July 24, 2003 | Read Time: 2 minutes
An extensive audit of the Barnes Foundation, made public this month, reveals details of some of the financial and management troubles in the past decade that helped deplete the art institution’s endowment.
The foundation, housed in an estate in suburban Philadelphia, is seeking a court’s permission to increase revenue by moving its multibillion-dollar art collection to central Philadelphia, where it would be more accessible to the public.
At the request of Pennsylvania’s attorney general, the judge in the case authorized the public release of the auditors’ report, which covers activities from 1993 to 1998.
The 250-page document implies that the foundation’s former chairman and president, Richard H. Glanton, ran the organization’s affairs with little oversight by his fellow board members.
The document cites an April 1997 deposition in which, when asked why he hadn’t sought approval from the other board members for his travel and entertainment expenses, he replied: “It would be stupid. What am I going to do? Go to my subordinates and say ‘Approve this for me’?”
Mr. Glanton declined to cooperate with the audit, which he termed “a million-dollar witch hunt” ordered by other board members after he stepped down. And he denied abusing his position to further his own interest.
Annual Deficits
Barnes had annual operating deficits averaging more than $1-million in every year covered by the audit, ranging from $316,307 in 1994 to $2.1-million in 1997. The result of such persistent deficits, the audit says, has been “the substantial depletion of the endowment.”
According to the audit:
- Barnes incurred more than $4.7-million in legal expenses since 1992, on matters relating to zoning issues, an international tour of some of its artworks, and civil-rights litigation alleging racial discrimination against Barnes by its suburban Philadelphia neighbors.
- Mr. Glanton, who was not paid a salary, incurred travel and entertainment expenses of more than $225,000 from 1993 to 1998, often without approval or review by the board and with only minimal documentation.
He stayed at four-star hotels, patronized fine restaurants, and used first class or business class when he traveled.
When the foundation treasurer tried to review his expenses in 1997, the report says, Mr. Glanton tried to have him removed from the board.
Mr. Glanton, a lawyer who now works for an energy company in Chicago, contends that the Barnes Foundation was in much better financial shape when he left the institution in 1998 than it had been when he became chairman in 1990. He cites its cash reserve, which he says grew from $9-million to $11-million in that period.
Barnes is now embarked on a campaign to raise $15-million for a “stabilization fund,” while it works to rebuild its endowment and take other measures to regain financial health.
