Pubdate: Wed, 23 Oct 2002
Source: Chronicle of Higher Education, The (US)
Issue: 25 October 2002
Copyright: 2002 by The Chronicle of Higher Education
Contact:  http://chronicle.com/
Details: http://www.mapinc.org/media/84
Author: John L. Pulley

MONEY TALKS, MORE SO WHEN IT WALKS

The philanthropist Peter B. Lewis -- savvy businessman, patron of the arts, 
financial supporter of educational institutions, iconoclastic billionaire 
- -- is a dedicated libertarian as well. He smokes marijuana and favors its 
legalization, donates millions to the American Civil Liberties Union, and 
lustily exercises the Constitution's guarantee of free speech.

"I like stirring the pot," Mr. Lewis, 68, says at lunch, biting into a 
hamburger ordered rare. "I like challenging the status quo."

Among the beneficiaries of Mr. Lewis's largess -- and the targets of his 
free speech -- is Case Western Reserve University. It has used $36-million 
of his money to erect a stunning new home for its business school, 
dedicated this month. All swerves and curves and undulating steel, the 
building was designed by the famed architect Frank Gehry, a friend of Mr. 
Lewis.

During the course of its completion, however, things got entangled. Mr. 
Lewis became displeased with cost overruns, turnover among key 
administrators, and what he considers poor management of the project. The 
eventual price, $61.7-million, is more than double the original $25-million 
estimate. Those missteps, he says, result from a syndrome of ineffective 
leadership that has resulted in bigger troubles at Case Western: 
particularly, he believes, an erosion of its reputation, including slippage 
in academic rankings.

Case Western is "abominable," "a rotten mess," "diseased," and "in free 
fall," he has said, at one point suggesting that the university is pulling 
this city "right down the hole."

The problem, he asserts, is the governing board. "All the trustees, based 
on the performance of the university, should resign," he says, polishing 
off lunch and leaning forward to emphasize his point.

Following a strategy he modestly describes as "Gan-dhiesque," Mr. Lewis is 
withholding financial donations to all Cleveland-area organizations until 
the university overhauls its governance to his satisfaction. The charities 
he is depriving include Cleveland's art museum and art institute, its 
public-radio station, and an organization that helps people with chronic 
mental illness return to independent living. His thinking is that because a 
number of Case Western's trustees serve on the boards of those other 
organizations, they will be pressured to restructure the university's board.

Having put his mouth where his money is, Mr. Lewis has vowed not to back 
down, even though mass resignations among Case Western trustees seem 
unlikely. "I could do this for the rest of my life," he says.

His quixotic boycott has drawn attention far beyond this city. Experts on 
higher education and on philanthropy say they cannot recall such a bold, 
and boldly public, critique from a major donor.

His actions, though, bespeak a growing scrutiny of college and university 
governance, from both inside and outside academe. Public-college boards 
have come under the most visible pressure to be accountable, and from the 
most directions, given the taxpayer dollars that flow to those 
institutions. But in an era of billion-dollar endowments and increasing 
commercialization, and in an economic climate that has revealed widespread 
corporate malfeasance, private-college leaders can hardly be surprised that 
their stewardship and decision making are coming under the microscope as well.

"Over time, there has been much more emphasis, and rightfully so, on the 
effectiveness of boards at private institutions," says Scott S. Cowen, 
president of Tulane University and a former dean of Case Western's 
Weatherhead School of Management. "Our universities have become larger and 
more complex and much more publicly visible. With that comes accountability."

That scrutiny has been apparent in many forms in recent months: as the 
Internal Revenue Service monitors how colleges pay their chief executives; 
as watchdog groups examine institutions' investments, in recent cases at 
Harvard University and the University of Texas System; and as Auburn 
University consents to letting a special investigator look into charges 
that its Board of Trustees exceeded its authority.

"There is a whole revolution in accountability that is hitting 
universities," says Mark Yudof, chancellor of the Texas system. "The public 
wants to know how you are behaving, who your partners are, and whether all 
your deals meet the integrity test."

The Donor's Epiphany

When Peter Lewis opens his mouth, no one can predict what will emerge, 
including Mr. Lewis himself. "I never know what I'm going to say until I 
stand up," he says.

Mr. Lewis was at his extemporaneous best last winter, when representatives 
of the Cleveland Museum of Art called on him. He had donated in the past, 
and he knew they had come seeking a large contribution. Just as the fund 
raiser was set to make his pitch, Mr. Lewis had his epiphany. "I said, 
IStop! I'm not going to give you a goddamn dime.'"

Then he told the Jewish Community Federation the same thing. And since that 
time, every Cleveland-area organization that has appealed to Mr. Lewis for 
funds has instead received a form letter explaining his campaign to alter 
Case Western's board.

"Cleveland is a small town, so what I decide is important to a number of 
institutions," says Mr. Lewis, attired in black slacks and a black 
pullover, his monochromatic trademark. "It dawned on me that by doing 
nothing, I can do something."

In his estimation, the university's board is too big and too cautious, 
overly concerned with the social aspects of membership, and made up of too 
many lawyers. In recent years, it has seated as many as 56 trustees at a 
time. Mr. Lewis has objected to what he sees as the board's lack of 
innovation and creativity and an inability to move quickly.

In the higher-education universe, he asserts, Case Western's standing has 
slipped, and at home, town-gown relations stink.

The president of a major research institution, who asked not to be 
identified, shares Mr. Lewis's opinion that Case Western has lost ground in 
recent years.

"We once considered them a peer, but no longer," says the president. "Case 
Western has stayed in place."

On Case Western's campus, people see it differently. "There is a sense of 
excitement and optimism" on the campus, says Edith Lerner, a member of the 
faculty at Case Western's medical school and chairwoman of the university's 
Faculty Senate.

"Peter Lewis has his opinions," says Dr. Lerner, who serves on several 
local boards herself, including the Board of Trustees of the University 
Hospitals Health Systems. "I don't think a lot of faculty members see the 
issue he is addressing."

terms, with mandatory retirement at 72. Moreover, trustees have expressed a 
willingness to better police members for conflicts of interest, and to 
diversify the board's membership.

The board also stated its desire to focus its energy on fiduciary issues.

"The board had tended to become probably too involved in executive 
matters," says George Aranoff, chairman of the review committee.

William A. Weary, president of Fieldstone Consulting, a Washington-based 
group that advises college boards and presidents on governance issues, 
encourages other institutions to learn from Case Western's troubles.

"This kind of situation can best be seen as a wake-up call to make sure 
boards are functioning to the highest level," says Mr. Weary, who has 
written several books on university governance. "If you've got a group of 
40 or 50 people who love an institution with all their heart, but the board 
is largely show-and-tell, they'll get caught with their pants down."

The Case Western business school's building dedication went off without a 
hitch. NBC's Today show interviewed Mr. Lewis, who was on his best 
behavior. There were smiles and verbal high-fives all around.

Away from the crowd, Mr. Lewis gave the board's initiatives a lukewarm review.

"It is certainly a positive step in the right direction, but it's the same 
board," he said. "It bodes well, but the payoff is in accomplishment."

And one other thing, he noted. The boycott is still on.

Buffeted By A Boycott

Peter B. Lewis has cut off donations to local organizations until he is 
satisfied that Case Western Reserve University has improved its management. 
These are some of the Cleveland-area philanthropies to which the 
philanthropist has contributed in recent years:

American Civil Liberties Union, Ohio affiliate Cleveland Center for 
Contemporary Art Cleveland Heights University Heights School District 
Cleveland Museum of Art Cleveland Public Radio Hopewell Inn, which helps 
return people with chronic mental illness to independent living Jewish 
Community Federation Oberlin CollegeForm letter received by Cleveland-area 
charities from Peter B. Lewis
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