Judith Rothschild Foundation: No Conflict of Interest

To the Editor:

Your recent article on the Judith Rothschild Foundation (“Making Sure Their Art Stays Alive,” September 21) raised conflict-of-interest questions about the compensation paid to Harvey Miller where none exist.

Mr. Miller did not fix his own compensation. I did so in my capacity as executor of the estate of Judith Rothschild. I had my decision approved by the Internal Revenue Service and, informally, by the New York State attorney general”s office before I funded the foundation with the assets of Ms. Rothschild’s residuary estate.

As part of his agreement with me, Mr. Miller consented to reduce his compensation in the event the foundation’s resources did not permit an annual salary of $175,000 plus health and life insurance and parking. This agreement was included in my submission to the Internal Revenue Service.

Since January 1, 1994, Mr. Miller’s basic compensation has remained unchanged. For 1998 I approved a bonus of $25,000 to compensate him for the extraordinary work involved in completing, after the unexpected departure of the foundation’s part-time curator, the research, visual material, and art preparation needed for a monograph to be published in conjunction with a major traveling retrospective exhibition of Ms. Rothschild’s own art. The additional $2,933 of 1998 income is the taxable portion of the parking costs.

As part of the 1993 application for the foundation’s qualification as a private operating foundation, I submitted to the Brooklyn office of the Internal Revenue Service information from Pages 44 and 47 of the 1993 Foundation Salary Report published by the Council on Foundations.

That report showed that nationwide chief executive officers of private operating foundations with assets between $10-million and $50-million received annual salaries ranging from $35,600 to $182,900. Salaries went up to $250,000 in the next asset category. The report also showed that (1) in the Northeast and Mid-Atlantic area, salaries were about 18 percent higher than in the rest of the country, and (2) foundations similar in size to the Rothschild Foundation had several full-time employees.

I pointed out to the Internal Revenue Service that Mr. Miller would be the foundation’s only full-time employee, which is still the case. The exemption application also stated that Mr. Miller would be the foundation’s governing body and would occupy a bedroom in the foundation’s building on Park Avenue.

Before approving Mr. Miller’s compensation, his occupancy of the house with its artwork, and the foundation’s status as a private operating foundation, the Internal Revenue Service reviewed Mr. Miller’s credentials. It was then that I learned he was a graduate of Harvard Law School who had done contemporaneous graduate work in art history at the Fogg Museum at Harvard University. Mr. Miller and I had not met until the day Ms. Rothschild died. All I knew was that he was her choice. When I learned of his credentials I concluded, and the Internal Revenue Service agreed, that Mr. Miller’s compensation could appropriately be near the high end of the range of salaries for comparable private operating foundations.

During the 10 years preceding Ms. Rothschild’s death, Mr. Miller served as president, chief operating officer, and director of a publicly traded medical-research company. His prior employment included a position as the curator of collections and director of special exhibitions at the Franklin Institute in Philadelphia and law associate at a major New York City law firm.

In addition, Mr. Miller had published a monograph and catalogue on Milton Avery and was serving, or had served, on the boards of trustees of the Philadelphia Museum of Art, the Milton and Sally Avery Arts Foundation, the MacDowell Colony, the New York Studio School, the Pennsylvania Academy of the Fine Arts, and the Philadelphia College of Art (now University of the Arts).

His qualifications and subsequent performance have confirmed Ms. Rothschild’s judgment of selecting him as her foundation’s only trustee.

The Internal Revenue Service specifically inquired into the arrangements for Mr. Miller’s occupancy of the foundation’s property at 1110 Park Avenue. It was satisfied by my response that detailed how his occupancy and maintaining the art collection and Ms. Rothschild’s own work served an exempt purpose within the meaning of Section 501(c)(3) of the Internal Revenue Code.

Erik J. Stapper
Counselor at Law
Stapper & Van Doren
New York