NEW YORK—On June 23 the Senate Finance Committee chairman Sen. Charles Grassley publicly criticized the board of the J. Paul Getty Trust, Los Angeles, and questioned its management practices in the wake of a newspaper report detailing the compensation and travel perks of president and CEO Barry Munitz.
“Charities shouldn’t be funding their executives’ gold-plated lifestyles. I’m concerned that the Getty board has been spending more time watching old episodes of Lifestyles of the Rich and Famous than doing its job of protecting Getty’s assets for charitable purposes,” Senator Grassley declared in a statement made available to ARTnewsletter.
A June 10 story in the Los Angeles Times describes Munitz’s excessive spending at the Getty’s expense in recent years, even as the institution was undergoing a series of cutbacks and layoffs after the endowment lost $1 billion in the stock market. Among the expenditures detailed: $72,000 for a Porsche Cayenne SUV, $35,107 for a trip to Tuscany in 2000, and $29,000 for a journey to Australia. During much of the first-class travel cited, Munitz was accompanied by his wife, Anne, the story says.
Munitz is one of the highest-paid foundation chiefs in the country, the Times article asserts, with compensation topping $1 million in 2003. Further, in 2004 when the Getty was eliminating raises for other employees, Munitz requested an increase that lifted his pay package to $1.2 million.
Said Senator Grassley: “The board’s failure is especially troubling because the Getty is a private foundation that doesn’t rely on outside donations and therefore doesn’t need to be responsive to potential donors. The board serves as the only check on abuse. If the
board isn’t doing its job, as we’ve seen time and time again, the wheels come off.”
The Council on Foundations, a Washington, D.C., industry group of which the Getty is a member, said it had initiated a review of the Getty in the wake of the Times story, but would not comment on details of the review. The Getty did not return repeated calls and e-mails requesting comment.
The report on Munitz’s spending comes during a general push for greater oversight of nonprofits. On June 22 the Panel on the Nonprofit Sector, Washington, D.C., an independent effort by charities and nonprofits that represents the country’s 1.3 million charitable organizations, presented a set of proposed changes to the Senate Finance Committee that includes higher penalties for excessive compensation and tighter limits on travel expenses.
The June panel report—more than 100 pages long—also advocates increasing resources allocated to the Internal Revenue Service (IRS) for “oversight and enforcement of charitable organizations.”
Senator Grassley explained that “this report today will be of great use as the Finance Committee—on a bipartisan basis with Sen. Max Baucus—now begins drafting legislation. . . . I see much in the report that provides significant common ground.” He added that his timeline is to have legislation this summer for the Finance Committee members.
In March, representatives of nonprofit foundations from around the country held a day of meetings with members of Congress, reports Gabriela Schneider, a Council on Foundations spokeswoman. The foundation representatives stressed a number of key points, including the importance of philanthropy in the U.S. and the high standards and ethical principles that the vast majority of foundations adhere to. “We have zero tolerance for abuse of charitable dollars, and support holding those accountable who intentionally flaunt the law and the ethical underpinnings of philanthropy,” the council emphasized in its written statement.
Senator Grassley has been spearheading a move for better governance of nonprofits over the past year. Last August the IRS announced a new campaign to identify and stop abuses by tax-exempt organizations that give excessive compensation and benefits to their insiders (see ANL, 8/31/04). Last summer the Senate Finance Committee held hearings on “Charitable Giving and Best Practices,” including discussions of excessive pay for leaders of nonprofits.