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Is the BSO mismanaging its assets?

In this June 17, 2019 photo, Baltimore Symphony Orchestra musicians picket outside the Meyerhoff after being locked out by management as they continue to negotiate salaries in Baltimore. The BSO's players have been locked out of Meyerhoff Symphony Hall since June 17. An audit released in July concluded that there's "substantial uncertainty" as to whether the BSO has sufficient financial resources to remain in business for another year. (Kevin Richardson/The Baltimore Sun via AP)
In this June 17, 2019 photo, Baltimore Symphony Orchestra musicians picket outside the Meyerhoff after being locked out by management as they continue to negotiate salaries in Baltimore. The BSO's players have been locked out of Meyerhoff Symphony Hall since June 17. An audit released in July concluded that there's "substantial uncertainty" as to whether the BSO has sufficient financial resources to remain in business for another year. (Kevin Richardson/The Baltimore Sun via AP) (Kevin Richardson/AP)

Are the Baltimore Symphony Orchestra administration and board managing the assets of the symphony properly and do they have effective asset management policies in place?

I asked Peter Kjome, the president and chief executive officer and Barbara Buzzoto, board of directors’ chair, and their answers have been concerning and incomplete.

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In response to my questions, BSO leadership disclosed to me that the endowment returned 7% over the 10-year period from December 2009 to September 2018. They also disclosed that the endowment invested 15.5% in hedge funds and that from 2010 to 2017, the endowment invested an additional 19% in tactical allocation funds.

At what cost and at what risk were the assets invested? Mr. Kjome would not answer those questions, but during the same 10-year period, the annualized return for the Standard and Poors 500 Index (S&P 500) was a much higher 13.9% (dividends reinvested and not adjusted for inflation). If the $60 million endowment had had the same return as the S&P 500, there would have been over $40 million of additional income to expand it.

Also, the Baltimore Symphony Orchestra Inc. (different than the endowment) declared on its publicly available IRS 990 forms that their assets fell $13.3 million between 2013 and 2017. Their net assets are in the red nearly $16 million on the 990 form most recently available at the end of 2017.

Who is managing the assets, and do any have conflicts of interest? These are fair questions since publicly available information shows that five symphony board and two symphony endowment members are in investment management and, according to The Baltimore Sun, one of those board members previously resigned as a board member for the University of Maryland Medical System during the UMMS conflict of interest scandal. While we appreciate experienced board members serving as volunteers, Mr. Kjome would only say, through his assistant, that no one on the board declared a conflict of interest and he would not provide the conflict of interest policy.

For individual supporters like me who love the symphony and for those determining if additional public dollars will be provided, the BSO must answer these questions so we know whether new leadership or additional oversight is necessary (“How can orchestras like Baltimore’s be fixed? 5 things we can learn from problems at BSO and elsewhere,” Aug. 5).

Philip J. Spevak, Baltimore

Add your voice: Respond to this piece or other Sun content by submitting your own letter.

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