Downsizing for stability?

The Syracuse Symphony board is giving up because it’s just too damned hard:

Syracuse Symphony s board of trustees will file Chapter 7 bankruptcy, likely next week.

Interim Executive Director Paul Brooks made the announcement Tuesday following a 2  hour SSO board meeting. Board chair Rocco Mangano, seated next to Brooks in a conference room of Eric Mower and Associates  downtown office, did not speak during the brief press conference.

Brooks read a statement expressing the board s  great sadness  at reaching this decision and its attempts  to find any and every possible means to survive.  He said the board realized it couldn t support a 77-person, $7 million orchestra on a $5 million budget.

The statement also pointed out if another symphony organization should be organized in the future, it would not be saddled with the SSO s $5.5 million debt, a $2.5 million unfunded pension liability or  a union contract that restricts its ability to configure itself to fit the times. …

When asked if this leaves open the possible formation of a future symphony, Brooks said  That’s a question to be answered down the road.

Brooks said the board decided to file for Chapter 7 bankruptcy because of the SSO’s outstanding pension liability. Chapter 7 enables the Pension Benefit Guaranty Corp. to step in and take over responsibility for the pension, ensuring the musicians  pension remains whole and intact, he said.

The SSO’s $5.5 million debt includes major unfunded pension liability, outstanding accounts payable, bank debt and unfulfilled susbscriptions, he said.

Jeremy Mastrangelo, an SSO musician who sits on the board, attended the meeting.

In the end, people put up their hands and said “We didn’t know how to do it” and “there’s nothing we can do” to raise the money to continue the operation.

He said musicians will find the the news hard to take because they were  explicitly  told in making their salary and benefit concessions last summer that would ensure the viability of the SSO s 50th anniversary season. He added in the recent discussions with management and the board, musicians offered even more in concessions for next season.

Apparently last summer the “union contract” didn’t “restrict the orchestra’s ability to configure itself to fit the times.” Making the orchestra smaller then didn’t seem to help. Why does the board think it would help now?

Maybe this board would have been successful running a $5 million orchestra when they failed to sustain a $7 million budget. I think it’s more likely that, had they been running a $5 million orchestra, they would have failed at that and then demanded $3 million orchestra.

The problem with concessionary bargaining for musicians is that the people demanding the concessions are generally demanding them because, on some level, they’ve failed to run the institution responsibly. That makes it very hard for musicians to believe that they’ll do any better in the future. But, in many situations, they fear that the board will do exactly what the SSO board did – walk away.

The non-profit sector is one of the great achievements of American society. But it has serious structural flaws. The biggest is the mis-alignment of the incentives of those who use the services of non-profits, those who work for non-profits, and those who govern non-profits. Volunteer non-profit boards paradoxically can have the least at stake in the institution’s success or failure of any of the institution’s constituents or beneficiaries. All they lose in throwing in the towel is having to make donations and asking their friends for money.