Recommendation Letter PPT

Case: “Historical Society of Pennsylvania” HBSP You often will present recommendations or analysis results to clients, colleagues, or professionals external to your organization. Savvy communicators view a presentation as an opportunity to cultivate relationship and expertise credibility—influencing others to perceive you as a confident, credible, personable professional.

This assignment asks you to convert your written HSP recommendation into a presentation to a diverse audience of businesspeople.

Directions Carefully review your HPS email recommendation to the HSP Board Chair. Assume that the Chair invited you to deliver your recommendation in a 4-5-minute pitch to the board at the upcoming meeting—and you’ll have an additional 2 minutes to respond to questions.

Send To: HSP Board Chair
Recommendation for Future Direction of HSP
Dear Dr. Lewis,
Thank you for sending out the three options for the Historical Society of Pennsylvania (HSP) to
consider prior to our next board meeting. After careful analysis of the case, I recommend that
we move forward with Option 2, which would involve deaccessioning our art and artifact
collection and focusing on strengthening our manuscript, archive, and library holdings.
While it may be difficult to let go of our art and artifact collection, this option would allow us to
concentrate on our core identity as a research library, and prioritize our resources towards
building and preserving our documentary collections. This would give us the ability to add the
valuable Philadelphia City Archives to our collection and attract more researchers, which in turn,
would help us promote our resources and distinguish HSP.
Moreover, focusing on our mission as a research library would enable us to target programs that
build on that mission and effectively preserve and promote the resources that distinguish HSP.
By doing so, we would be able to push funders, researchers, and members to support our
efforts and make our collections more accessible.
In addition, deaccessioning our art and artifact collection would provide us with more space,
which would give us the ability to add more manuscripts, archives, and library materials to our
collection. Furthermore, this option would help us ease financial pressures, as it would be more
feasible for us to replace museum revenues.
To implement this strategy, We would need to undertake a $5-$10 million capital campaign, and
I am confident that with the focus on being the best special collections library in the areas of
HSP’s expertise, we will be able to galvanize the necessary support.
In conclusion, I strongly recommend that we move forward with Option 2, which would involve
deaccessioning our art and artifact collection and focusing on strengthening our manuscript,
archive, and library holdings. I have attached supporting information to this email to further
explain my recommendation. Thank you for your attention to this matter, and I look forward to
discussing this further with the board.
Best regards,
Derrik Allen
Harvard Business School
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Rev. February 5, 1997
The Historical Society of Pennsylvania
We must begin to grapple with the challenges of fitting user interests and collectionrelated needs into the unforgiving realities of bricks, mortar, and dollars.
Susan Stitt
President and CEO
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On Monday afternoon, June 27, 1994, the Board of The Historical Society of Pennsylvania
gathered for a potentially crucial meeting. After numerous meetings, the board was considering
fundamental changes in the direction of the Society. In the late 1980s, the Society had been confronted
by financial difficulties, along with many other Philadelphia cultural institutions. Despite having
made progress towards financial stability by 1994, HSP’s board chair, Howard Lewis, believed major
long-term changes had to be made by the board if the Society was to prosper into the next century.
Several options had been reviewed; an important feature of two of the options was transferring the
museum function and the Society’s collection of art and artifacts to another institution or institutions.
tC
According to Lewis, the board was split over what the future direction of the Society should
be. He described the situation: “This board is often focused on itself, with board members tending to
cluster around their favorite activities. We need a new shared vision of HSP’s mission so we can go
forward together and effectively raise money to realize that vision.”
Background
No
The Historical Society of Pennsylvania is a treasure chest. The key to that treasure
chest will be our clarity of purpose in addressing its key priorities.”
Susan Stitt
September 1990 President’s Report
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One of the nation’s oldest historical societies, The Historical Society of Pennsylvania (HSP)
was founded in Philadelphia in 1824 to “collect and preserve the evidences of the past of the
Commonwealth of Pennsylvania, to encourage scholarly research, and to stimulate public interest in
American history.” It had been in its downtown 1300 Locust Street building since 1910. HSP had
collected “the materials of history” broadly, including both written material and artifacts in its
collections, with priority given to preserving these primary materials and making them available to
the public. The Society supported an extensive research library of books, manuscripts, and family
histories, as well as a small (10,000) but important museum collection of 17th, 18th, and 19th century
art and artifacts. The Society’s manuscript collections included two handwritten drafts of the United
Research Associate Stephanie L. Woerner prepared this case with Professor Stephen A. Greyser as the basis for class
discussion rather than to illustrate either effective or ineffective handling of an administrative situation.
Copyright © 1996 by the President and Fellows of Harvard College. To order copies or request permission to
reproduce materials, call 1-800-545-7685 or write Harvard Business School Publishing, Boston, MA 02163. No
part of this publication may be reproduced, stored in a retrieval system, used in a spreadsheet, or transmitted in
any form or by any means—electronic, mechanical, photocopying, recording, or otherwise—without the
permi ssion of Harvard Business School.
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States Constitution, a cookbook of Martha Washington’s, and the William Penn family’s papers, as
well as early census records, burial records, early Philadelphia real estate maps, and local family
histories. The library held one of the most important genealogical collections in the nation. Examples
of artifacts owned by the Society include George Washington’s desk used during his Philadelphia
presidency, an eight-day clock commissioned by Thomas Jefferson to serve as an accurate timepiece
for astronomical observations, a silver collection spanning three centuries, and a collection of about
1000 paintings by such 18th and 19th century artists as Benjamin West, Gilbert Stuart, John Singleton
Copley, and Rembrandt Peale. In addition, HSP had published a quarterly scholarly journal, the
Pennsylvania Magazine of History and Biography, since 1877. From the 1940s onward, the Society
displayed its art and artifact collections on the first floor of HSP’s building.
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Until recent years, however, HSP had maintained a low profile. Lewis described the Society
during the 1960s as “a place for the Society’s members to gather for tea after the orchestra and as an
attic for them to bequeath family heirlooms.” Among historians and genealogists, however, the
Society was valued for its collections, one of the United State’s largest. HSP was not professionally
managed or governed during the 1960s, and the staff was generally considered to be underpaid, with
lots of resulting turnover.
Times of Change
No
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During the 1970s and the 1980s, HSP had undergone a period of change. Among the changes
was a push to make HSP more visible in the community. Interpretive projects, such as museum
exhibitions and teaching programs, were added to HSP’s traditional program areas of research
facilities, lectures, and publications. A day camp dedicated to history programs for children was
begun by HSP in the early 1980s: children explored different subjects, such as the Revolutionary
War, through field trips to historic sites and other activities. HSP also began offering training
programs for teachers which explained ways to use primary sources such as maps, photos, and
diaries, to help bring history to life in the classroom. Another program, Traveling Suitcases, provided
teaching aids (via a suitcase packed with documents, books, toys, clothes, tools, and games from a
particular period) to classrooms along with ideas for how teachers could use those aids in their
classes. At the same time, HSP began mounting exhibitions in its headquarters building. A
permanent exhibition, “Finding Philadelphia’s Past: Visions and Revisions”, installed in 1989,
showcased HSP’s collections. Other changing exhibitions were designed to display collections such
as graphic and visual images in greater detail and increase public awareness about HSP. Throughout
the period, HSP continued to collect, catalogue, and preserve manuscripts, documents, and artifacts,
and make them accessible to the public, as well as publish its historical quarterly.
In the wake of these changes, the HSP board had revisited the organization’s objectives and
“principles” as part of a long-range planning initiative. One element of the planning committee’s
report was the articulation of a four-part mission statement in October 1988. As shown in Exhibit 1,
the mission statement addressed collecting, preserving, access to materials, and communication to
constituencies.
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Financial, Space, and Personnel Difficulties
By the late 1980s, expenses were increasing and the increases in programs were putting
pressures on the staff. The problems with rising expenses were also compounded by the composition
of the endowment. Although the endowment was well managed, according to a board member the
portfolio in 1980 consisted of 95% debt issues and 5% equity issues; HSP received a consistent
interest and dividend stream but was not adequately appreciating its capital base. The fund manager
and the board member overseeing the endowment began to shift the mix of the portfolio in the early
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1980s; a new Pennsylvania statute allowed this shift. The return being taken out of the endowment
to cover the operating losses, however, was becoming increasingly large.
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There also were major concerns about cramped space at HSP. The Society was located in
downtown Philadelphia in a 78,000 square foot fireproof Colonial Revival building constructed in
1910. HSP had 46,000 linear feet of books and manuscripts, which needed to be housed and cared for
archivally in a climate-controlled, secure space. In addition, there were 10,000 artifacts that needed
the same protected conditions as did the manuscripts and books. Approximately 28,000 square feet
of the building was used for storage: 13,000 square feet for manuscripts and original records, 11,000
square feet for books in the library, and 4,500 square feet for art and artifacts. In many areas, the
collections were overcrowded and poorly shelved, according to an internal Collections Condition
Survey. The public spaces included a permanent exhibit displaying the collections, a temporary
exhibits space, catalogue areas for library and manuscript/archive collections, and a reading room
used by researchers studying the collections. Administrative offices were located in the same
building.
The director of HSP during this period was an academic, strong in research but considered to
have limited management acumen. He knew his limitations and had requested the board hire a
business manager; however, this request went unheeded. Factions developed on the board over the
question of whether the director should remain in his position. Eventually, in 1989, the board
redefined the director’s job to that of president and CEO, and initiated a search to fill the position. It
was agreed that the incumbent director would leave when the new person arrived. (See Exhibit 2 for
a time line of the case events.)
A New President
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Harrison Wright, a Swarthmore history professor with a reputation as a consensus builder,
was elected HSP board chair at the Society’s annual meeting in November 1989. It was under
Wright’s leadership that the search for a new president had been conducted. The financial difficulties
of the 1980s led the board to consider candidates with more management experience compared to
previous directors. Wright described what HSP needed: “Ours is a complex institution requiring
increasingly efficient management. If we are to be good stewards of the collections then we must be
equally good stewards of our time, talents, and physical and financial resources.”
No
Susan Stitt was hired as president and CEO of HSP, and began her service in January 1990.
She took over the day-to-day operations of an organization with an annual operating budget of $1.5
million. Stitt had 25 years of experience as a nonprofit organization administrator in the history field.
She had been the head of an institution, having last served as the director of a history museum in
Stony Brook, NY for 14 years. She was experienced at raising money. In addition, she had worked at
HSP as assistant to the director for one year while she was finishing her masters degree in American
Civilization at the University of Pennsylvania in 1966. In hiring Stitt, Lewis reflected: “The board
made a conscious decision to gain management expertise and to become more professional.”
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Her hiring constituted a departure for HSP. Previous directors had been members of the
Society, often gentlemen-scholars who were intimately involved with the collections, either as
researchers or as private collectors. The background of previous directors reflected HSP’s academic
culture. “A professional manager, not an academic” is how Stitt described herself. She recognized
that her hiring clashed with the culture. Stitt said “In the beginning, researchers would drop by my
office just to gab about their research and I realized they had always done this. It was like a
department in a university.” “You know, she’s not a scholar” was one comment she recalled that was
made about her when she first started. Furthermore, Stitt was the first woman to occupy the top
management position at HSP. Stitt commented “There was innate sexism at HSP. Men worried
about finance, women worried about the programs. I disrupted those roles.” Lewis reflected: “Men
on the board viewed Susan as a helper, while some women on the board, I believe, viewed her as a
threat to the programs.”
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Stitt Takes Charge
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Stitt’s first President’s Report (Stitt described it as “a crisis management memo”) to the board
in September 1990 laid out three immediate goals for the Society: 1) stabilize and improve HSP’s
financial condition, 2) improve the physical storage and cataloging of the collections, and 3) make the
collections more accessible to users.
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Her initial priority was to stabilize the Society financially. She noted: “When I came on
board, HSP was losing $50,000 a month.” Although the new educational and interpretive programs
had increased budget pressures, the financial difficulties the Society faced were not new. According
to Stitt: “HSP never had big money. It was in genteel poverty for generations.” There was no
meaningful budget in place when she arrived; one was hurriedly drawn up. New programs such as
the history camp were curtailed. An experienced controller was hired to oversee the financial
operations. A fundraising program was revitalized and there was a drive to recruit members.
In July 1990, Stitt reduced and restructured the 53 member staff (43 full-time employees and
10 part-time employees equaling 5.97 FTEs) into three divisions—Collections, Interpretation, and
Administration—in an effort to make HSP more efficient. (Exhibit 3 presents HSP’s staff
organizational chart after restructuring.) The Collections staff (the largest group) oversaw the storage
and cataloguing of the collections. The Collections division included three curatorial units,
Manuscripts and Archives, Museum, and Library. The small Interpretation division explained the
significance of the collections and placed them in context through exhibitions, publications, and
classes. The Administration division included the President’s office, the Business office, and the
Development office. The executive structure was reorganized at the same time. A four member
management team—the vice president for Collections, the vice president for Interpretation, the
business manager, and the development director—met with Stitt weekly to develop strategy and
oversee operations. Stitt cut the number of staff by 28% in the reorganization as part of her cost
control efforts.
tC
In addition to discovering that HSP had ineffective financial controls and an outgrown
organizational structure, Stitt found that there was no information on who visited HSP, who used the
collections, and which collections were most used. No data had been collected on the educational
and interpretive programs. Stitt recalled: “It took all of 1990 to get statistics on HSP operations.” A
survey of the current membership was also conducted, gathering demographic data and perceptions
of HSP’s strengths and weaknesses.
Do
No
Despite new attempts to control costs, the Society continued to eat into its endowment;
however, because of the shift in the ratio of debt to equity in HSP’s portfolio, the endowment
continued to grow in value. High expenses meant that the endowment was increasingly taxed, as it
was tapped to cover the operating shortfall. The endowment had barely kept up with inflation since
1939. The 1939 endowment of $1.19 million had grown to $9.31 million by 1990. Further, had the
endowment’s 1980 ratio of debt to equity instruments been maintained, HSP would have been broke.
The spending rate of the endowment at this time was hovering around 12%, due to the use of funds
in the quasi- (or board-designated) endowment to cover HSP’s annual deficits. This was above the
9% spending rate allowed by Pennsylvania statute, and far above the 5% that Stitt and some members
of the board knew was a prudent and conservative spending rate advocated by industry experts, or
the 6.5% rate deemed acceptable by other board members.
In the final section of her memo, Stitt addressed an issue she believed had ramifications for
the future of HSP: There seemed to be no agreement on why HSP existed. She called HSP “a multifaceted organization, fragmented with narrow perspectives that are often self-centered. HSP is an
historical society long undernourished, and impoverished spiritually as well as physically.” She
believed that the need for a mission statement was as much a priority as the need to strengthen HSP’s
financial condition.
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Information is Collected While Resources Remain Stretched
The data collected in 1990 and 1991 revealed much about who HSP’s main users were and
which collections and programs were most popular. Some 3,000 people visited the museum
annually; 3,845 children and 1,515 adults participated in educational programs ranging from class
visits to guided tours. In the Society’s library and archives, approximately 12,000 reader days1 were
logged, making HSP one of the most heavily-used independent research libraries on the East Coast.
The documentary collections were used mainly by professional, academic, and amateur historians
and by those seeking information about genealogy and their family history. (Exhibit 4 presents data
about the users of HSP collections and the number of FTE staff used to maintain each HSP activity, as
well as a breakdown of expenses and revenues.)
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More information was also collected about the members. In 1990, HSP had a membership of
2810. Some 42% had been members for six or more years. Many researchers became members at the
Individual level ($35 per year) or Patron level ($125 per year) because membership afforded them
benefits such as unlimited free entry and use of HSP’s holdings. Membership fees had not been
changed since 1987. A small proportion (1%) became members at a higher level.
In the 1990 membership survey, a majority of members said that free use of the library was
the principal benefit of membership; only a quarter of the members used the library once a month or
more. Many Philadelphians supported HSP through membership because they believed its existence
was important. Overall, HSP’s members were well-educated (over 45% had a graduate degree), with
above-average incomes. Almost half of the members were over the age of 60. Most said they were
interested in history and genealogy; 79% of the members who responded to the survey had used
HSP’s research collections. (See Exhibit 5 for annual membership figures.)
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Effective January 1, 1991, the Society opened the reading rooms on Saturdays. Individual
level members were limited to 12 free visits per year, and a discounted research pass was made
available for additional visits. Unlimited visits continued for Patron members.
No
By 1991, there were pressures on all of HSP’s resources. Staff levels had been reduced
further in an effort to control expenses. (See Exhibit 6 for annual staffing levels.) This made it
difficult to run a wide variety of programs. Stitt later remarked: “The expertise needed to run a
successful library was different from that needed to run a museum or an educational program, and
staff members were usually trained and skilled in only one area.” Lack of space was an increasing
concern. Collections were cramped with little room available for additions. There were no rooms for
lectures, and workshop and preparation space for exhibitions was limited. Financially, there were
additional concerns. Processing, cataloguing, and preserving the collections were necessary steps to
making the collections accessible to the public; these steps needed financial support. Government
entities were cutting funds to non-profit institutions, and foundations typically funded special
projects, not on-going operations. In addition, because government cuts were hitting social programs
hard, foundations were being asked to pick up the slack; this reduced the money available to
historical and cultural institutions. (Exhibit 7 presents HSP’s income statements for 1985–1994.)
Do
Three Options
By late 1992, Stitt knew much more about HSP’s resources and users than was the case two
years before. She was also much more aware of the challenges the Society was facing. At the
November 23, 1992 board meeting, she made a presentation about HSP’s future. Stitt recalled: “I did
not tell any of the board members in advance about my presentation, except David Maxey (the board
chair and Wright’s successor).” There was typically good attendance at an HSP board meeting. In
1 A reader day is one person visiting for one day to use resources in the reading room. If the same person were
to come the next day, another reader day would be recorded.
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this case, 24 board members filled the table in the first floor board room, with only three board
members unable to attend.
Formal governance of the Society had remained relatively unchanged since the 1930’s: Both
the board and the officers were elected directly by the Society’s entire membership. There were 27
board members; they served overlapping three-year terms in cohorts of nine. The board met five
times annually. Of the 1990 board members, about one-quarter were women, and two were African
American. In terms of occupation, 11% were academics, 11% were lawyers, and 40% were in
business and banking. The Society elected its officers for one-year terms. The average tenure of
board chairs since the 1930’s was 5–6 years.
Stitt began her presentation by outlining HSP’s opportunities and challenges to the board,
and then proceeded to describe three options for HSP, as she saw them.
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Option 1 Stitt described Option 1 as “live within our means.” This option reflected what the Society
should do if it decided to depend upon its current resources for operations. HSP would maintain its
present collections—manuscripts and archives, library, art and artifacts—with public access through
the research library and the permanent exhibition. The collections would grow by gift or by
purchase. The research library would remain open on its current schedule, and would continue to
share building space with the permanent exhibition. The permanent exhibition, however, had a
useful life of only six more years (until 1998). Under this option, HSP would continue to publish its
journal, but would have to find outside sources of funds for any other programs, including school
programs, teacher workshops, lectures, and special exhibitions. By board decision the previous year,
HSP was moving toward a 6 1/2% utilization rate of true endowment value, down from the current
9%, in order to insure long-term asset growth by appreciation. Under this condition, several million
dollars would have to be raised for the endowment to maintain the research library and the museum
at current levels. This would preclude adding new programs, supporting existing ones further,
upgrading the facilities, and increasing access to the collections. However, Stitt said that she doubted
whether significant funds could be raised, given “HSP’s inherent problems of over-extension.”
Stitt cited a healthy endowment as crucial to maintaining the research library and/or the
museum. She noted that these institutions have relatively high fixed costs and thus need income
from an endowment and/or contributions. The median earned income for historical societies is only
approximately 8% of their operating budgets.2 Thus endowment income helps defray operating
expenses. Stitt thought that the prospect for foundation funding under this option was limited
because foundations typically did not offer operating support to libraries with few or no programs.
Do
No
In Stitt’s view there were compelling reasons not to continue to support both a research
library and a museum. HSP’s art and artifact collection, although important, was relatively small at
10,000 items; it was not big enough to support ongoing and changing exhibitions that would capture
public attention. In addition, it was both more labor intensive and space intensive to create public
access to its art and artifact collection than to its document collection. HSP did not have the space,
without expanding its building, nor the financial resources without a major capital campaign, to
increase, preserve, present, and interpret both its library and manuscript collections as well as its art
and artifact collections. Stitt, in describing the Society’s situation, said “Our space is too cramped to
sustain collecting, responsible preservation, and adequate public service. And our funds are
currently too limited to upgrade our facilities, appropriately compensate our staff, and prudently
enhance our endowment.” In addition, HSP was not located in an area that was attractive to
potential spur-of-the-moment visitors; there were no nearby cultural or historical attractions to draw
people who might also be interested in HSP.
2 Jed I. Bergman in collaboration with William G. Bowen and Thomas I. Nygren, Managing Change in the
Nonprofit Sector (San Francisco, Calif.: Jossey- Bass, 1996).
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However, remaining both a research library and a museum did have its merits. In some
areas (e.g. the Mifflin family collection and the William Penn collection), the combination of HSP’s
artifacts and papers was very rich, giving researchers opportunities to study a person or family on
several levels. Maintaining both functions would keep all of the collections at HSP, quelling
arguments about deaccessioning3 and the violation of public trust (see below). However, Stitt was
adamantly opposed to maintaining both functions at HSP; she called this option “death by a
thousand nibbles.” She believed that the burden of caring for and preserving both kinds of
collections, with their different needs, would cause HSP to stagnate and suffer even further
financially. She saw HSP eventually losing its preeminence as a research library because the tight
finances and space restrictions would not allow either the museum or library collections to be
expanded or made more available to the public.
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Option 2 Under Option 2, HSP would maintain its core identity as a research library, by building and
strengthening its manuscript, archive, and library holdings. It would deaccession its art and artifact
collection to other non-profit institutions. This Stitt termed the “get smaller to get better” option. By
giving up the art and artifact collection, space would be gained for additional manuscripts, archives,
and library material. This could give HSP the ability to add the valuable Philadelphia City Archives
to its collection. (HSP had been approached by a large foundation to consider helping the City
Archives collection which was inadequately maintained and housed. Although the city’s budget did
not provide money for the collection, the city wanted it to be preserved.) By focusing its mission on
documentary collections, HSP could target programs that built on that mission, orient itself towards
researchers, and more effectively preserve and promote the resources that distinguished HSP. In
addition, Stitt thought that several foundations would support a capital campaign to increase the
endowment, and she identified local foundations that were prospects for helping improve the library
facilities.
Do
No
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HSP’s reputation principally derived from its extensive library and manuscript collection and
the majority of named funds in the endowment were associated with the research library. Stitt’s
research showed that most members and users always thought HSP was a library, not a museum.
Stitt noted: “Of the 50 state historical societies in the United States, half are either a library or a
museum. The state historical societies that have both programs are either private and well-endowed,
like the Massachusetts Historical Society, or are publicly funded, like the Minnesota Historical
Society.” Nonetheless, an attempt by HSP to focus its mission and pare down its programs to become
a better research library would be unusual. The museum programs of historical societies were
typically more popular, better known to the general public, and easier to fund than their libraries.
Serving historical and genealogical researchers was a small market niche. While the choice to
deaccession the art and artifact collections and concentrate on the research library was not common, it
had been done before. For example, in 1910, the American Antiquarian Society gave its artifacts to
other museums in order to focus on its printed material collections. Deaccessioning its art and
artifact collections would give HSP more space and ease the financial pressures. Nevertheless,
deaccessioning is a controversial strategy, raising questions about an institution’s obligation to its
collection’s donors. Stitt recognized that to implement this strategy—i.e. improve the collections and
related programs and make them more accessible, as well as replace museum revenues—depended
in part on a $5–$10 million capital campaign. Stitt’s thought was that a narrowing of the focus to
being the best special collections library in the areas of HSP’s expertise, would galvanize funders,
researchers, and members to support such a capital campaign.
3 Deaccessioning is an expression used in collecting organizations like museums and historical societies to mean
getting rid of part of the permanent collections of an institution either by selling, donating, or trading them. A
great deal of stigma is attached to deaccessioning; it has been likened to lawyers breaking a trust. The generally
accepted practice for art museums is that they may deaccession objects in order to upgrade their collections by
acquiring better objects to replace the deaccessioned items. According to Stitt, however, the generally accepted
norm for history museums is that they may use the proceeds from deaccessioning to add to the endowment in
order to care for items in the permanent collection. It goes against current industry norms and practices to fund
ongoing operations with the proceeds from deaccessioned objects.
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Option 3 Stitt called the third option the “big idea”. In this scenario, HSP would retain its core
identity as a research library, as in Option 2, but instead of just deaccessioning its art and artifact
collection to other non-profit institutions, HSP, together with several other Philadelphia historical
and cultural museums, would create a major history museum. According to Stitt, this new museum
would solve several problems. There were ten non-site (i.e., not historic houses) specific history
museums in the Philadelphia area which were small and dispersed throughout the city. Most of
these museums were also having financial difficulties. One of them, the Atwater Kent Museum
(AKM), with a large collection of 82,000 items concentrating on the 19th and 20th century, had been
supported by the city; however the mayor had told AKM they would be losing that support in three
years. AKM’s collections complemented HSP’s 17th, 18th and 19th century collections, and together
they represented a wide range of Philadelphia history. Stitt thought that one comprehensive history
museum was more likely than ten separate museums to attract funding and provide lively programs
and exhibits that would draw in tourists, students, and city residents . In addition, by donating the
Society’s art and artifact collection to this new museum, the small but important HSP collection
would be kept intact, would remain in Philadelphia, and would be more accessible. Stitt had
approached foundations as well as city and state government officials about the idea of a history
museum, and they were all positive about the concept. The foundations, including the William Penn
Foundation, the Pew Charitable Trusts, and the Annenberg Foundation, especially wanted to be in on
the planning stages.
tC
Many concerns were raised about this option. None of the museums that were interested in
working together to create a joint history museum were well-funded. Putting together a building
campaign and an endowment that would be sufficient to sustain a new museum would require major
fund-raising; it was projected that the History Museum would need to raise $50 million. There were
questions about how much support the public would give to this plan. There was also another
Philadelphia history museum, Constitution Center, in the planning stages; however, its focus was
national and specific, rather than regional and broad as was the museum Stitt was proposing. In
addition, the fundraising for a history museum could conflict with HSP’s own planned capital
campaign. Stitt, as developer of the idea, would need to devote time to getting the history museum
off the ground. There were also questions about the status of the new museum: Would it be an
independent institution? Would other museums be willing to donate their collections to it and in
essence go out of business? How much support would the other history museums give to the
venture? Stitt believed that the new museum should be an independent institution and that HSP
should not be part of the governing structure. She thought that HSP should donate its entire art and
artifact collection to the new museum because the latter would need first-class collections to succeed.
This option would require a lot of work from both Stitt and HSP board members.
No
Stitt talked extemporaneously for 30 minutes about HSP’s future. At the end of her
presentation, Stitt recalled: “The board applauded the concept and agreed to examine the options in
more detail.” Because of HSP expense overruns, Stitt recommended that the Society’s museum
department be curtailed indefinitely; only one employee would support the museum while HSP’s
future was being discussed by the board.
Dissent Crystallizes
Do
Although board members expressed initial enthusiasm for focusing HSP’s mission, they soon
realized that the art and artifacts, some of which graced the walls of the Society’s headquarters,
would no longer remain at HSP under some options. One board member questioned the wisdom of
mothballing the museum department, saying “We should evaluate our own stewardship.” Some
questioned whether there had been an active enough fundraising effort, telling Stitt “If you raised
more money, there wouldn’t be a problem.”
Several board members were unhappy with the idea of deaccessioning the art and artifact
collection. There were two central arguments made against deaccessioning. Some board members
said “these are our things” and considered the collection to be decorative antiques that made HSP a
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“pretty library”; they liked the ambiance in the Society’s building. Other board members believed
that deaccessioning the collection was a violation of trust: the objects had been given by HSP
members to HSP members. In the view of these board members, HSP had a moral responsibility to
keep and preserve the objects that had been given to it. There were also questions about whether
HSP could legally sell or give away donated art and artifacts that the Society had accepted.
op
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These arguments caused board and staff members to consider what the Society’s
responsibility was to the members, the collections, and the public. Some board members thought that
HSP was a “club” and its responsibility was only to its members. Lewis later commented “Some of
the Society’s board at that time thought HSP existed only for its own members.” Many members
cared only that the collections be made available for research. The staff viewed the collections as
“objects that tell stories” and considered HSP a caretaker for those collections. In their mind, the
objects were dedicated to the public and they should be made accessible to the public, either at HSP
or at another institution. In fact, people who had bequeathed belongings to HSP often did not give
any indication as to how they viewed their gift; most items were given without restrictions or an
endowment to support them. During this period of reflection, HSP became aware that the Society
was viewed by the public as having a broader civic responsibility, not only to its own collections, but
also to endangered collections in the city. For example, in January 1991, one of HSP’s funders had
asked Stitt “What is HSP going to do about the City Archives?”
tC
In time, two more options were suggested by members of the board: 1) be a research library
but retain a core collection of the best art and artifacts at HSP or 2) cut more staff in order to reduce
expenses. Stitt argued that keeping the most desirable art and artifacts would doom the proposed
history museum because to be successful the museum would have to have those objects in order to
attract visitors. Further, in her view, even if the history museum did not come to pass,
deaccessioning only the less desirable items in HSP’s collections would not bring enough money into
the endowment to improve research programs and increase collections significantly. Stitt maintained
that making more cuts in staff would make it difficult to keep the collections accessible to the public;
the staff at HSP had already been cut substantially.
Do
No
Throughout 1993, Stitt, together with HSP’s management team and the board chair,
continued to put together documents formally detailing the three major options. Meanwhile, further
financial pressures led to further layoffs. Separately, Stitt brought in a consultant specializing in nonprofit organizations to help accelerate the planning process. A question posed by the consultant,
“What is HSP’s market?”, helped guide the planning sessions. Most board members were willing to
discuss focusing the mission but there were concerns about deaccessioning. Although donating the
museum collection to the History Museum would keep HSP’s collection together and in Philadelphia,
some board members saw the art and artifact collection as substantial assets that could be sold to
maintain and expand the research library. One board member described the art and artifacts “like
shares of IBM that can be sold to provide money to care for the remaining collections,” and the
Philadelphia Museum of Art had already expressed an interest in some of the items in the collections.
Although there was only a vocal minority of three who adamantly continued to oppose
deaccessioning the art and artifact collection, other board members occasionally sympathized with
them. The minority was depicted by one board member as “consisting of someone who abhors the
idea of getting rid of anything, a friend of that person, and a former staff member whose heart is in
the artifact collection, having published a book on part of that collection.”
Friction also appeared between Stitt and Maxey, the board chair. Maxey believed that HSP
should solve its financial problems before setting priorities. Stitt thought that HSP’s financial
problems stemmed from its diffuse mission and that her job was to help HSP change so the strategy
reflected the mission. She said: “I was hired to give an opinion and I gave it.” Maxey declined to
serve a third term as board chair and was succeeded by Howard Lewis, a friend and college
classmate of Maxey’s, at HSP’s November 1993 annual meeting.
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Lewis Takes the Chair
Lewis was born in 1934 in Philadelphia. He graduated from Harvard in 1956, and later
earned his law degree there in 1962. He practiced in Philadelphia, specializing in corporate law.
Lewis was a long-time HSP board member and the second member of his family to lead the Society.
When invited to join the board for his first term during the early 1960s, he was told “Your
grandfather was president of the Society and you belong there.” Lewis remained on the board
through the 1970s and 1980s, serving as board chair in the mid-1980s. He ran HSP’s first capital
campaign in 1975–1976, raising $750,000. He became vice president of the troubled Atwater Kent
Museum in 1991. Lewis knew the history of HSP and had a reputation for getting things
accomplished. Jack Friedland, a current board member who did a lot of fundraising for HSP, asked
Lewis to return as board chair in 1993 to preside over the direction of HSP’s future and to try to unite
the board in that decision.
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Lewis recognized that HSP had financial problems. He later said “When I took over, I knew
we had to have a capital campaign because of the drain of money out of the institution.” He was,
however, initially unconvinced of the need to examine HSP’s mission. He recalled “I was
uncommitted until Susan proved it to me.” Once convinced, he worked at persuading the rest of the
board of the need to do so. Lewis described the 1994 board as “. . . a group of nice people but no
leaders. There was no mobilization on the board on the issues facing HSP.”
tC
Lewis enlisted several members of the board to help him. He recalled “We had two business
leaders who brought their skills into play. Bill Warden, our treasurer, quietly repeated that we
needed to lower our endowment take from 9% to 6 1/2%. Jack Friedland encouraged our donors to
contribute more to the Society. They were most helpful in getting the rest of the board to contemplate
change.” Although some of the members of the board were enthusiastic in considering change,
others, as Lewis phrased it, were “wafflers”. Describing the latter, Lewis said “They saw
membership in the Society as social and undemanding and they wanted this to continue. They really
didn’t want change and didn’t want to put up money.” Other wafflers were trustees who personally
did not like Stitt. The core opposition still consisted of the three board members who continued to
raise issues about deaccessioning the art and artifact collections.
No
The three opposing board members made Lewis’s job of guiding HSP’s future direction
difficult. There were great pressures for unanimity, even among board members supportive of
change. “Culture and traditions in Philadelphia decreed consensus,” Lewis said. He described
Philadelphia as a “village” and said “In Philadelphia, we spend a lot of time talking about options. It
is a Philadelphia tradition to want everyone on the same track before going forward. Getting only
majority support and moving forward is not comfortable for many people.” Stitt concurred:
“Decisions are harder to make in Philadelphia.”
Do
Although the board was still split and board meeting discussions remained contentious, most
of HSP’s other constituencies viewed the prospect of change in a positive light. Stitt described the
staff’s reaction: “The staff was startled at first, but by now most of the staff supports change. There
are still a few old-timers who would like nothing to change and there is some job concern among the
staff.” Most of the members of HSP already considered it a library, not a museum; some had even
called and said “You guys are finally doing something.” Foundations were especially interested in
the history museum proposal, as was the city. Stitt said “The arguments about HSP’s mission are all
internal, at the board level. I would have never guessed the amount of internal debate this decision
would provoke.”
The June 1994 Board Meeting: Facing a Decision
Stitt had further reduced expenses by mid-1994. (See Exhibit 7 for annual income statements
and Exhibit 8 for a chart of HSP income and revenue broken out by source.) Lewis and some other
10
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members of the board urged board members to increase their personal contributions. Lewis noted
that Friedland was an especially effective fund-raiser: “Jack wanted to know how much we, as
trustees, were individually giving to HSP. Jack held our feet to the flame.” According to Lewis, the
endowment was now being managed for growth. It was being overseen by George Connell, a
leading fund manager who was the Society’s long-time vice-chair for finance; he had shifted to the
mix of the portfolio to 20% bonds and 80% equity. The museum exhibitions were winding down and
were not being replaced. “We are stable but we are spread far too thin” was how Stitt depicted HSP’s
financial situation. HSP was continuing to take out a big return from the endowment, more than was
considered prudent.
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By June 1994, Lewis and Stitt decided it was time for HSP to resolve its future direction and
to move forward. Lewis believed that Stitt had propelled the process, creating, researching, and
formally presenting options in a series of four planning documents over the past year and a half. He
said “Susan enlisted us [the board] in serious consideration of the future.” At the same time, Lewis
kept the board focused on its task. Stitt commented “Howard didn’t let the issues get off of the board
agenda.” Lewis charged the board to “examine the Society’s goals, explore our institutional
opportunities for public service, and identify the resources we need to fulfill our mission.”
tC
As the board pondered its alternatives, several additional questions were raised about the
process and the intent of change. What should the new mission of HSP be? What should be the
board’s role in planning strategy and guiding change? What was the responsibility of board to the
collections, to the public, to the organization, to the members? How important are minority views
and what constitutes “consensus”? What is needed to propose and implement change successfully at
HSP?
List of Exhibits
Exhibit 1: 1988 HSP Mission Statement
No
Exhibit 2: Time Line of Case Events, 1988–1994
Exhibit 3: HSP Staff Organizational Chart
Exhibit 4: Breakdown of HSP Users, Staffing Levels, Revenues and Expenses
Exhibit 5: HSP Annual Membership Figures
Exhibit 6: HSP Staffing Levels
Do
Exhibit 7: HSP Income Statements, 1985–1994
Exhibit 8: HSP Income and Expenses by Source, 1991 and 1994
11
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The Historical Society of Pennsylvania
1988 HSP Mission Statement
Exhibit 1
The Historical Society of Pennsylvania has a four part mission:
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It will COLLECT the best available evidence in keeping with its Collections
Policy;
•
It will PRESERVE its collections and assets by improvements to physical plant,
by improvements to storage of collections, by an alternative text program, and by
a planned conservation program;
•
It will MAKE AVAILABLE its collection more fully by improved cataloguing,
mounting a permanent exhibition, by sponsoring fellowships, symposia, and
publications;
•
It will actively COMMUNICATE with its constituencies – both established and
new – what this generation needs to know about the past to encourage the
widest possible understanding and the wonder of discovery.
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•
Exhibit 2 xxx Time Line of Case Events, 1988–1994
Long Range Planning Report (a needs assessment document) issued.
tC
April 1988
October 1988
1989
1989–1991
Board redefines director’s job to that of president and CEO; board conducts search
for new president.
Harrison Wright chairs board.
Susan Stitt begins to serve as president and CEO.
No
January 1990
Mission Statement approved.
July 1990
September 1990
1990–1991
Current staff and management structure put into place.
Stitt presents crisis management memo to board.
Information about users and members collected; Stitt reduces staff.
David Maxey succeeds Wright as board chair.
November 1992
Stitt presents three options to board.
Do
November 1991
June 1993
Planning sessions with Stitt, management team, and board chair; further staff
reductions.
November 1993
Howard Lewis elected board chair. Future options of HSP explored in detail and
presented in planning documents.
June 1994
Board meets to decide future direction.
12
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Exhibit 3 xxx HSP Staff Organizational Structure
1991
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The Historical Society of Pennsylvania
President and
Chief Executive Officer
Vice President
Collections Division
Vice President
Interpretation Division
29 People
including the following
departments
Library
9 People
Museum
2 People
1994
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Manuscripts and Archives
11 People
5 People
Administrative Division
18 People
including the following
departments
Business Office
3 People
Development Office
4 People
tC
President and
Chief Executive Officer
Vice President
Interpretation Division
17 People
including the following
departments
6 People
No
Vice President
Collections Division
Administrative Division
13 People
including the following
departments
Business Office
3 People
Library
6 People
Development Office
3 People
Do
Manuscripts and Archives
6 People
13
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Exhibit 4
Breakdown of HSP Users, Staffing Levels, Revenues and Expenses—Fiscal year 1993 (from 1993 Planning Documents)
Activity
Users
1. Collection and Preservation
a. collecting and deaccessioning
1) active—searching
2) passive—selectively accepting
b. preserving/caring for collection
1) active—housing, treatment
2) passive—storing in safe building
d
c. researching presentations—programs/workshops,
exhibitions, teaching aids
3. Goods (derived from information/collection)
a. passive (users come to us)
1) research library
2) rights & reproductions (photos and copies)
3) written inquiries
4) loans—short-term and long-term
5) sales of publications and royalties
b. active
1) programs/workshops/events
2) exhibitions
t
o
4. Services
a. passive
1) facility rental usage
2) facility and access rental—GSP
3) general and professional information
b. active
1) publishing history—PMHB (3,200 copies each of 3 issues)
2) membership
a
o
D
N
Revenues and
Restricted
Gifts
% of Total
Incomeb
Direct
Expense
As % of Total
Expensesc
13,920
0
17,604
40,300
1%
2%
2%
40,780
110,770
2%
7%
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1.0 FTE
0.6 FTE (13)
1.4 FTE
35,030
0
3.6 FTE (2)
same as 2a at same
time
1.7 FTE (2)
81,886
5%
139,581
8%
28,801
2%
60,250
4%
8,727 researcherse
240 requests
564 inquiries
19 museums and
historical societies
5.3 FTE (10)
1.5 FTE
1.4 FTE (7)
.05 FTE
*
16,030
32,809
11,070
0
23,415
1%
2%
1%
171,250
50,090
38,380
5,670
1%
d
10%
3%
2%
0%
5,422 participantsf
3,847 visitors
0.8 FTE
0.5 FTE
8,480
61,717
0.5%
4%
25,333
74,946
1.5%
4.5%
18 organizations
d
3,555
23,739
0
0%
1%
37,550
2%
1.0 FTE
1.0 FTE
56,620
73,420
3%
4%
68,900
44,854
4%
3%
19.85 FTE (34)
$470,492
26.5%
$926,258
54%
d
d
2,712 members
Head count, not hours, not including governance and development volunteers
Total expenses, $1,693,858
e
Each researcher paid $1.83 and cost $19.62
c
Approximate No.
FTE Staff
(Volunteersa )
240 donors
2. Making Access Possible
a. inventorying, cataloging collection
b. making finding aids—cards, on-line, indexes, biographies
Totals
-14 –
b
d
f
d
d
Total revenue and resources used, $1,693,858
Negligible
Each participant paid $1.56 and cost $4.67
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Exhibit 5 xxx HSP Annual Membership Figures
2,112 members
1978
3,118 members a
1987
3,107 members
1990
2,810 members
1991
2,650 members
1992
2,813 members
1993
2,712 members
1994
2,507 members
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1939
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The Historical Society of Pennsylvania
a
This figure was inflated by as much as 10% because the membership rolls carried individuals in arrears for as
long as one year.
Exhibit 6 xxx HSP Staffing Levels
19 staff members
1978
22 staff members
1987
1991
33 staff members
53 staff members: 43 full time staff,
10 part-time staff members equaling 5.97 FTEs
32 full time staff,
part-time staff members equaling 6 FTEs
No
1992
tC
1939
28 full time staff
part-time staff members equaling 6.5 FTEs
1994
25 full time staff
12 part-time staff members equaling 6.66 FTEs
Do
1993
15
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Exhibit 7 xxx HSP Income Statements, 1985–1994
Operating information only
Excludes restricted funds & capital campaign
-16 –
Historical Society of Pennsylvania
12 Months
Ended
December 31,
1989
6 Months
Ended
June 30,
1990 a
12 Months
Ended
June 30,
1991
1992
1993
1994
37,595
–
99,504
29,707
84,494
267,423
518,723
15,993
13,432
137,735
28,369
84,260
272,481
552,270
14,820
14,643
128,248
27,294
91,807
269,087
545,899
13,849
16,050
97,740
22,694
97,289
234,299
481,921
o
y
p
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1985
1986
1987
Support and Revenue
Admission—education/galleries
Admissions—research
Memberships
Rental income
Auxiliary activities
Contributions & grants
Total support & revenue
9,009
–
80,879
88,968
65,947
90,989
335,792
15,065
–
90,864
58,140
95,422
170,080
429,571
25,312
–
99,727
59,860
112,499
205,971
503,369
31,684
–
99,577
67,170
111,305
222,927
532,663
20,445
–
96,888
46,463
83,276
188,830
435,902
48,102
–
95,060
30,338
80,562
75,232
329,294
Expenses
Program
Administrative
Development/membership expenses
Total operating expenses
285,367
415,890
111,102
812,359
402,948
432,881
98,255
934,084
650,282
320,790
158,570
1,129,642
697,051
353,701
169,506
1,220,258
940,012
351,504
177,495
1,469,011
837,988
601,086
143,182
1,582,256
751,006
585,213
197,996
1,534,215
903,183
635,612
231,934
1,770,729
733,480
524,093
208,881
1,466,454
564,409
632,276
164,246
1,360,931
(476,567)
(504,513)
(626,273)
(687,595)
(1,033,109)
(1,252,962)
(1,015,492)
(1,218,459)
(920,555)
(879,010)
426,984
49,583
0
t
o
517,255
170,340
0
594,430
438,679
0
541,882
711,080
0
501,708
513,784
0
454,650
763,809
0
421,279
499,276
0
408,399
470,611
0
1993
1,466,454
-17.18%
2.60%
1994
1,360,931
-7.20%
2.70%
-19.78%
-9.90%
Excess/(Deficit) (Operating)
Prior to endowment return
Endowment utilized
Interest/dividend
Capital gains
Excess/(deficiency)
a
o
D
Source: Audited financial statements
475,713
28,800
0
492,180
134,093
0
1988
Note: 1990 amounts doubled to offset the effect of a six month period.
N
Operating expenses
% change over prior year
Philadelphia inflation rate #
% Change adjusted for inflation
1992
1,770,729
2.10%
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Exhibit 7 (continued)
Operating information only
Excludes restricted funds & capital campaign
Summary
Total income
Total expenses
Increase/(decrease) over prior
year expenses
%
Capital additions
Gain on pension plan termination
Investment market value
Investment cost
Endowment Income
Interest/dividend
Capital gains earned
Total capital gains earned
Less: Capital gains utilized
Capital gains realized
Capital gains used
Cumulative CG carry forward
Rule of 9% (entire endowment)
Rule of 9% (excluding quasi endow)
Endowment composition (units)
Restricted principal & income
Unrestricted principal & income
Total
o
D
Source: Audited financial statements
-17 –
Historical Society of Pennsylvania
1985
1986
1987
335,792
812,359
429,571
934,084
503,369
1,129,642
121,725
14.98%
195,558
20.94%
135,552
12 Months
Ended
December 31,
1989
1988
6 Months
Ended
June 30,
1990*
12 Months
Ended
June 30,
1991
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p
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532,663
1,220,258
435,902
1,469,011
329,294
1,582,256
518,723
1,534,215
90,616
8.02%
248,753
20.39%
113,245
7.71%
(48,041)
-3.04%
228,000
81,988
11,080
100,551
1992
1993
1994
552,270
1,770,729
545,899
1,466,454
481,921
1,360,931
(304,275)
-17.18%
(105,523)
-7.20%
236,514
15.42%
58,452
6,140,871
3,760,756
7,288,972
4,250,231
7,131,734
4,717,481
8,155,709
5,520,291
10,043,947
5,745,354
9,311,581
5,223,827
8,465,109
4,096,159
9,427,592
4,341,883
10,380,230
4,881,925
9,689,089
4,792,459
426,984
354,947
475,713
331,596
492,180
349,071
517,255
518,289
594,430
125,684
541,882
57,842
501,708
115,684
454,650
208,908
421,279
334,657
408,399
395,193
354,947
(49,583)
331,596
(288,000)
349,071
(134,093)
518,289
(170,340)
125,684
(438,679)
57,842
(711,080)
115,684
(513,784)
208,908
(763,809)
334,657
(499,276)
395,193
(470,611)
334,657
(473,257)
320,869
395,193
(423,919)
292,143
–
–
–
–
719,649
201,504
(461,684)
459,469
641,856
734,014
903,955
419,021
761,860
720,180
848,483
827,028
934,221
915,286
872,018
861,263
245,112
3,395,441
210,694
3,851,247
245,112
3,412,212
94,881
3,752,205
245,109
3,415,807
75,735
3,736,651
248,435
3,429,147
45,923
3,723,505
t
o
–
552,678
N
–
656,007
This document is authorized for educator review use only by Judy Tisdale, HE OTHER until May 2017. Copying or posting is an infringement of copyright. Permissions@hbsp.harvard.edu or 617.783.7860
t
s
o
P
r
597-062
Exhibit 8 xxx HSP Income and Expenses by Source, 1991 and 1994
FY91 Income by Source
Fiscal Year
1991
Restricted
Grants
11%
Sales &
Ancillary
Services
7%
Memberships
5%
Admissions
2%
Endowment
Gains &
Transfers
25%
Contributions,
Grants
23%
Restricted
Contributions &
Grants
14.0%
Memberships
6.4%
Ancillary
Services
7.8%
Contributions &
Grants
15.3%
o
D
t
o
Admissions
2.0%
N
Special
Projects, Other
10%
o
y
p
o
C
Endowment
Income
(Investments)
27%
FY94 Income by Source
Fiscal Year
1994
FY91 Expenses
Office &
Communications
15%
Occupancy
9%
Personnel
66%
FY94 Expenses
Endowment
Realized Gains
25.8%
Investment
Income
28.7%
Personnel
60.5%
Special
Projects, Other
5.1%
Office &
Communications
17.7%
Occupancy &
Depreciation
16.6%
This document is authorized for educator review use only by Judy Tisdale, HE OTHER until May 2017. Copying or posting is an infringement of copyright. Permissions@hbsp.harvard.edu or 617.783.7860
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