A colleague of mine espouses what he calls the ”mushroom method” of managing a board of directors: keep them in the dark, and every now and then shovel crap on them (he uses an alternate word for ”crap”). That method may have been a factor at the Milwaukee Public Museum, based on the news flowing from their announcement last month of severe financial troubles.
Now it seems that when that organization’s endowment committee met at the beginning of the year, they were given the wrong year-end balance for the organization’s endowment. They were told it stood at $6.4 million, when in fact it had already dropped to $2.5 million. The committee now claims they would have done something about the troubles sooner if they had known the truth.
However, the error seems more a product of ”mushy” than ”mushroom” management. The organization’s endowment and operating money were invested together — confusing the financial manager of the funds, it seems — and worse, it appears that the organization was spending down its endowment without even knowing it.
It’s certainly easy to point to the staff and executive leadership for fumbling the ball so horribly, and even to suggest that they didn’t keep their board informed and engaged enough to govern well. But the ”mushroom method” can also be a self-imposed or mutually reinforcing phenomenon when the board has a preference for sitting in the dark.
