Midwestern Contemporary Art Essay

5691 Words Jul 26th, 2013 23 Pages
Mid Term Case Study:
Case 16 – Midwestern Contemporary Art

Proc 5840
P T Barnum
September 25, 2013

Introduction
This case begins with a couple named Peter and Catherine Smith. The Smith’s began collecting art in the late 1960’s after Catherine had an unexpected recovery from cerebral vascular spasms because it was one of Catherine’s life- long dreams. By June of 1981, the Smith’s art collection had grown so much that they were contacted by the MCA and Peter was invited to be a member of the board of trustees. In order to be a member of the board, you are asked to donate $10,000.00 to the MCA. Peter was elected to be the chairman of the board by 1989.
The MCA is a foundation that specializes in contemporary art and strives to be
…show more content…
They would engage in intense debates at board meetings regarding which artifacts to show, which artists to invite, and when to hold exhibitions. The most heated arguments were over the speed of the expansion of MCA. Basically, Peter wanted more communication, and checks and balances between him and Keith’s plans. Keith wanted the freedom to work as he needed without checking in and thinks Peter should trust his judgment when it comes to the speed of the building project. Keith has a very aggressive demeanor and began creating a coalition. Peter was at a loss on how to handle the situation. To settle the expansion dispute, a vote was held in 1991; the board voted in favor of Keith. The Smith’s disappeared from MCA and ignored repeated phone calls to return. The board then elected a new chairperson, Avery Truman, for the MCA.
Now it is 1997. The new chairman of the board is Peggy Fisher. Peggy became a board member in 1989, so she was familiar the Smith’s and the conflict between Peter and Keith. It was brought to her attention that MCA was facing a critical financial situation because of a $5,000,000.00 pledge by the Smiths, which was made in 1991 right before their departure from MCA, was not honored. This jeopardized the financing of the expansion project which began in 1993 and was finished in 1997.
The reason for the pledge going unpaid and unenforced can be attributed to the accounting procedures that were enforced in 1995 by the FASB. This