dedicated staff position was short lived, and the ultimate presence of the former Alliance organization and mission has faded significantly, neither to my surprise. Since institutions are born and exist as extensions of human conscience, they all fade away, and we need to see that as a beautiful and necessary part of stewardship, not a process of failure and foreboding.
Following all this closely....And the Great Dixter conference left me green with envy. Do you have any impulse to write more about your garden? Mine has been my total preoccupation for nine months, involving new stone work, water features, the redesign of my fire ceremony space, tree planting from wild cherry to yellow wood, oak, buckeye and hawthorn, all culminating in a giant house party to celebrate my life and friendships, sixty people dancing and feasting and loving. Heaven. Thinking as I write this note of Pound:
"What thou lovest well is thy true heritage
What thou lov’st well shall not be reft from thee....
it is not man
Made courage, or made order, or made grace,
Pull down thy vanity, I say pull down.
Learn of the green world what can be thy place
In scaled invention or true artistry."
C
I should have known why the long hiatus given all your posts on your fabulous garden project!
Well done with this article. I admire and share your fresh approach to stewardship as a guiding principle.