Risk & Compliance

Smithsonian: No Corporate Types, Please

Roiled by charges of excessive spending and inappropriate personal expenses, the Smithsonian announces governance changes that ban all corporate di...
Stephen TaubJune 19, 2007

The Board of Regents of the Smithsonian, the august institution charged with safeguarding the cultural treasures of the United States, announced sweeping governance changes Monday “based on nonprofit sector best practices.” Among those best practices: prohibiting its staff members, which apparently includes its own board members, from serving as directors of for-profit companies.

The Board did not provide an explanation for why such a prohibition translates into better governance, but the changes are a response to multiple reports of excessive spending among board members and other staff members. In May, the House Appropriations Subcommittee on Interior, Environment and Related Agencies rebuked the institution by announcing it had cut four percent — $26 million — from the Smithsonian’s budget “based on significant problems of governance and fiscal policies at the institution.”

That move followed the March resignation of Smithsonian Secretary Lawrence M. Small, amid criticism that he had made more than $2 million in expenditures. In May, Gary M. Beer, the CEO of the for-profit Smithsonian Business Ventures also left amid congressional and internal reviews of his spending, according to a report in the Washington Post. The announcement of the Smithsonian’s new policy also coincides with the resignation of Sheila Burke, the Smithsonian’s Deputy Secretary and chief operating officer. Both Small and Burke were also members of the board of Chubb Group during times when that company was providing the Smithsonian with insurance, according to the Washington Post.

The governance changes will also give the Smithsonian’s CFO and general counsel direct access to the Board of Regents. Other new practices and policies announced by the Smithsonian are a Board of Regents chair who is separate from the chancellor; a change in the leadership of all the board’s committees; and requiring a minimum of four full-day board meetings per year. Altogether, the Governance Committee made 25 recommendations for new and updated policies.

Smithsonian Business Ventures will follow established Smithsonian guidelines in such areas as compensation and human resources, contracting, travel and accounting. Exemptions to general policies must be approved by the Secretary and the Regents.