Robert:

Thanks for yours.

In fact under our original charity law (now over 395 years old- and
hence applicable to the USA for its first 170 years!) there are
four recognised categories of charitable purpose - and eleemosynary (the
English spelling) purposes are confined to the relief of poverty and
similar needs.

The other three specific authorised purposes are the advancement of
religion, the advancement of education and various miscellaneous purposes
approved by the Court of Chancery or the Privy Council - which
the courts interpreted over the centuries very liberally - providing
clean water, safety lifebelts by the coast, te liberation of slaves etc.
(For the avoidance of doubt following contradictory court
interpretations, by statute the provision of physical recreation, sport
and similar welfare facilities were added to the original 4 categories in
1958.)

In the UK (or more specifically England, Wales and Northern Ireland -
as Scotland has its own distinct legal system based on Roman Law and does
not have charity law as such!!) virtually all non-profit museums are
recognised and classified legally as educational charities and have to be
fitted into this definition.  In fact this is a rather restrictive
provision if you think about it, since "education" might conceivably be of
secondary concern where e.g. the preservation of a crucially important
collection, monument, nature reserve may in fact be the primary objective.

Clearly the examples of hospitals you refer to are privatisations in the
clearest possible sense, and we have had a small number of these in the UK
However, the reverse is still far more common, i.e. the rescuing of
private, for-profit, museums (if we can use the term: all 1956 onwards
ICOM definitions would exclude them) by either a straight take-over by a
public body such as a local authority, the National Trust or an
established national or local museum, or the transfer of the existing
commercial undertaking to a charitable trust. (This has happened with
many commercial and industrial company museums and many "stately homes"
buildings and their associated and museums and collections over the past
20/30 years).

However, the current definitions are in my view very inadequate, in that
the "for profit" concept ultimately depends on whether the shareholders or
private owners of - in this case - the museum building and collections -
(or for that matter the privatised hospital) are eligible to receive
direct financial rewards in the form of dividends or profits based on
their property ownership.

However, there are - at least here - a rapidly growing number of other
models in which the ultimate ownership of the buildings, other property
etc. may remain in public sector ownership (or for that matter in the
charitable sector) but which are now managed by profit-orientated
intermediary bodies.  In suh cases the management of the museum, hospital
or other public or charitable service is contracted out completely for a
period of perhaps 5 - 10 years or upwards to a for-profit company which
employs directly all of the staff and which does pay itself dividends etc.
based on the profits from the running of the previously public service
(which legally remains a registered charity - since that status depends
primarily on the ownership of the core resources).

Even more difficult is the half-way house between a traditional
structure and transfer to a fully privatised (or new "outside" private
sector) management - what the last government caled a "Next Steps agency"
(from the title of the report "Government Service: The Next Steps").

In these cases the existing (or in some cases completely new) managements
are for most practical purposes turned into quasi-commercial businesses
which do not pay dividends on a shareholding or its equivalent (except
perhaps to government itself - as in the old nationalised industries).
However, top management (working with an appointed and often salaried
board) now has a VERY strong profit motive in terms of their own financial
rewards - with the possibility of virtually unlimited increases in their
own salaries and other financial rewards - performance bonuses etc.) out
of trading profits (sorry - "surpluses" is the approved word!!).
Experience is showing that such quasi-privatised agencioes (including have
been characterised in the last few years by major staff cuts, below
cost-of-living pay rises, transfers to short-term contracts, attempts at
de-recognition of unions and local negotiating bodies, and falling
real-terms pay for 97% or more of the workforce, and run-away pay
increases for the handful of staff on the new management boards.

Such tansfers of management control out of the public (or charitable)
service may not be defined as privatisation yet, but the effect is the
same.  What is happening reminds that one famous USA international highly,
indeed agressively, commercial organisation is nevertheless legally
a "charity" - and strongly promotes itself as such.  The truth is that if
by some misfortune it ever had a significant profit then the ultimate
beneficiary would be a leading US ational institution.  However, for the
past half century or more the management has ensured that any such
transfers are purely nominal - derisory almost - by the very simple device
of paying out almost every dollar of the trading profits to the staff,
above all top management of course, through a complex, self-determined,
system of "performance bonuses" and "commissions".


Patrick Boylan

=====================================

On Mon, 7 Jul 1997, GOLER wrote:

>
>      It seems to me that perhaps the answer to the question lies in the
>      definition of purposes, rather than governance.  Could it be that the
>      fundamental nature of museums as eleemosynary organizations mandates
>      that they serve the general weal regardless of whether they are
>      governmentally-operated (public) or governmentally-sanctioned (private
>      nonprofit)?
>
>      Our means for discussing these issues has been shaped heavily by
>      management language, thus giving greater emphasis to market-driven,
>      for-profit modes of thinking.  Perhaps more accurate and widely
>      accepted means of describing the characteristics of the nonprofit
>      sector would give us different tools to judge museums.  I do think it
>      is critical to assess the institution's purpose along with its legal
>      structure in discerning its public value.  In the meantime,
>      comparisons with other types of charitable organizations may be our
>      most helpful guide.
>
>      A significant example of "privatization" is currently playing out in
>      the United States where many university/teaching hospitals are being
>      sold to private, for-profit companies.  Here is a true example of a
>      transfer that is moving institutions from serving the public welfare
>      to ones that select their customers and will be judged by stock prices
>      and dividends.  The situation has alarmed the majority of state
>      attorney generals (who are concerned about the public welfare) and
>      hospital administrators (who are having increased difficulty raising
>      monies for these new entities), but it is too early to tell what the
>      longterm impacts will be.
>
>
>      Robert Goler
>      National Museum of Health & Medicine
>      Washington, DC