CASE STUDY: ROYAL ACADEMY OF ARTS (RA), LONDON
I was asked to become the Secretary of the Royal Academy (RA) in the middle of 1996 and was there for six years. The Secretary is the head of the staff and secretary to Council. The position is in effect the Chief Executive. The RA is best known to the general public for its world-renowned temporary exhibitions held in its magnificent building in London’s Piccadilly, which attract an annual audience of between 800,000 and 1 million visitors. There is a professional staff in the hundreds. It is a sizeable enterprise.
The RA was established by King George III in 1768 as an independent, self-governing professional body for artists and architects. The RA is still an artist-run institution. The Council, the governing body, was composed exclusively of Academicians and was chaired by the elected President. Academicians took it in turns to serve on Council, for a term of two years.
While the artistic program of exhibitions was strong, the financial and administrative side of the RA was in disarray. The head of finance had been imprisoned for embezzlement. Financial statements had not been audited for three years. Management accounts were non-existent. As to forecasting, three-quarters of the way through the fiscal year 1996, the best estimate of loss turned out to be a fifth of the actual outturn. The reserves were negative. The regulator for Britain’s non-profits, the Charities Commission, had begun to ask questions. There was a general lack of accountability.
The press was full of stories about the RA’s troubles. References were made to a previous crisis in 1962 when the RA sold off its Leonardo cartoon to meet a deficit.
The Council, made up solely of Academicians, and chaired by a President without experience of running organizations, was weak. However, some of the trustees of a separate charity, the Royal Academy Trust, set up to support the Academy, came from the world of business, and were eager to help.
- Strengthen management. This involved recruiting a strong head of finance and creating an executive committee of senior managers, a forum to improve decision-making.
- Ensure that the artistic program had merit and vitality, and was viable. The exhibitions program, the public face of the Academy, was outstanding, but was not planned sufficiently in advance, putting enormous strain on every part of the organization. This had to be addressed. Education and outreach activities were increased.
- Stabilize the finances. Systems of budgetary control were installed. Cost control was tightened. Admission prices were raised. Patron support groups were started up to provide funds for operations. The profitable business of publishing exhibition catalogues was brought in house.
- Keep up the momentum of the refurbishment of the physical space. A good start was made on the renovation of the “Private Rooms,” then used as offices (now open to the public). The courtyard was renovated and cars ejected. The adjacent building in Burlington Gardens was purchased for the RA for a modest outlay in 2000.
- Address fundamental flaws in governance that had led to this crisis – not the Academy’s first. The basic problem was that the Academy of the public, with its world-class exhibitions and professional staff, had outgrown the governance structure. The Academicians, led by the President, felt that in some sense that their Academy had been taken away from them by staff. The staff felt unappreciated and disempowered.
A new governance institution was created to bridge the gap: a committee whose membership comprised Academicians, trustees of the Trust, and senior members of staff. The committee became the de facto governing body, and mediated between the factions. However, clearly this could not be a long-term solution and in its turn created tensions between the Academicians and the trustees. A group of senior Academicians, advised by a prominent lawyer, was set up to review the constitution. This group was wound up after I left. (Five years later, following a second review, by a judge, some necessary reforms were made: the Council now includes non-Academicians and the title of Chief Executive has been added to that of Secretary.)
By 2002, there was a good management team, a system of budgetary control was in place, reserves were positive, and the Academy’s credibility had been restored to the outside world. Innovations such as keeping the Academy open for 36 hours during the last weekend of the Monet in the Twentieth Century had attracted widespread attention. But, the crisis now over, the President and Council did not then take governance reform seriously, and I left.
- Effective governance is crucial. The board of a cultural institution must not only understand the centrality of artistic mission but must also have access to the skills to ensure that it has the right management and financial framework to carry it out.
- Financial integrity and transparency are essential.
- Venerable institutions are prone to using their longevity as an excuse for avoiding the need for change. “We have been around since 1768…”
- There has to be mutual respect between board and staff.
- A team approach to management leads to better decision-making.