PROCEEDINGS OF THE BOARD OF REGENTS

June 18, 2007 

ATTENDANCE

This special meeting of the Board of Regents was held in the Regents’ Room of the Smithsonian 

Institution Building and was called to order by the Chancellor at 8:05 a.m. on Monday, June 18, 

2007. Present were: 

Robert P. Kogod 

Doris Matsui 

Roger W. Sant 

Patricia Q. Stonesifer 

Participating by teleconference were: 

The Chief Justice 

Eli Broad 

Thad Cochran 

Anne d’Harnoncourt 

Shirley Ann Jackson 

Sam Johnson 

Patrick J. Leahy 

Alan G. Spoon 

Hacker Caldwell, Chair, Smithsonian National Board 

Unable to participate were: 

Richard B. Cheney 

Xavier Becerra 

Chris Dodd 

Phillip Frost 

Walter E. Massey 

Also present were: 

Acting Secretary Cristián Samper 

General Counsel John E. Huerta 

Assistant General Counsel Elaine Johnston 

Inspector General A. Sprightley Ryan 

Special Advisor to the Regents John K. Lapiana 

Senior Writer-Editor for the Office of the Secretary Barbara Feininger 

Assistant to the Vice President Marie Fishpaw 

Assistant to Senator Leahy Kevin McDonald 

Assistant to Congresswoman Matsui Alexis Marks 

Governance Committee Counsel Celia Roady, Esq., Morgan, Lewis & Bockius 

Also participating by teleconference were: 

Assistant to the Chief Justice Jeffrey P. Minear 

Assistant to Congressman Johnson David Heil 
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DISCUSSION OF PREVIOUSLY CIRCULATED AGENDA

The Chancellor directed the Regents’ attention to the meeting agenda, which had been previously 

distributed for consideration on June 14, 2007. Additional materials were sent via e-mail on June 

16, 2007. The Chancellor noted that this meeting was a follow-up to the meeting of June 11, 

2007. He began the meeting by summarizing the meeting of June 11, 2007, including the 

Regents’ discussion with the Independent Review Committee and the review of the Governance 

Committee’s recommendations. He then turned the meeting over to the Chair of the Governance 

Committee. 

CONSIDERATION OF THE GOVERNANCE COMMITTEE REPORT AND 

RECOMMENDATIONS

Patricia Q. Stonesifer noted that the Governance Committee (“the Committee”) last met on 

June 13, 2007, during which time additional refinements were made to the proposed 

recommendations of the Governance Committee. Recommendation number 24 was strengthened 

to ensure unified standards and structures in the Institution’s compensation policies; 

modifications to recommendation number 19 would standardize Smithsonian leave policies to 

follow federal employee policies. Recommendation number 12 was strengthened to facilitate the 

Inspector General’s access to senior management. Number 15 was modified to enhance the 

transparency of the Regents’ actions and communications; recommendation number 6 also was 

strengthened to create a web-based scorecard by which key stakeholders will be able to follow 

and assess the Regents’ actions. Changes to recommendation number 18 clarify that senior 

management may no longer serve on the boards of for-profit companies. 

Some of the recommendations in the Governance Committee report refer to the Smithsonian 

Secretary, whereas others note the Acting Secretary. It was clarified that proposed actions that 

require immediate response are directed towards Acting Secretary Samper, whereas descriptions 

of long-term proposed actions are directed toward the new Secretary. Recognition of the 

enhanced role of the Inspector General also was emphasized; this action is considered especially 

critical to the Board of Regents’ aggressive efforts to develop and implement effective, 

transparent governance policies for the Institution. As was approved during the September 18, 
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2006, meeting of the Board of Regents, the Inspector General will continue to report directly to 

the Regents. 

The Regents then unanimously approved the following motion: 

VOTED that the Board of Regents adopts the recommendations set forth in the 

Report of the Governance Committee and approves the specific actions described 

therein. The Executive Committee shall propose such Bylaw amendments as may 

be necessary to carry out these recommendations. The Board of Regents requests 

all Board Committees to undertake the actions set forth in the recommendations. 

The Board of Regents further directs the Acting Secretary to take such actions as 

are necessary to implement the policy guidance set forth in the recommendations. 

* * * * * 

REPORT OF THE GOVERNANCE COMMITTEE TO THE BOARD OF REGENTS 

(JUNE 14, 2007) 

Introduction 

The Governance Committee presents the following report and recommendations to the Board of 

Regents for consideration. The Committee believes that the recommendations, based on its 

review of the best practices of the nonprofit sector, as well as the insights of the Independent 

Review Committee, will strengthen the Regents’ oversight of the Smithsonian and ensure that 

the Board will be a strong partner in setting the Institution’s strategic direction. 

In conducting its work, the Committee was especially sensitive to the critical concern that 

prompted its creation: the public’s trust in the governance and management of the Smithsonian 

was shaken. Questions had been raised regarding the Smithsonian’s executive compensation 

practices, abuses of travel and expense policies, participation by senior executives on for-profit 

corporate boards, and the lack of transparency on some business transactions and major decisions 

of consequence to the Institution. 

The Committee’s mandate is based on a simple premise — the Board is ultimately responsible 

for the Smithsonian. Where, as here, legitimate questions about the Board’s governance of the 

Institution are raised, the Regents must accept that responsibility and act accordingly. 

Context and Committee Process 

Over the past year and a half, a series of initiatives based on confidential business contracts 

(Smithsonian On Demand, a book publishing deal, and an image licensing agreement) between 

Smithsonian Business Ventures and outside companies generated particularly harsh criticism 

from the Congress and the public, as well as Smithsonian staff, that the Smithsonian lacked the 

transparency expected from a public institution. Meanwhile, members of the House 

Appropriations Committee and the media began to question the compensation of senior 

executives. 
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In January 2007, the Smithsonian’s Acting Inspector General reported to the Regents on 

executive compensation and a confidential outside audit of then-Secretary Lawrence M. Small’s 

expenses that identified a number of unauthorized or unsupported transactions. Some expenses, 

the report noted, “could be considered lavish or extravagant,” but concluded that there was “no 

evidence that the expenses were solely for personal benefit.” After a review of the expense 

report, the Regents, on the recommendation of the Audit and Review Committee, determined 

that the expenses were incurred for legitimate business purposes and retroactively authorized 

their expenditure. Changes to the existing policies were not considered. 

That action prompted a substantial amount of criticism, culminating in a letter of inquiry and 

investigation from Senator Charles E. Grassley to the Chancellor, alleging that the Board’s 

“response and action to [an] ‘anything goes culture’ seems to be rubber stamping the actions of 

Secretary Small and turning a blind eye to very serious issues raised by the Inspector General.” 

Others also questioned the propriety of senior executives serving on for-profit corporate boards 

and contended that some Smithsonian operations, as well as those of the Regents, were not 

conducted in an appropriately transparent manner. 

In response to these criticisms and in their own determination to advance the best interests of the 

Smithsonian, the Regents formed the Governance Committee with a mandate to 

comprehensively review the policies and practices of the Smithsonian 

and how the Board conducts its oversight of the Institution. At the same time, the 

Board established the Independent Review Committee (IRC), chaired by the Honorable Charles 

A. Bowsher, former Comptroller General of the United States, to review the issues arising from 

the Inspector General’s reports, the Regents’ response, and related Smithsonian practices 

identified in Senator Grassley’s letter. 1

The work of the two committees has run on parallel tracks. Each had a separate mandate focused 

on the same goal — improving Smithsonian governance. The IRC conducted an extensive 

factual investigation of Smithsonian practices questioned by the Inspector General and Senator 

Grassley, including conducting dozens of interviews and reviewing thousands of records. In 

contrast, the Governance Committee undertook a “clean slate analysis,” researching and 

identifying the best practices in 21st century nonprofit governance and then applying them to the 

Smithsonian. The Regents’ discussions with the IRC indicate that the recommendations from 

both the IRC and the Governance Committee share many similarities. Reaching similar results 

from such dissimilar approaches gives the Governance Committee added confidence that the 

critical weaknesses and failures prompting these reviews have been identified and addressed. 

The Governance Committee has met weekly since March 21, 2007, and moved swiftly on a 

number of critical fronts. First, the Committee addressed issues raised by the Inspector General 

and congressional inquires. The initial result was the development of 12 interim policies and 

procedures, approved by the Executive Committee on April 9, 2007, that provided immediate 

corrections to monitoring and compliance problems initially identified.2

 

1 The Honorable Stephen D. Potts and A.W. “Pete” Smith also served on the Independent Review Committee. 

2 See Appendix D. 
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From its inaugural meeting, the Committee’s work was informed by the best governance 

practices in the nonprofit and federal sectors. Among its initial tasks was to conduct a landscape 

analysis, comparing current Smithsonian practices to the Panel on the Nonprofit Sector’s draft 

Principles for Effective Governance, as well as the best practices of similar organizations. 

On May 6, 2007, the Committee hosted a robust discussion with four well-regarded experts on 

nonprofit governance on the applicability of 21st century governance practices to the 

Smithsonian. Two of the experts spoke to the full Board of Regents the next day, with nonRegent Committee member Diana Aviv facilitating. The Committee also received in-depth 

presentations from key Smithsonian staff to help it understand the unique legal nature of the 

Institution and the interaction between the Smithsonian’s federal and trust budget processes. 

In the final week before this Report was completed, the members of the IRC met with the 

Regents and discussed their preliminary findings and recommendations. The Regents welcomed 

the opportunity to engage the IRC directly in a frank review and discussion of their work, and 

were sobered by the number of management and governance weaknesses identified by the IRC. 

Both the IRC and the Regents were encouraged by the congruence between the 

recommendations reached by both bodies, despite their different charges and approaches. The 

IRC presentation and ensuing discussion informed the Governance Committee’s final 

recommendations and we look forward to using the IRC’s final report as guidance in our 

ongoing work. 

This report, the result of the Committee’s work since March 21, 2007, provides an initial 

blueprint for action over the next seven months. The purpose of these recommendations is not 

just to address weaknesses in existing policies and practices, but to position the Smithsonian 

among the leaders in nonprofit governance. 

Scope of Recommendations 

The Regents’ primary responsibility is to govern the Smithsonian on behalf of the United States. 

The original Smithson bequest was accepted by the Congress in trust for the American people. 

The Congress, in turn, delegated to the Regents the management and governance authority for 

the Smithsonian. This unique relationship is different from other nonprofit boards; it both 

constrains and provides opportunities for the Regents in exploring methods of better governance. 

The Committee acknowledges that the Smithsonian’s Charter — the basic framework 

establishing the Board — is statutory. Making changes requires more than passing a Board 

resolution or a Bylaw amendment. Only the Congress, with the concurrence of the President, 

can amend the Charter. Indeed, the last change to the Board’s structure occurred over 30 years 

ago when the number of Citizen Regents was raised from six to nine. The Committee recognizes 

that considerable analysis and further deliberations are necessary before any decision can be 

made as to whether changes might improve the framework for governance. This task requires 

the Committee to go beyond current best practices to also study the historical and legal, 

including constitutional, issues that prompted the current structure. With that in mind, and as 

underscored by the recommendations below, the Committee is pursuing a full and complete 

review and consideration of all aspects of governance. In the meantime, many recommendations 

have been made that address significant areas of concern and can be implemented immediately. 
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As it conducted its review, the Committee identified a number of weaknesses in Smithsonian 

governance practices: 

• First, the Regents did not routinely receive, nor did they demand, the information 

necessary to support vigorous deliberation and well-reasoned decision-making. (Many 

Regents were unaware of critical details of Secretary Small’s employment contract, the 

non-uniform application of policies and procedures, objections to certain practices of 

Smithsonian Business Ventures, morale issues identified through employee surveys, and 

increasing tensions between the units and the central administration or “Castle”.) 

• Second, critical relationships necessary to allow key staff to bring forward or highlight 

important issues and concerns to the Board were lacking. (The General Counsel, the 

Chief Financial Officer, and the Inspector General were without the necessary direct 

access to the Board to be able to raise concerns or serve as effective resources.) 

• Third, with monitoring systems failing to raise the necessary “red flags,” the Regents’ 

ability to provide critical oversight and require compliance with policies and internal 

controls was crippled. (The Regents did not question enough the representations of 

management and misplaced their reliance on other advisors who failed to identify 

relevant issues and report them to the Board.) 

Despite regular attendance by most Regents and active participation in meetings, in the end the 

Regents did not provide the level of leadership and oversight that they had intended. 

Contributing to the situation was an agenda and information flow tightly controlled by the Office 

of the Secretary. Information leading to difficult and critical decisions was at times prepared and 

presented in a summary fashion that did not encourage full and complete discussion. As a result, 

the Regents were at times unable to thoroughly consider the major and strategic issues facing the 

Institution. 

The recommendations contained in this report address these weaknesses and the well-founded 

criticisms of stakeholders, as well as other policies and practices identified for strengthening 

during the Committee’s review. Together, these recommendations make important immediate 

changes and provide an initial blueprint for action over the next seven months. 

The Committee also acknowledges that the role of the Regents should not be confused with that 

of management: the Board sets the major policies and, while retaining the ability to engage in 

effective oversight, delegates to management the responsibility for implementation. In achieving 

this balance, the Committee recognizes the deep commitment and professionalism of 

Smithsonian employees and is confident in their abilities to implement these recommendations. 

While moving swiftly since late March, the Committee remains mindful that many of the 

Smithsonian’s current processes, structures, policies, and practices have served the Institution 

well. The Committee distinguished between practices that needed to be changed, practices that 

needed improvement, and practices that were appropriate. The Smithsonian has flourished for 

160 years; it has clearly been doing many things right. Its successes and accomplishments reflect 

the dedicated and loyal employees who continue to support the Smithsonian’s mission, despite 
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the controversies and criticisms caused by recent events. 

The Committee’s work is a significant step toward strengthening the Institution, but we 

recognize that serious threats continue to exist — the $2.3 billion facilities backlog and the 

squeeze on funding for critical programs and activities. The Regents will need to work with 

Smithsonian management and the Congress to resolve these issues. A strong governance 

structure, coupled with the creativity, skills, and dedication of the members of the Board, its 

committees, and Smithsonian staff, will provide a framework to address these and other 

challenges facing the Smithsonian. 

Finally, the Committee welcomes the rigorous search process now under way that will result in 

the selection of the 12th Secretary of the Institution. 

With these recommendations the Board will put in place mechanisms to foster the constructive 

partnership with the Acting Secretary and his successor that is necessary to address the 

Smithsonian’s enormous challenges. The Governance Committee acknowledges that many of 

the recommendations will require considerable and continuing efforts over the next year to 

implement. As part of that effort, the Committee will track progress on all of the 

recommendations and publish a “scorecard” that will be available on the Regents website. 

The Blueprint for Better Governance: Recommendations 

The Committee’s recommendations are organized into three areas of focus: 

(1) Recommendations to Reinforce the Foundation of Integrity and Responsibility; (2) 

Recommendations to Promote a Constructive Partnership; and (3) Recommendations to 

Strengthen the Culture of Accountability. The capsule recommendations below are presented in 

further detail, with supporting reasoning, in Appendix A. 

I. Reinforcing the Foundation of Integrity and Responsibility 

Stakeholders properly look to the Regents to provide stewardship of the public trust, maintain the 

ethical compass for the Institution, and govern the Smithsonian in a fair and equitable manner. 

Recent controversies present opportunities for the Regents not only to renew and improve 

governance practices, but also to assume a leadership role in fostering a culture of strong ethical 

conduct, mutual respect, openness, and increased fidelity to the Smithsonian’s core as a public 

trust. 

The work of the Committee has been informed and guided by several overarching principles. 

The Committee believes that adoption of these guiding principles by the Regents will reinforce 

the foundation of integrity and responsibility that is essential for the Smithsonian to continue to 

achieve success and retain its status as a world-class educational institution. 

These guiding principles support the specific recommendations of the Governance Committee 

and will also provide direction to the Regents and Smithsonian staff as they move forward in 

their work to carry out the Smithsonian’s mission. 
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A. Our Operations and Activities Will Reflect Our Status as a Public Trust 

Administered on Behalf of the American People:

The Board of Regents was established by Congress to carry out the 

responsibilities of the United States as trustee of the Smithson trust. Given this 

unique and special status, the Smithsonian must be mindful that it is a public trust 

operating on behalf of the American public and the United States government to 

carry out its mission to increase and diffuse knowledge. As such, the Smithsonian 

will be guided by the principles of the federal sector in the conduct of its activities 

whenever appropriate and consistent with its mission and trust responsibilities. 

In all other cases, the Institution will follow the principles and best practices for 

fiduciary stewardship in the nonprofit sector. 

B. We Remain Committed to Following The Highest Standards of Ethical 

 Conduct: 

The Smithsonian Institution remains committed to following the highest 

standards of ethical conduct in pursuit of its mission to increase and diffuse 

knowledge. All individuals who have been entrusted to act on behalf of the 

Smithsonian — Regents, staff, researchers, fellows, interns, and volunteers — 

are expected to conduct their activities according to the highest professional 

standards, with honesty and accountability, and in the best interest of the 

Smithsonian. They must take care that their actions will not adversely impact 

the integrity of, or the public’s confidence in, the Institution, its work, or its 

mission. 

C. We Will Conduct Our Business Within an Ethos of Transparency: 

The Smithsonian Institution is committed to operating in a culture marked by 

openness, accessibility, and robust communication. All Smithsonian 

stakeholders should have access to appropriate and accurate information 

regarding the finances, operations, and activities of the Smithsonian 

Institution. Effective transparency also requires open and reliable 

communication between the Board, management, and other stakeholders to 

support informed decision-making. The Smithsonian is dedicated to using 

every reasonable method to foster the effective transparency that will support 

its mission to increase and diffuse knowledge. 

II. Promoting a Constructive Partnership 

Recent events have underscored the Board’s need to govern proactively and to provide strategic 

leadership to the Smithsonian. These recommendations are designed to promote a constructive 

partnership between the Board and the Secretary. That partnership requires the Secretary to 

provide the Board the information it needs to engage in vigorous and productive deliberations. 

In turn, the Board must clearly convey to the Secretary its reasonable expectations and 

requirements. Moreover, certain staff, such as the Chief Financial Officer, the General Counsel, 
9

and the Inspector General, whose contact with the Board in the past has been limited, must have 

free access to the Board to bring forward matters deserving of the Regents’ attention, as well as 

to serve as resources for informed deliberations. And in some instances, such as setting 

executive compensation, the Regents must operate independently of Smithsonian management. 

These recommendations to strengthen governance structures will transform the Board into a 

more dynamic body. By making these recommendations, the Committee recognizes that the 

Institution is best served by an engaged board comprised of members who understand their roles, 

are knowledgeable about the Smithsonian, and creatively address both challenges and 

opportunities. 

Recommendations to Promote a Constructive Partnership 

1. To ensure that the Board is positioned to provide effective leadership, the 

Governance Committee will examine the appropriate structure and composition of 

the Board, the Executive Committee, and Board committees and report to the Board 

in January 2008 on its findings and recommendations. 

2. To establish clear governance expectations, the Regents adopt the description of the 

Regents’ duties and responsibilities contained in Appendix A. 

3. To enhance Board leadership, the Regents adopt the specific duties and 

responsibilities for the positions of Chancellor and Chair of the Board contained in 

Appendix A and will initiate a change to the Bylaws to separate these positions. 

4. To provide sufficient time for deliberations and action, the Board of Regents will 

hold no fewer than four regular business meetings, with additional meetings as 

necessary. Each Board meeting will include an executive session without the 

presence of staff, as well as executive sessions with the Secretary and other key staff 

individually, as appropriate. To enhance the transparency of Board operations and 

deliberations, the Board and Board committees will keep minutes for all meetings, 

including executive sessions, and the Special Advisor to the Regents will develop a 

new format to document minutes of Board and Board committee meetings. The 

Secretary will delegate to the General Counsel the responsibility for preparing and 

keeping Board and committee minutes. 

5. To provide Regents with the necessary foundation to be effective, the Governance 

Committee will develop an orientation program for new Regents. To promote 

accountability, the Governance Committee also will develop and regularly 

administer a process to assess the effectiveness of the Board, Board committees, and 

individual Regents. 

6. To enhance effectiveness, each Board committee will review its role, function, and 

charter. The committees will revise and update their charters as necessary. 

Committee charters will be subject to approval by the full Board. To provide 

momentum as the Board initiates its strengthened governance practices, new 

leadership will be appointed for each of the Board-established committees. 
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7. To ensure a rigorous, independent, and transparent system for evaluating executive 

compensation and performance, the Compensation and Human Resources 

Committee will implement a refined process that follows best 

practices in executive evaluation and compensation in the nonprofit sector. The 

Committee will follow this new process to recommend to the Board, at its 

September meeting, an appropriate compensation package to guide the search for 

the next Secretary, balancing the need to attract the best leader for the Institution 

with our public trust status. 

8. To provide a mechanism for immediate and continuing Board attention to the 

Smithsonian’s facilities needs and to underscore the Regents’ commitment to 

resolving the facilities backlog, the ad hoc Committee on Facilities Revitalization 

will become a standing committee of the Board. 

9. To strengthen board development and integrate the nominating and governance 

process, the Governance Committee will assume the responsibilities of the 

Nominating Committee and be renamed the Governance and Nominating 

Committee. The Committee will develop criteria for the nomination of new Citizen 

Regents to ensure that the skill sets and diversity necessary for a dynamic Board are 

identified. It also will review existing processes for appointing Board committee 

members and chairs and will recommend improvements. 

10. To provide the Board with necessary and timely legal advice, the General Counsel 

will have direct access to the Board, attend Board and Board committee meetings 

(either in person or by delegate), and regularly report to the Board and relevant 

Board committees in executive session. The General Counsel will have the right and 

obligation to bring directly to the Board and/or relevant Board committee any 

information on legal or compliance matters that he or she reasonably determines 

should be brought to their attention. The Governance Committee will review and 

report to the Board on whether sufficient resources are available for the Office of 

General Counsel to effectively perform its functions. 

11. To enhance the accessibility of financial information, the Chief Financial Officer 

will have direct access to the Board, attend Board and relevant Board committee 

meetings, and regularly report to the Board of Regents, the Audit and Review 

Committee, and/or other relevant Board committees in executive session. The Chief 

Financial Officer will have the right and obligation to bring directly to the Board 

and/or relevant Board committee any information on financial or compliance 

matters that he or she reasonably determines should be brought to their attention. 

The Audit and Review Committee will review and report to the Board on whether 

sufficient resources are available for the Office of Chief Financial Officer to 

effectively perform its functions. 

12. To strengthen the role of the Inspector General, the Audit and Review Committee 

will document the expectations for, and reporting relationship of, the Inspector 

General to the Board of Regents. The Inspector General is expected to bring 
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directly to the Board and/or relevant Board committee information on all matters 

that he or she determines should be brought to their attention. The Audit and 

Review Committee will review and report to the Board on whether sufficient 

resources are available for the Office of Inspector General to effectively perform its 

functions. The Office of Inspector General will be relocated to downtown 

Washington, in close proximity to the Secretary and senior management. 

13. To recognize the assistance and support that the Smithsonian National Board and 

other Advisory Boards provide to the Smithsonian and to establish a stronger link 

between the Regents and the Advisory Boards, the Governance Committee will 

oversee an examination of options to more effectively engage these Advisory 

Boards and will report to the Board with its recommendations in 2008. 

III. Strengthening the Culture of Accountability 

While recent criticisms of the Regents’ oversight span a variety of areas, they provide an 

important lesson: the Regents must ask the necessary questions, and demand the necessary 

information, to engage in effective oversight. The Regents should have been made aware of all 

of the provisions of the Secretary’s contract, outside activities of senior executives, any 

significant problems in Smithsonian Business Ventures, and deviations from normal travel and 

expense policies. Policies could have been strengthened or clarified and problems resolved when 

they first arose. Moreover, events have amply demonstrated that the Regents must dictate the 

flow of information to them, control their agenda, and frame the issues for discussion. Options 

must be presented and vigorous debate encouraged. 

The Smithsonian’s mission is to increase and diffuse knowledge, and congressional and public 

critics rightly point out that the Smithsonian also must apply this mission to knowledge about the 

Institution’s operations, finances, and decision-making processes. Members of Congress have 

expressed concern about the Smithsonian’s failure to provide controversial contracts to them and 

to operate its business ventures in a more open way. Inside the Smithsonian, many staff 

members have been disturbed by a perceived lack of transparency in the governance of the 

Institution, highlighted by controversial business deals and the acceptance of a number of large 

donations and corporate sponsorships. 

The following recommendations are designed to increase the ability of the Regents, and in many 

instances senior management, to monitor critical operations of the Smithsonian and to hold staff, 

as well as themselves, more accountable. These recommendations also aim to increase 

transparency throughout the Smithsonian, ensuring that all stakeholders have access to clear, 

accurate, and timely information about the Institution and the Regents. 

Recommendations to Strengthen the Culture of Accountability

14. To foster a culture of ethical conduct, the Secretary will develop an overarching 

Smithsonian Code of Ethics that promotes best practices and the highest 

professional standards and is based on the guiding principles for ethical conduct 
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adopted by the Regents. The Code will be presented to the Board for review and 

approval as soon as possible and in any event no later than the end of 2007. 

15. To embrace a spirit of increased openness, the Regents will provide an opportunity 

for input through an annual public forum and other appropriate mechanisms 

beginning in 2008. The Regents also will engage regularly in direct communication 

with interested members of Congress to promote a constructive dialogue with these 

key stakeholders. In addition, the Regents will immediately launch a public webpage 

that will include information about the structure, membership, and functions of the 

Board, as well as meeting agendas and summaries of meeting minutes. 

16. To foster an ethos of transparency, the Secretary will develop a strategy to increase 

available information about the Board and Smithsonian activities and operations 

and to enhance communications with the Board. The strategy will be based on the 

best practices of nonprofit organizations, universities, and federal agencies. The 

Secretary will begin immediately implementing elements of this recommendation as 

they are developed and will present the full strategy to the Board for review and 

approval by the end of 2007. The strategy should include the following components: 

• Enhanced use of the internet to make information about Smithsonian policies, 

governance, finances, operations, programs, activities, and decision-making 

processes widely available. 

• Mechanisms to foster communication between and among senior management 

and the Board of Regents, staff, and other stakeholders. 

• A framework to ensure effective congressional outreach and information. 

• A communications plan to ensure that all constituencies are routinely informed 

of important decisions and current issues and have opportunities to provide 

comments or information to the Board and management. The plan should 

consider the establishment of a public ombudsman. 

• An effective process, including telephonic and electronic “hot lines,” for the staff 

or public to bring ethics and compliance issues to the attention of management 

and the Board. 

• Plans for monitoring and measuring these efforts, including routinely 

benchmarking Smithsonian efforts against evolving best practices. 

17. To increase accessibility to information about Smithsonian activities, the Regents 

affirm that the Smithsonian embraces the principles of disclosure reflected in the 

Freedom of Information Act (“FOIA”) and follows its spirit in considering public 

requests for information. The Secretary will develop and issue by the end of 2007 a 

policy on disclosure of Smithsonian records to implement this guidance. 
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18. To avoid even an appearance of conflict of interest or divided loyalty, the Regents 

adopt the policy that, beginning October 1, 2007, Smithsonian senior executives 

shall not be permitted to serve on the board of a for-profit company. 

19. To maintain public confidence in the integrity of the Board and staff, the Regents 

adopt the following policies and guidance on outside activities and conflicts of 

interest: 

• The Secretary will transition all Smithsonian staff to a leave accrual system as 

soon as possible, and in any event no later than October 1, 2007. The leave 

policy for all Smithsonian employees will follow federal employee policies. 

• The rules on approval of outside activities engaged in by senior executives 

established in the Interim Policies and Procedures are adopted as standing 

policies and expanded to include all unit heads and above. 

• As the Smithsonian’s Chief Ethics Officer, the General Counsel is primarily 

responsible for the identification and management of potential conflicts of 

interest of senior executives. The General Counsel will personally review the 

annual financial disclosure statements and outside activity requests of all senior 

executives and unit heads under the Standards of Conduct. The General 

Counsel will provide a written report to the Audit and Review Committee on the 

conclusion of the annual financial disclosure process and will also provide a 

written annual report to the Committee on the reported outside activities of 

senior executives, including dispositions of requests for clearance to participate 

in outside activities. The Audit and Review Committee, in turn, will report the 

General Counsel’s conclusions and recommendations, if any, to the Board. 

• The Secretary will develop an accessible database for staff to alert appropriate 

officials when potential conflicts of interests may exist. 

20. To promote accountability and ensure the public trust, Smithsonian Business 

Ventures (“SBV”) operations will follow established Smithsonian policies, except in 

specific pre-approved circumstances when an exception is necessary to accomplish 

SBV mission requirements. All current deviations from general Smithsonian 

policies must be eliminated or individually re-approved by the Secretary and 

reported to the Chair of the Audit and Review by the end of 2007. The Regents 

endorse the Acting Secretary’s plan to review the status, mission, and operations of 

SBV and to make recommendations to the Board concerning these issues. 

21. To strengthen stewardship of Smithsonian resources, the rules on expenses for 

travel, representational activities, and special events established in the Interim 

Policies and Practices are established as standing policies and the Regents adopt the 

following additional policies: 
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• Expenses for travel, representational activities, and special events incurred by or 

on behalf of the Office of the Secretary will be subject to review by the Audit and 

Review Committee for reasonableness and compliance with standard 

Smithsonian policy. The Audit and Review Committee will report to the Board 

at least annually on the results of this review, including any deviations from 

Smithsonian policy. The Chief Financial Officer will conduct periodic audits of 

travel and entertainment expenses incurred by the Secretary and senior 

executives and report the results of such audits to the Audit and Review 

Committee. 

• Expenses for Regents’ activities, as well as other Smithsonian special events, 

shall be reasonable and in accordance with spending guidelines to be developed 

by the Secretary and submitted to the Executive Committee for review and 

approval no later than September 2007. 

• The Audit and Review Committee will review internal controls and monitoring 

processes for all travel and expense reimbursements to determine whether they 

are consistent with best practices and will report to the Board on its findings and 

recommendations in 2008. 

22. The Finance and Investment Committee, working with the Secretary and Chief 

Financial Officer, will review the Smithsonian federal and trust budget formulation 

and monitoring process to ensure that the Committee and the Board have adequate 

opportunities to provide strategic direction in the development of budget priorities 

and meaningful oversight of the Smithsonian’s budget and financial resources. The 

Committee will report to the Board on its findings and recommendations in 2008. 

23. The Audit and Review Committee, working with the Secretary and Chief Financial 

Officer, will review the Smithsonian’s financial reporting systems and internal 

controls to ensure that appropriate systems and controls are in place to enable the 

Committee and the Board to provide meaningful oversight of the accuracy and 

integrity of Smithsonian financial statements and reports. The Committee will 

report to the Board on its findings and recommendations in 2008.

24. To ensure that Smithsonian compensation practices are fair and equitable to 

employees and provide appropriate stewardship of Smithsonian human and 

financial resources, the Compensation and Human Resources Committee, working 

with the Secretary, will review the Smithsonian philosophy and rationale for senior 

trust employee compensation in order to present a unified compensation philosophy 

and structure to the Board by the end of 2007. 

25. To promote confidence in the integrity of Smithsonian business activities, the 

Secretary will develop a policy on Smithsonian contracting that will include 

principles and practices to ensure that all Smithsonian contracting activities are 

conducted with integrity, fairness, and openness and in a manner that will best 
15

achieve Smithsonian mission requirements. The Secretary will develop and issue by 

the end of 2007 a policy on contracting to implement this guidance. 

Conclusion 

This report provides a key opportunity to advance good governance at the Smithsonian; however, 

the report and these recommendations represent only an initial milestone in the Committee’s 

work. During the next seven months (and beyond), the Governance Committee will continue to 

explore, discuss, and identify areas in need of improvement or further thought and request that 

other committees do the same and present their findings and recommendations to the Board. 

Good governance is a continuing process of rigorous re-examination and renewal. The 

Governance Committee looks forward to this challenge. 

Appendices: 

Appendix A: Detailed Recommendations and Rationales 

Appendix B: Methodology 

Appendix C: Committee Members and Acknowledgements 

Appendix D: Interim Policies and Practices, approved April 9, 2007 

APPENDIX A: DETAILED RECOMMENDATIONS AND RATIONALES 

 

RECOMMENDATIONS TO REINFORCE THE 

FOUNDATION OF INTEGRITY AND RESPONSIBILITY

 

To reinforce the existing foundation of integrity and responsibility, the Regents adopt the following 

Guiding Principles for conduct by the Smithsonian: 

 

A. Our Operations and Activities Will Reflect Our Status as a Public Trust Administered on 

Behalf of the American People:

The Board of Regents was established by Congress to carry out the responsibilities of the United 

States as trustee of the Smithson trust. Given this unique and special status, the Smithsonian must 

be mindful that it is a public trust operating on behalf of the American public and the United 

States government to carry out its mission to increase and diffuse knowledge. As such, the 

Smithsonian will be guided by the principles of the federal sector in the conduct of its activities 

whenever appropriate and consistent with its mission and trust responsibilities. In all other cases, 

the Institution will follow the principles and best practices for fiduciary stewardship in the 

nonprofit sector. 

 

B. We Remain Committed to Following The Highest Standards of Ethical Conduct: 

The Smithsonian Institution remains committed to following the highest standards of ethical 

conduct in pursuit of its mission to increase and diffuse knowledge. All individuals who have been 
16

entrusted to act on behalf of the Smithsonian — Regents, staff, researchers, fellows, interns, and 

volunteers — are expected to conduct their activities according to the highest professional 

standards, with honesty and accountability, and in the best interest of the Smithsonian. They 

must take care that their actions will not adversely impact the integrity of, or the public’s 

confidence in, the Institution, its work, or its mission. 

C. We Will Conduct Our Business Within an Ethos of Transparency: 

The Smithsonian Institution is committed to operating in a culture marked by openness, 

accessibility, and robust communication. All Smithsonian stakeholders should have access to 

appropriate and accurate information regarding the finances, operations, and activities of the 

Smithsonian Institution. Effective transparency also requires open and reliable communication 

between the Board, management, and other stakeholders to support informed decision-making. 

The Smithsonian is dedicated to using every reasonable method to foster the effective transparency 

that will support its mission to increase and diffuse knowledge. 

 

 

RECOMMENDATIONS TO PROMOTE A CONSTRUCTIVE PARTNERSHIP 

 

1. To ensure that the Board is positioned to provide effective leadership, the Governance 

Committee will examine the appropriate structure and composition of the Board, the 

Executive Committee, and Board committees and report to the Board in January 2008 on its 

findings and recommendations. 

 

Rationale: The Board of Regents includes not only nine “Citizen Regents” but also representatives of 

each branch of the federal government: the Chief Justice of the United States, the Vice President, 

three members of the Senate and three members of the House of Representatives. Two Regents — the 

Vice President and the Chief Justice — serve in an ex officio rather than an individual capacity, and by 

tradition the Chief Justice serves as the Chancellor of the Institution. 

The Smithsonian Charter — the basic framework establishing the Board — is statutory. Any changes 

would require legislative action by the Congress, with the concurrence of the President. The last 

change to the Board’s structure occurred over 30 years ago when the number of Citizen Regents was 

increased from six to nine. The Committee found that best practices for good governance include a 

periodic review of board size and structure to ensure it continues to meet the organization’s need for 

effective governance. The Committee determined that considerable analysis, including input from 

stakeholders, and further deliberations are necessary before making any suggestions with regard to 

whether changing the Charter would improve governance. 

The Governance Committee has identified some fundamental questions about the structure and 

composition of the Board and its committees, including: (1) what is the appropriate size of the Board; 

(2) what is the appropriate size and function of the Executive Committee; (3) what is the appropriate 

representation of the Legislative, Executive, and Judicial Branches on the Board; (4) what is the 

appropriate Board committee structure; (5) what is the appropriate number of Citizen Regents on the 

Board; (6) what is the appropriate process for selection and appointment of Regents; and (7) what are 

the appropriate roles of the Chancellor and the Board Chair? 
17

With respect to committee structure, the Governance Committee notes that significant areas of 

Smithsonian activity are not currently within the oversight of any committee, including fundraising 

and development, Smithsonian Business Ventures, and most programmatic activities. The 

Governance Committee will consider whether the Board’s ability to provide strategic direction and 

oversight would be enhanced by the creation of additional committees to oversee these or other areas. 

To address these questions, the Governance Committee will review the rationale for the existing 

structure, consider best practices of similar organizations, and consult with a wide range of 

stakeholders. The Committee may engage a consultant to assist in conducting this review. This 

review will include consideration of Board structure and function issues raised in the report of the 

IRC. The Committee’s report will be presented to the Board of Regents at its January 2008 meeting. 

 

RECOMMENDATIONS TO PROMOTE A CONSTRUCTIVE PARTNERSHIP 

 

2. To establish clear governance expectations, the Regents adopt the following description of 

duties and responsibilities of all Regents: 

 

Duties and Responsibilities of Regents 

The Board of Regents is entrusted with the governance of the Smithsonian Institution and overseeing 

its mission to increase and diffuse knowledge. Regents are responsible for carrying out their duties in a 

manner that encourages prudent and independent decision-making, places the Smithsonian’s interests 

above personal interests and ensures that decisions are in keeping with the Smithsonian mission. The 

expectations of Regents in carrying out their duties and responsibilities are as follows: 

• Regents operate in a culture of inquiry, regularly attending Board and committee meetings and engaging in 

meaningful and forthright discussion about issues that shape the Smithsonian’s strategic plans and 

operations. The Board values independent thinking and encourages Regents to raise questions, challenge 

conclusions and advocate for solutions that affirm the primacy of the Smithsonian mission. 

• Regents review and approve the Smithsonian’s ongoing and future strategic plans and articulate Smithsonian 

priorities in a manner that continually reinforces and affirms the Smithsonian mission and culture. Regents 

establish major policies for the Institution and oversee implementation by the Secretary. 

• Regents elect the Secretary, set the Secretary’s compensation and annually evaluate the Secretary’s 

performance. With input from the Secretary, Regents evaluate and establish compensation for the senior 

leadership team and plan for management development and succession. Regents hold management 

accountable for performance and regularly assess their own individual, Board and committee effectiveness. 

• Regents work in partnership with the Secretary, who is responsible for implementing the policies and 

priorities articulated by the Board. They maintain open communication with the Secretary regarding 

information – both positive and negative – that impacts the Smithsonian’s mission and operations. Regents 

request information from the Secretary and staff as necessary in order to oversee management in its operation 

of the Smithsonian and its programs. 

• Regents are transparent in their dealings with one another and in their relationships with the Secretary, staff, 

Smithsonian National Board and Advisory Board Members, donors, the Congress and other stakeholders, 

and act as ambassadors for the Institution. Regents are accessible to the Secretary and senior staff and 

encourage them to bring important issues to the attention of the Regents. Regents establish and oversee 

processes to engage Smithsonian National Board and other Advisory Board members in promoting the 

Institution’s mission and activities. 

 

 
18

 

• Regents review and approve Smithsonian budgets and work in collaboration with the Secretary and the 

Congress to address the Institution’s financial and human resource needs for the accomplishment of its 

mission and strategic priorities. Regents oversee and assist the Smithsonian’s efforts to generate resources 

through private fundraising and revenue-generating activities. 

• Regents oversee the Smithsonian’s legal and ethical compliance obligations, the integrity and reliability of 

financial reporting and audit processes, and management’s procedures for identifying and managing risks. 

Regents are mindful of their own ethical obligations to the Institution and follow the Regents Ethics 

Guidelines. 

• Regents demonstrate their commitment to ongoing Board development by identifying potential candidates 

for Citizen Regents for consideration by the Congress. All new Regents participate in Board orientations. 

 

Rationale: The Charter and Bylaws establish the Board as the Smithsonian’s governing authority, but 

the specific duties and responsibilities of individual Regents are not explicitly stated. Without a 

formal job description, the role of a Regent was subject to individual interpretation. The best 

practices of nonprofit boards strongly encourage members to have a basic shared understanding of 

their roles and expectations. The Governance Committee believes that adopting a clear statement of 

Regent duties and responsibilities will reaffirm that the Board is the Smithsonian’s ultimate governing 

authority and that the Regents will act accordingly. 

This job description establishes expectations for all Regents, including ex officio and Congressional 

members, who act collectively as a governing body. The Governance Committee notes that the review 

of Board structure and functions described in Recommendation 1 will address the appropriate role 

and obligations of ex officio, Congressional, and Citizen Regents. Following that review, the 

Committee may suggest revisions to this job description. 

Each current and prospective Regent should take into consideration whether he or she has sufficient 

time and ability to fulfill the requirements of the position as defined. 

 

RECOMMENDATIONS TO PROMOTE A CONSTRUCTIVE PARTNERSHIP 

 

 

3. To enhance Board leadership, the Regents adopt the following specific duties and 

responsibilities for the positions of Chancellor and Chair of the Board and will initiate a 

change to the Bylaws to separate these positions: 

 

Duties of the Chancellor 

• The Chancellor presides over Board of Regents meetings. The Chancellor leads and 

furthers the Board’s deliberations by providing an opportunity for all Regents to 

participate and sees that the Board follows proper decision-making procedures. 

• The Chancellor serves as a member of the Executive Committee and in that capacity 

participates in developing the agenda for Board meetings. 

• With approval of the Board, the Chancellor appoints members and chairs of Board 

committees, other than the Executive Committee. 

• The Chancellor presides over official ceremonies of the Institution. 

 

 
19

 

• The Chancellor may, by instrument in writing filed with the office of the Secretary, 

appoint an Acting Secretary when there is a vacancy in the office or whenever the 

Secretary is unable to perform the duties of the office. 

 

Duties of the Chair of the Board 

• The Chair plays a leadership role in guiding the Board of Regents in its deliberations 

and the exercise of its oversight function. The Chair directs the Board’s attention to the 

immediate and long-term strategic planning needs of the Smithsonian and oversees the 

Board’s, Board committees’, and individual Regents’ evaluation of their effectiveness. 

The Chair also works closely with the Chancellor in developing the agenda for Board 

meetings. 

• The Chair represents the Board in dealing with the Secretary and senior management 

on matters that arise between Board meetings. The Chair works in partnership with the 

Secretary and senior management to communicate and oversee the carrying out of the 

policies adopted or approved by the Board and reports to the Board on the conduct 

and management of the affairs of the Smithsonian. 

• The Chair establishes the process for selecting a new Secretary. Together with the Chair 

of the Compensation and Human Resources Committee, the Chair leads the Board in 

its annual evaluation of the Secretary’s performance and compensation. 

• The Chair is the chief spokesperson and advocate for the Board of Regents. The Chair 

communicates with the Congress, other Smithsonian stakeholders and the media on 

behalf of the Board. The Chair serves as the primary liaison between the Board and the 

Smithsonian National Board and other Advisory Boards. 

• The Chair presides over Board of Regents meetings in the event the Chancellor is 

absent. 

• The Chair serves as Chair of the Executive Committee. 

 

Rationale: The Smithsonian Charter provides for a “Presiding Officer,” called the “Chancellor,” who 

is elected by the Regents and possesses certain statutory responsibilities. By tradition, the Regents 

have selected the Chief Justice of the United States — who by statute is an ex officio member of the 

Board — as Chancellor. The Bylaws provide that the Chancellor is also the Chair of the Board and 

that he may call on the Executive Committee for assistance. In practice, the Chair of the Executive 

Committee has performed many of the duties and responsibilities of the Chair of the Board. 

The Smithsonian has greatly benefited from each Chief Justice’s willingness to continue this 

tradition. By virtue of a Chief Justice’s life-tenure judicial office, he brings to the role of Chancellor 

practical experience in presiding over deliberative proceedings and a long-range perspective of the 

Smithsonian’s institutional interests. His presence as Chancellor reinforces the distinctive nature of 

the Smithsonian as a public trust of the United States. But by virtue of his judicial office, the Chief 

Justice, as Chancellor, also faces constraints in exercising the full range of responsibilities of the Chair 

of the Board. Accordingly, the current Chief Justice, like his predecessors, has limited his role as 

Chair of the Board in important respects and delegated a broad range of duties to the Chair of the 

Executive Committee. 
20

To formalize the division of the past and augment the central role of the Chair of the Board, the 

Governance Committee recommends that the Regents amend the Bylaws to separate the positions of 

Chancellor and Chair of the Board. This division of responsibilities is consistent with the concerns 

expressed by the IRC that the Board should structure its organization to bring more resources to bear 

on day-to-day leadership and oversight. The Committee recommends that, prior to approval and 

implementation of a Bylaw change, the Regents recognize this division of responsibilities through 

appropriate means. The roles of the Chancellor and Chair may be further refined as a result of the 

Governance Committee review of Board structure and functions. 

 

RECOMMENDATIONS TO PROMOTE A CONSTRUCTIVE PARTNERSHIP 

4. To provide sufficient time for deliberations and action, the Board of Regents will hold no 

fewer than four regular business meetings, with additional meetings as necessary. Each 

Board meeting will include an executive session without the presence of staff, as well as 

executive sessions with the Secretary and other key staff individually, as appropriate. To 

enhance the transparency of Board operations and deliberations, the Board and Board 

committees will keep minutes for all meetings, including executive sessions, and the Special 

Advisor to the Regents will develop a new format to document minutes of Board and Board 

committee meetings. The Secretary will delegate to the General Counsel the responsibility 

for preparing and keeping Board and committee minutes. 

Rationale: The Board’s current schedule includes three business meetings and one strategic planning 

meeting each year (this does not include committee meetings). Current practice allows for an 

extended period as a “Committee of the Whole” before the business meetings. In doing so, 

substantive discussions are separated from decision-making in a way that detracts from good 

governance. Moreover, because the Committee session is not considered part of the business 

meeting, the amount of time Regents deliberate has been underestimated by observers. 

The flow of Board meetings and decision-making will improve by conducting no fewer than four 

business meetings each year, with additional Board meetings to be scheduled as necessary. The 

meeting schedule may include an opportunity for additional work sessions and/or Board committee 

meetings the preceding day, as appropriate. The Committee notes that because of the extraordinary 

governance issues that have arisen this year six Board meetings are likely. The Committee believes 

that all Regents must be aware of, and accept, the fact that governing an Institution as large and 

complex as the Smithsonian requires a significant time commitment, both in attending Board and 

committee meetings as well as necessary engagement and action between meetings. 

The Committee notes the importance of executive sessions as a mechanism to provide the Board 

with unfiltered information and enhance its ability to engage in frank and open discussions. The 

Board should have regular executive sessions with no staff present, as well as sessions with the 

Secretary and key “gatekeepers” individually. As discussed in Recommendations 10-12, regular 

executive sessions will be held with the General Counsel, Chief Financial Officer, and Inspector 

General. 

Nonprofit organizations customarily prepare succinct minutes for each board or board committee 

meeting. These minutes include discussions of agenda items, decisions made and relevant 
21

deliberations informing those decisions. Under current practice no minutes are prepared for 

meetings of the Committee of the Whole and certain Executive Committee meetings. Consequently, 

gaps exist in the records of Regent deliberations. The Regents rely on Board and Board committee 

minutes to make informed decisions; other stakeholders, including Congressional committees and 

the Office of Management and Budget, also rely on minutes for information on Smithsonian 

governance. As a result, the Board should require minutes for all Board and Board committee 

meetings to provide the necessary record of the Regents’ official deliberations and decisions. 

Minutes of committee meetings should be regularly provided to the Board for information. The 

Secretary should delegate to the General Counsel his corporate secretarial responsibilities for the 

preparation and maintenance of the minutes for Board and committee meetings, including executive 

sessions. 

The current format for the formal Board of Regents minutes (called “Proceedings”) is difficult to 

follow. There is little discussion of Board deliberations aside from the language of the actual 

resolutions adopted, and the Proceedings incorporate reports of committee meetings and other 

reports delivered to the Regents, such as Advisory Board communications. The Regents should 

maintain a record of Board and Board committee meetings that better serves their needs and 

promotes effective transparency. The Committee has instructed the Special Advisor to the Regents 

to develop a new, more accessible format for minutes for presentation to the Executive Committee 

for review and approval prior to the Board’s September 2007 meeting. 

 

RECOMMENDATIONS TO PROMOTE A CONSTRUCTIVE PARTNERSHIP 

 

5. To provide Regents with the necessary foundation to be effective, the Governance 

Committee will develop an orientation program for new Regents. To promote 

accountability, the Governance Committee also will develop and regularly administer a 

process to assess the effectiveness of the Board, Board committees, and individual Regents. 

Rationale: A robust orientation for new board members is widely considered a best practice. No 

formal orientation program for new Regents has been conducted since at least 2000. Given the 

breadth and complexity of the Smithsonian’s operations, Regents must have a thorough orientation 

about the Institution’s legal status, organization and funding structure as well as the responsibilities 

of Board members. The Governance Committee will work with management to develop an 

orientation for new Regents, to begin in January 2008. All Regents will be strongly encouraged to 

participate. The Governance Committee will provide guidance to Smithsonian management to 

ensure that orientation programs for the Smithsonian National Board and other Advisory Boards 

include appropriate elements of the Regents’ orientation. 

Best practices call for boards, board committees and individual board members to evaluate their 

effectiveness and contribution to the organization’s mission and strategies. The Governance 

Committee will develop a process to do that for the Board of Regents, Board Committees and 

individual Regents. One area identified for measurement is the success of the Board, Board 

committees and individual Regents in maintaining a culture of inquiry and independentmindedness, as well as working in constructive partnership with management. The assessment 
22

process will be implemented in January 2008. 

The Governance Committee will also consider the value and propriety of maintaining an 

independent and dedicated staff within the Institution to support the Board of Regents. Having staff 

reporting directly to the Regents may assist in the flow of critical information to the Regents and 

provide for independent analysis. At the same time, the Committee is aware that an independent 

staffing capacity may cause confusion regarding reporting and support responsibilities within the 

Institution. The Committee will explore the advisability of establishing such a function and present 

a recommendation to the Board at its January 2008 meeting. 

 

RECOMMENDATIONS TO PROMOTE A CONSTRUCTIVE PARTNERSHIP 

 

 

6. To enhance effectiveness, each Board committee will review its role, function, and charter. 

The committees will revise and update their charters as necessary. Committee charters will 

be subject to approval by the full Board. To provide momentum as the Board initiates its 

strengthened governance practices, new leadership will be appointed for each of the Boardestablished committees. 

Rationale: Over the past several years, it has become a best practice for board committees to have 

formal written charters that clarify purposes and responsibilities, establish operating procedures and 

require assessments of effectiveness. This reflects, among other things, the growing influence of the 

Sarbanes-Oxley Act on the nonprofit sector. By identifying a committee’s purposes and functions 

and backing them with performance assessments, charters allow a committee to better carry out its 

strategic role in supporting the organization’s mission. 

Some of the Board committee charters lack the necessary detail to guide operations. For example, 

the Executive Committee charter does not require the Committee to audit the Regents’ travel 

expenses as required by the Smithsonian Charter. Others do not reflect state-of-the-art governance 

practices. For example, the Compensation and Human Resources Committee charter does not 

incorporate the procedures set forth in the regulations under Section 4958 of the Internal Revenue 

Code (the so-called “intermediate sanctions” provisions) for establishing a “rebuttable presumption 

of reasonableness” in the compensation-setting process. 

As Board committees review their role, function, and charters, they should also consider their 

operating procedures and specify or clarify their information needs and expectations of 

management. The committees should complete their review by end of 2007. 

The Governance Committee recognizes that the strengthened governance practices recommended in 

this Report will require a high level of engagement by all Regents, and each committee is being 

charged with specific actions to be initiated immediately. To provide momentum during this critical 

period, new leadership will be appointed to chair the Audit and Review, Compensation and Human 

Resources, Facilities Revitalization, and Finance and Investment, and Governance Committees. 
23

 

RECOMMENDATIONS TO PROMOTE A CONSTRUCTIVE PARTNERSHIP 

 

7. To ensure a rigorous, independent, and transparent system for evaluating executive 

compensation and performance, the Compensation and Human Resources Committee will 

implement a refined process that follows best practices in executive evaluation and 

compensation in the nonprofit sector. The Committee will follow this new process to 

recommend to the Board, at its September meeting, an appropriate compensation package 

to guide the search for the next Secretary, balancing the need to attract the best leader for 

the Institution with our public trust status. 

 

Rationale: Much recent scrutiny of the Smithsonian involved the level of compensation and 

spending practices of the former Secretary, including a housing allowance, first class travel 

accommodations and spousal travel. Other executive compensation policies have since been 

questioned by the Regents. Members of the Board and the Compensation and Human Resources 

Committee were unaware of some of these practices, such as exempting certain senior executives 

from the generally-applicable leave accrual system. 

The Compensation and Human Resources Committee is responsible for ensuring that the 

Smithsonian executive compensation and benefits are reasonable and appropriate. The 

Committee should implement a refined compensation process that follows best practices in the 

nonprofit sector, including the IRS requirements under the intermediate sanctions regulations for 

obtaining the “rebuttable presumption of reasonableness.” These refinements will enhance the 

independence and reliability of information available to the Committee and will thereby better 

support the validity and propriety of the Committee’s and the Board’s compensation decisions. In 

addition to the specific process recommendations described here, the Governance Committee 

recommends that the Compensation Committee review the overall philosophy and rationale for 

Smithsonian employee compensation (see Recommendation 24). 

This refined process will include the following elements (some of which are already in place): (1) 

Committee members will be independent of the Secretary in fact and in perception; (2) the 

executive compensation process will be administered under the control and direction of the 

Committee; (3) outside compensation consultants will be selected, engaged by and report solely to 

the Committee; (4) the Committee’s review will take into account all elements of compensation, 

including appropriate benchmarks; (5) current executive benefits will be examined for 

reasonableness in light of comparable market data and revised as appropriate; (6) decisions 

regarding executive compensation made in executive session will be documented in minutes kept 

in accordance with applicable IRS requirements; (7) when acting on recommendations of the 

Committee, the Board will have access to all necessary information, including comparable market 

data, to meet the applicable IRS requirements; (8) executive compensation and benefits will be 

accurately and fully reported on Form 990; and (9) the Committee and Board will follow best 

practices in the nonprofit sector for transparency and disclosure of compensation decisions and 

practices. 

The Committee should implement these practices immediately to recommend to the Board at its 

September meeting an appropriate compensation package to guide the search for the next 

Secretary, balancing the need to attract the best leader for the Institution with our public trust 

status.
24

 

RECOMMENDATIONS TO PROMOTE A CONSTRUCTIVE PARTNERSHIP 

 

8. To provide a mechanism for immediate and continuing Board attention to the 

Smithsonian’s facilities needs and to underscore the Regents’ commitment to resolving the 

facilities backlog, the ad hoc Committee on Facilities Revitalization will become a standing 

committee of the Board. 

Rationale: The Smithsonian’s most pressing issue is the $2.3 billion facilities revitalization and 

maintenance backlog. Significant public attention has been focused on facilities revitalization, 

including planned hearings by both the House and the Senate on the issue over the summer. The 

Regents must leave no doubt that this is also their paramount concern. The ad hoc Committee on 

Facilities Revitalization was established in June 2005 and has met once since that time. Given the 

particularly complex and pressing nature of these issues, the Governance Committee recommends 

that the ad hoc Committee become a standing Board committee. The Committee on Facilities 

Revitalization should be made responsible for working with Congress and other stakeholders to 

explore all the options available for revitalizing aging Smithsonian facilities. 

 

RECOMMENDATIONS TO PROMOTE A CONSTRUCTIVE PARTNERSHIP 

 

9. To strengthen board development and integrate the nominating and governance process, 

the Governance Committee will assume the responsibilities of the Nominating Committee 

and be renamed the Governance and Nominating Committee. The Committee will

develop criteria for the nomination of new Citizen Regents to ensure that the skill sets and 

diversity necessary for a dynamic Board are identified. It also will review existing 

processes for appointing Board committee members and chairs and will recommend 

improvements. 

Rationale: Board development is an essential function of the Governance Committee and will be a 

focus of its work as improved governance practices are adopted and implemented. Combining the 

functions of the Governance and Nominating Committees will ensure that new Regent and 

committee appointments will support and reflect the priorities and strategies for strengthening the 

Board identified by the Governance Committee. 

Press reports and Congressional inquires have questioned the relationship between the Regent 

nominations and the prior Secretary. In response to these questions and reflecting best practices, 

the new Governance and Nominating Committee will develop criteria for nomination of all new 

Citizen Regents that factor in, among other things, critical skills (e.g., experience in public service, 

academia, business or complex cultural and educational institutions; expertise in areas such as 
25

financial accounting and audit, investment strategies, governance, compensation, or facilities 

management) and diversity. The criteria will also value a candidate’s independence and 

commitment to the Smithsonian. 

The Governance and Nominating Committee will also review the committee and chair 

appointment process. The Bylaws do not limit the number of committees that a Regent may 

chair, making it possible to concentrate significant governance responsibility in a small group of 

Regents. Providing that a Regent may not chair more than one committee would result in a more 

equitable distribution of responsibilities and allow a committee chair to better focus attention on a 

single committee. The Bylaws also do not address appointment of non-Regents to committees, 

even though this is permitted by committee charters and established practices. Non-Regents 

contribute significantly to the work of Board committees, and the Governance Committee will 

consider appropriate Bylaw amendments and/or suggested committee charter revisions that 

address and encourage such appointments. 

 

RECOMMENDATIONS TO PROMOTE A CONSTRUCTIVE PARTNERSHIP 

 

10. To provide the Board with necessary and timely legal advice, the General Counsel will 

have direct access to the Board, attend Board and Board committee meetings (either in 

person or by delegate), and regularly report to the Board and relevant Board committees 

in executive session. The General Counsel will have the right and obligation to bring 

directly to the Board and/or relevant Board committee any information on legal or 

compliance matters that he or she reasonably determines should be brought to their 

attention. The Governance Committee will review and report to the Board on whether 

sufficient resources are available for the Office of General Counsel to effectively perform 

its functions. 

 

Rationale: The Committee recognizes that under the prior Secretary, the General Counsel’s access 

to the Board was limited. The General Counsel is legal counsel to the Institution and must be 

available to provide legal advice directly to the Board and its committees. The General Counsel 

must also have the right and obligation to bring directly to the Board and/or relevant Board 

committee any information on legal or compliance matters that he or she reasonably determines 

should be brought to their attention. 

The General Counsel’s attendance at Board and Board committee meetings will ensure that 

Regents have immediate access to legal advice during their deliberations. Regular reporting by the 

General Counsel to the Board and relevant committees on pending litigation and other serious 

legal or compliance issues, including in executive session as appropriate, will keep Regents 

informed of potential risks to the Smithsonian. The Committee also recognizes that given the 

number of meetings that committees may conduct, the General Counsel may not always be 

available to attend. Accordingly, the Committee expects that the General Counsel may designate a 

staff member to attend in his or her stead as appropriate. The Secretary should consult with the 

General Counsel to determine whether a staff lawyer should be dedicated to handle ethics, conflicts
26

of interest, and governance issues. The Governance Committee will review and report to the Board 

on whether sufficient resources are available for the Office of General Counsel to effectively 

perform its functions. 

 

RECOMMENDATIONS TO PROMOTE A CONSTRUCTIVE PARTNERSHIP 

 

11. To enhance the accessibility of financial information, the Chief Financial Officer will have 

direct access to the Board, attend Board and relevant Board committee meetings, and 

regularly report to the Board of Regents, the Audit and Review Committee, and/or other 

relevant Board committees in executive session. The Chief Financial Officer will have the 

right and obligation to bring directly to the Board and/or relevant Board committee any 

information on financial or compliance matters that he or she reasonably determines 

should be brought to their attention. The Audit and Review Committee will review and 

report to the Board on whether sufficient resources are available for the Office of Chief 

Financial Officer to effectively perform its functions. 

 

Rationale: The Bylaws establish the position of Chief Financial Officer, whose functions include 

assisting the Board in the exercise of its fiduciary duties. However, neither the Bylaws nor charters 

for the Audit and Review and Finance and Investment Committees address the Chief Financial 

Officer’s relationship to the Board or its committees. The Chief Financial Officer must, however, 

have the right and obligation to bring directly to the Board and/or relevant Board committee any 

information on financial or compliance matters that he or she reasonably determines should be 

brought to their attention. 

The Chief Financial Officer should have direct access to the Board and Board committees by 

attending Board meetings and relevant Board committee meetings and by regularly reporting to 

the Board, the Audit and Review Committee and/or other relevant Board committees in executive 

session. The Audit and Review Committee will also review and report to the Board on whether 

sufficient resources are available for the Chief Financial Officer to effectively perform her 

functions.

 

RECOMMENDATIONS TO PROMOTE A CONSTRUCTIVE PARTNERSHIP 

 

12. To strengthen the role of the Inspector General, the Audit and Review Committee will 

document the expectations for, and reporting relationship of, the Inspector General to the 

Board of Regents. The Inspector General is expected to bring directly to the Board and/or 

relevant Board committee information on all matters that he or she determines should be 

brought to their attention. The Audit and Review Committee will review and report to the 

Board on whether sufficient resources are available for the Office of Inspector General to 

effectively perform its functions. The Office of Inspector General will be relocated to 

downtown Washington, in close proximity to the Secretary and senior management. 
27

Rationale: The Office of the Inspector General is an independent office within the Smithsonian 

charged by statute to promote economy, efficiency, and effectiveness, and prevent and detect waste, 

fraud and abuse. Until last year, the Inspector General reported to the Secretary but now reports 

directly to the Board of Regents. The Committee supports the Acting Secretary’s decision to relocate 

the Office of the Inspector General to downtown Washington in close proximity to the Secretary and 

senior management. 

The Audit and Review Committee will work with the Inspector General to formalize her reporting 

relationship to the Board of Regents, consistent with applicable law. Developing formal terms of 

reference for this relationship will strengthen the Inspector General’s contribution to good 

governance of the Smithsonian. The Inspector General will propose terms of reference to the Audit 

and Review Committee for review and presentation to the Board of Regents for approval in 

September 2007. The Audit and Review Committee will also review and report to the Board on 

whether sufficient resources are available for the Office of Inspector General to effectively perform 

its functions. 

 

RECOMMENDATIONS TO PROMOTE A CONSTRUCTIVE PARTNERSHIP 

 

13. To recognize the assistance and support that the Smithsonian National Board and other 

Advisory Boards provide to the Smithsonian and to establish a stronger link between the 

Regents and the Advisory Boards, the Governance Committee will oversee an examination 

of options to more effectively engage these Advisory Boards and will report to the Board 

with its recommendations in 2008. 

Rationale: The Regents recognize that Smithsonian Advisory Boards are an underutilized core 

asset that can, and should, become a strong partner with them in advancing the Institution’s 

mission. The more than 600 Advisory Board members are effective advocates and fundraisers and 

possess a focused and intense passion for the museums or programs they support. Acknowledging 

the contributions Advisory Boards can make to general Smithsonian governance, the Regents have 

established a practice of inviting the Chair of the Smithsonian National Board to attend all of its 

meetings and to participate in other Regent activities, including executive search committees. 

Advisory Boards provide a key link between the Regents and the public and a direct connection to 

Smithsonian units. Advisory Board members are a diverse group, coming from all walks of life 

and representing a wide variety of interests and constituencies. Many individual Advisory Board 

members have indicated that they are enthusiastic about engaging in new ways to assist the Regents 

in their oversight and support of the Institution. 

The Governance Committee believes the Regents should seize this opportunity and will ask the 

Chair of the Smithsonian National Board and the Secretary to assist with a review of ways to use 

the Advisory Boards more effectively. The Committee will report to the Board of Regents with 

recommendations in 2008. The report should propose a new, strong partnership between the 

Regents and the Advisory Boards that will also: 

• enhance the Regents’ understanding of Smithsonian units and their strategic plans. 
28

• inform the Regents’ deliberations and oversight of issues relating to the individual units. 

• increase the effectiveness of Institution-wide advancement and fundraising efforts. 

• ensure a diversity of inputs to inform the Regents decision-making process. 

 

RECOMMENDATIONS TO STRENGTHEN 

THE CULTURE OF ACCOUNTABILITY 

14. To foster a culture of ethical conduct, the Secretary will develop an overarching 

Smithsonian Code of Ethics that promotes best practices and the highest professional 

standards and is based on the guiding principles for ethical conduct adopted by the 

Regents. The Code will be presented to the Board for review and approval as soon as 

possible and in any event no later than the end of 2007. 

 

Rationale: While the Regents Ethics Guidelines and the Smithsonian Standards of Conduct, which 

is modeled on the Ethics in Government Act and federal conflict of interest laws, provide guidance 

for individual conduct, and other policies address specific ethics issues, the Smithsonian does not 

have a single Board-approved statement of institutional ethics that reflects the Guiding Principles 

on Ethical Conduct set forth above. An institutional Code will reaffirm the Smithsonian’s mission, 

purpose, and values; provide guidance to Regents, staff, and volunteers in the performance of their 

Smithsonian responsibilities; and support public confidence in the integrity of the Smithsonian. 

The Institutional Code of Ethics should complement the existing Standards of Conduct and the 

Regents Ethics Guidelines and reflect the principles contained in the Code of Ethics for Museums 

of the American Association of Museums as well as relevant codes for federal employees. The new 

Code should require that all Smithsonian staff participate in an annual process to encourage a 

continuing commitment to the highest ethical conduct and best professional practices. The 

Smithsonian will also establish telephonic and electronic ethics “hot lines” for staff to report 

questionable activities or to proactively seek guidance. 

 

RECOMMENDATIONS TO STRENGTHEN 

THE CULTURE OF ACCOUNTABILITY 

 

15. To embrace a spirit of increased openness, the Regents will provide an opportunity for 

input through an annual public forum and other appropriate mechanisms beginning in 

2008. The Regents also will engage regularly in direct communication with interested 

members of Congress to promote a constructive dialogue with these key stakeholders. In 

 

 
29

 

addition, the Regents will immediately launch a public webpage that will include 

information about the structure, membership, and functions of the Board, as well as 

meeting agendas and summaries of meeting minutes. 

 

Rationale: The Committee recognizes that effective transparency requires not only that 

information about the Regents is made widely available, but also that the Regents receive 

information and input from stakeholders to inform their decision-making. The Committee 

recommends that the Board begin in 2008 a practice of hosting an annual public forum that will 

enable interested stakeholders to address information and inquiry directly to the Board. The 

Committee will continue to review best practices to consider other mechanisms that will provide 

appropriate opportunities for the Board to receive public input and to be more accessible to 

stakeholders. 

Members of Congress have indicated that oversight of the Institution would benefit from increased 

and direct communication with the Board, while recognizing that the Secretary and other 

Smithsonian staff must remain the primary channel for information. The Regents agree that 

increased engagement with Congress will benefit the Institution and plan to engage regularly in 

direct communication with the Congress. The Board may also host an annual forum or event to 

facilitate interaction with Members of Congress and their staffs. 

The Smithsonian’s public website has included little information on Smithsonian governance 

generally and the Board of Regents in particular. As a trust instrumentality of the United States 

with a mission to increase and diffuse knowledge, the Smithsonian must be a leader in operating 

with effective transparency. Outside observers have noted the difficulty of monitoring Board 

activities and decisions. The Committee has worked with Smithsonian staff to develop a public 

webpage that includes information on Board and committee structure, membership, functions, 

meeting agendas and minutes, the Smithsonian’s IRS Form 990, management reports to the 

Board, and significant policies and procedures. The Board will work with staff on an ongoing 

basis to ensure that the webpage remains current and an effective means of conveying information 

about the Board and its activities. 

RECOMMENDATIONS TO STRENGTHEN 

THE CULTURE OF ACCOUNTABILITY 

16. To foster an ethos of transparency, the Secretary will develop a strategy to increase 

available information about the Board and Smithsonian activities and operations and to 

enhance communications with the Board. The strategy will be based on the best practices 

of nonprofit organizations, universities, and federal agencies. The Secretary will begin 

immediately implementing elements of this recommendation as they are developed and 

will present the full strategy to the Board for review and approval by the end of 2007. The 

strategy should include the following components: 

• Enhanced use of the internet to make information about Smithsonian policies, 

governance, finances, operations, programs, activities, and decision-making processes 

widely available. 

 

 

 
30

 

• Mechanisms to foster communication between and among senior management and 

the Board of Regents, staff, and other stakeholders. 

• A framework to ensure effective congressional outreach and information. 

• A communications plan to ensure that all constituencies are routinely informed of 

important decisions and current issues and have opportunities to provide comments 

or information to the Board and management. The plan should consider the 

establishment of a public ombudsman. 

• An effective process, including telephonic and electronic “hot lines,” for the staff or 

public to bring ethics and compliance issues to the attention of management and the 

Board. 

• Plans for monitoring and measuring these efforts, including routinely benchmarking 

Smithsonian efforts against evolving best practices. 

Rationale: Although the mission of the Smithsonian Institution is to increase and diffuse 

knowledge, the Institution has been subject to criticism that it does not apply this mission to 

knowledge about the Institution’s policies, governance, finances, operations, or decision-making 

processes. The Smithsonian must operate in an ethos of transparency that is both informed by, 

and reflective of, its mission and status as a leading educational and research organization. To 

achieve this result, the Smithsonian must exploit all of its substantial and diverse communication 

resources. 

In developing a strategy for increased transparency, the Smithsonian should identify and 

acknowledge its array of stakeholders and recognize their common interests as well as those 

particular to each, determine the scope of information that should reasonably be available to each 

stakeholder group, and establish mechanisms to make the information readily accessible. The 

Smithsonian should be prepared to identify and articulate a reasonable basis for its decisions on 

whether and how particular types of information are made available. In addition, the strategy 

should include establishing telephonic and electronic “hot lines” for staff and the public to report 

questionable activities or to proactively seek guidance on ethics and compliance matters. 

RECOMMENDATIONS TO STRENGTHEN 

THE CULTURE OF ACCOUNTABILITY 

 

17. To increase accessibility to information about Smithsonian activities, the Regents affirm 

that the Smithsonian embraces the principles of disclosure reflected in the Freedom of 

Information Act (“FOIA”) and follows its spirit in considering public requests for 

information. The Secretary will develop and issue by the end of 2007 a policy on 

disclosure of Smithsonian records to implement this guidance. 
31

 

Rationale: Although FOIA applies only to executive branch agencies, the Smithsonian has had a 

long practice of being guided by FOIA principles in responding to requests for information. 

Even so, there has been confusion, both within the Smithsonian and with the public, regarding 

the applicability of those principles. Recent requests for business contracts and personnel 

information exacerbated the uncertainty. With this endorsement by the Board, the 

underpinnings of Smithsonian policy and practice will be established and give authority to the 

Secretary to develop an appropriate policy on disclosure of information.

 

RECOMMENDATIONS TO STRENGTHEN 

THE CULTURE OF ACCOUNTABILITY 

 

18. To avoid even an appearance of conflict of interest or divided loyalty, the Regents adopt 

the policy that, beginning October 1, 2007, Smithsonian senior executives shall not be 

permitted to serve on the board of a for-profit company. 

 

 

Rationale: Serious concerns have been raised about the participation on corporate boards by 

senior Smithsonian executives. In particular, stakeholders and the IRC have asked whether 

senior executives devote too much time to such activities and whether potential conflicts of 

interest exist. The obligations of, and compensation received for, corporate board service also 

give rise to questions regarding an executive’s loyalty and professional commitment to the 

Smithsonian. To avoid even an appearance of impropriety, the Governance Committee 

recommends that senior executives be prohibited from serving on boards of for-profit 

companies. 

 

 

RECOMMENDATIONS TO STRENGTHEN 

THE CULTURE OF ACCOUNTABILITY 

 

19. To maintain public confidence in the integrity of the Board and staff, the Regents adopt 

the following policies and guidance on outside activities and conflicts of interest: 

• The Secretary will transition all Smithsonian staff to a leave accrual system as soon as 

possible, and in any event no later than October 1, 2007. The leave policy for all 

Smithsonian employees will follow federal employee policies. 

• The rules on approval of outside activities engaged in by senior executives 

established in the Interim Policies and Procedures are adopted as standing policies 

and expanded to include all unit heads and above. 

 

 
32

• As the Smithsonian’s Chief Ethics Officer, the General Counsel is primarily 

responsible for the identification and management of potential conflicts of interest 

of senior executives. The General Counsel will personally review the annual financial 

disclosure statements and outside activity requests of all senior executives and unit 

heads under the Standards of Conduct. The General Counsel will provide a written 

report to the Audit and Review Committee on the conclusion of the annual financial 

disclosure process and will also provide a written annual report to the Committee on 

the reported outside activities of senior executives, including dispositions of requests 

for clearance to participate in outside activities. The Audit and Review Committee, 

in turn, will report the General Counsel’s conclusions and recommendations, if any, 

to the Board. 

• The Secretary will develop an accessible database for staff to alert appropriate 

officials when potential conflicts of interests may exist. 

 

 

Rationale: The Committee notes that the Smithsonian Standards of Conduct provide a clear 

standard for staff engagement in outside activities and include an appropriate disclosure and 

recusal process for outside activities. Employees are not permitted to engage in outside activities 

for pay or any outside activities unrelated to their Smithsonian position during regular business 

hours. Some senior executives, however, do not accrue or record leave. For these employees, 

paid or unrelated outside activities taking place during regular business hours may appear to be 

occurring on Smithsonian, rather than on their own, personal time. Accordingly, the Committee 

recommends that all Smithsonian employees be subject to the existing system of leave accrual, 

which will provide 26 days of leave annually. This will enable senior executives to participate in 

permitted outside activities while on annual leave, subject to the requirements of the Standards 

of Conduct. 

The Standards of Conduct and the Board of Regents Ethics Guidelines provide an appropriate 

process for staff and Regents to report any financial interests that may conflict or appear to 

conflict with Smithsonian interests. The Committee recommendation for additional reporting 

and review in the financial disclosure process will improve Board oversight of this process. 

 

RECOMMENDATIONS TO STRENGTHEN 

THE CULTURE OF ACCOUNTABILITY 

 

 

20. To promote accountability and ensure the public trust, Smithsonian Business Ventures 

(“SBV”) operations will follow established Smithsonian policies, except in specific preapproved circumstances when an exception is necessary to accomplish SBV mission 

requirements. All current deviations from general Smithsonian policies must be 

eliminated or individually re-approved by the Secretary and reported to the Chair of the 

Audit and Review by the end of 2007. The Regents endorse the Acting Secretary’s plan 

to review the status, mission, and operations of SBV and to make recommendations to 

the Board concerning these issues. 
33

Rationale: Recent press reports, Congressional inquires, and an Inspector General audit and 

continuing investigation have brought into question the propriety of SBV policies and activities, 

such as its compensation practices and travel and expense policies. SBV was created in 1999 to 

consolidate Smithsonian business activities with the expectation that an Institution-wide unit 

would be better able to expand existing businesses, initiate new businesses, and improve business 

management and operational efficiency. To achieve those goals, SBV was permitted to conduct 

its activities more like a commercial enterprise and was not subject to all Smithsonian policies. 

SBV adopted separate policies in numerous areas, such as travel, contracting, accounting, and 

human resources. In light of the criticism of SBV practices, the Committee recommends that 

SBV follow generally-applicable Smithsonian policies except where a clear need for deviation is 

established. The recommendation provides a process for review, approval, and reporting of SBV 

policy determinations that will improve accountability and oversight. 

The Regents further endorse the Acting Secretary’s plan to review the status, mission, and 

operations of SBV and to make recommendations to the Board concerning these issues. In 

undertaking this review, the Acting Secretary should remain mindful of and specifically 

underscore the Regents’ ultimate responsibility for, and oversight of, SBV. 

 

RECOMMENDATIONS TO STRENGTHEN 

THE CULTURE OF ACCOUNTABILITY 

 

21. To strengthen stewardship of Smithsonian resources, the rules on expenses for travel, 

representational activities, and special events established in the Interim Policies and 

Practices are established as standing policies and the Regents adopt the following 

additional policies: 

 

• Expenses for travel, representational activities, and special events incurred by or on 

behalf of the Office of the Secretary will be subject to review by the Audit and Review 

Committee for reasonableness and compliance with standard Smithsonian policy. 

The Audit and Review Committee will report to the Board at least annually on the 

results of this review, including any deviations from Smithsonian policy. The Chief 

Financial Officer will conduct periodic audits of travel and entertainment expenses 

incurred by the Secretary and senior executives and report the results of such audits 

to the Audit and Review Committee. 

• Expenses for Regents’ activities, as well as other Smithsonian special events, shall be 

reasonable and in accordance with spending guidelines to be developed by the 

Secretary and submitted to the Executive Committee for review and approval no 

later than September 2007. 

• The Audit and Review Committee will review internal controls and monitoring 

processes for all travel and expense reimbursements to determine whether they are 

consistent with best practices and will report to the Board on its findings and 

recommendations in 2008. 
34

Rationale: The Inspector General’s report on the former Secretary’s travel and entertainment 

expenses demonstrated that Smithsonian policies and practices in this area needed improvement. 

The Governance Committee took swift action (with Executive Committee approval) in April 

2007 by proposing Interim Policies and Practices to ensure that expenditures for travel, 

representational activities, and special events must be reasonable, demonstrably support the 

Smithsonian’s mission, and not provide a personal benefit. The Committee concludes that 

making the Interim Policies and Practices permanent and adopting the additional guidelines and 

review processes in this recommendation will close the gaps reported by the Inspector General. 

To make clear that expenses related to Regents’ activities and other Smithsonian special events 

will also be subject to the requirement they are reasonable, in support of the Smithsonian 

mission, and not for personal benefit, the Committee recommends that the Secretary develop 

clear and appropriate guidelines to apply to the costs of such activities. 

The Audit and Review Committee should annually review these expenses, report to the Board 

on any deviations from standard policy, and should adopt procedures, such as conducting 

random reviews of requests for reimbursement and their disposition during the year, to ensure 

continuing compliance. 

 

RECOMMENDATIONS TO STRENGTHEN 

THE CULTURE OF ACCOUNTABILITY 

 

22. The Finance and Investment Committee, working with the Secretary and Chief Financial 

Officer, will review the Smithsonian federal and trust budget formulation and 

monitoring process to ensure that the Committee and the Board have adequate 

opportunities to provide strategic direction in the development of budget priorities and 

meaningful oversight of the Smithsonian’s budget and financial resources. The 

Committee will report to the Board on its findings and recommendations in 2008. 

 

Rationale: Among the most important responsibilities of the Board is ensuring that the 

Smithsonian manages its financial resources effectively to further its mission. The annual budget 

and the process for developing and monitoring the Smithsonian’s budget should be used as key 

tools for the Board to establish Institutional priorities. The Governance Committee 

recommends this review to ensure that the Board has appropriate and effective input and 

oversight into the Smithsonian budget development and monitoring process. 

 

RECOMMENDATIONS TO STRENGTHEN 

THE CULTURE OF ACCOUNTABILITY 

 

23. The Audit and Review Committee, working with the Secretary and Chief Financial 

Officer, will review the Smithsonian’s financial reporting systems and internal controls 

 
35

 

to ensure that appropriate systems and controls are in place to enable the Committee 

and the Board to provide meaningful oversight of the accuracy and integrity of 

Smithsonian financial statements and reports. The Committee will report to the Board 

on its findings and recommendations in 2008. 

 

Rationale: To fulfill its responsibility to provide effective oversight and require accountability 

for the management of Smithsonian resources, the Board should ensure that appropriate 

policies are in place to guide all aspects of Smithsonian operations and that there is an effective 

process for enforcing and monitoring compliance. As part of the recommended review, the 

Audit and Review Committee should consider launching regular comprehensive risk 

assessments. The Governance Committee notes that a recent management letter from the 

Smithsonian’s outside auditor cited inadequate accounting resources and staff as a “reportable 

condition” and suggests that the Audit and Review Committee determine whether the 

Smithsonian is taking appropriate steps to address this concern and other issues raised in that 

report. 

 

RECOMMENDATIONS TO STRENGTHEN 

THE CULTURE OF ACCOUNTABILITY 

 

24. To ensure that Smithsonian compensation practices are fair and equitable to employees 

and provide appropriate stewardship of Smithsonian human and financial resources, 

the Compensation and Human Resources Committee, working with the Secretary, will 

review the Smithsonian philosophy and rationale for senior trust employee 

compensation in order to present a unified compensation philosophy and structure to 

the Board by the end of 2007. 

 

Rationale: Serious questions have been raised as to whether compensation for Smithsonian 

senior executives should be brought into line with federal levels. The Smithsonian maintains 

separate employment systems governing its federal, trust, and SBV employees. 

Smithsonian human resources policies for non-SBV trust employees track those for federal 

employees in many respects. Salaries are comparable for employees below the senior level (i.e., 

the federal and trust pay schedules mirror one another). The Smithsonian may appoint federal 

employees to Senior Level (“SL”) positions and pay above the GS scale to the applicable SL salary 

cap, although Smithsonian federal employees are not eligible for the Senior Executive Service 

(“SES”) positions. Senior trust executives are not subject to a similar explicit salary cap. 

The Governance Committee believes that the Board should review existing compensation 

policies and practices to ensure that they are appropriate, effective, and serve the public trust. 

Particular focus should be directed to aligning senior federal and trust employees under a unified 

compensation philosophy. In doing so, the Board’s review should also provide for the flexibility 

identified by the IRC to allow limited deviations from any unified compensation structure to 

attract highly qualified individuals for key positions. 
36

The Governance Committee believes that this recommendation reflects concerns expressed to 

the Regents by the IRC regarding the advisability of creating a unified compensation philosophy 

and structure for both federal and trust senior executives. 

 

RECOMMENDATIONS TO STRENGTHEN 

THE CULTURE OF ACCOUNTABILITY 

 

25. To promote confidence in the integrity of Smithsonian business activities, the Secretary 

will develop a policy on Smithsonian contracting that will include principles and 

practices to ensure that all Smithsonian contracting activities are conducted with 

integrity, fairness, and openness and in a manner that will best achieve Smithsonian 

mission requirements. The Secretary will develop and issue by the end of 2007 a policy 

on contracting to implement this guidance. 

 

Rationale: Members of Congress, the public, and the media have expressed concern about the 

Smithsonian entering into confidential business contracts that appeared to have been awarded 

in a manner not consistent with contracting standards generally applicable in the public sector. 

Existing Smithsonian contracting policies state that the Smithsonian is guided by federal rules 

and principles for contracting, but the policies do not clearly describe how or when exceptions 

to these principles and rules may be approved. The Committee recommends that the Secretary 

reaffirm the Smithsonian’s commitment to the consistent application of best practices across all 

contracting activities and develop a policy ensuring adherence to those practices. 

APPENDIX B: METHODOLOGY 

The Governance Committee met weekly from March 21, 2007, to June 4, 2007, including onefull day session. Most meetings lasted over two hours and were marked by active involvement by 

all members. 

In making these recommendations, the Committee was informed by the best governance 

practices in the nonprofit and federal sectors. Among its initial tasks was conducting a landscape 

analysis, which compared current Smithsonian practices to the Panel on the Nonprofit Sector’s 

draft Principles for Effective Governance, as well as the best practice of similar organizations. 

As part of that effort, the Committee identified a number of organizations comparable to the 

Smithsonian in certain respects and, through information publicly available or through 

interviews, collected information about the governance practices of those organizations. After 

completing the analysis, the Committee met to identify strengths and weaknesses in the 

Smithsonian’s current practices, as well as best practices of other organizations that the 

Institution should consider in developing practices to strengthen its governance. 
37

On May 6, 2007, the Committee and other invited Regents engaged in a vigorous dialogue with 

four well-regarded experts on nonprofit governance: 

 Victoria Bjorklund, Partner, Simpson Thacher & Bartlett LLP 

 Scott Harshbarger, Senior Counsel, Proskauer Rose, LLP 

 William Josephson, Former Assistant Attorney General of New York, Charities 

 Division 

 William P. Ryan, Research Fellow, Hauser Center for Nonprofit Organizations, 

 Harvard University 

The following day, Mr. Josephson and Mr. Ryan spoke to the full Board of Regents on 21st 

century governance practices and their applicability to the Smithsonian. In preparation for these 

discussions, the speakers were provided substantial information on Smithsonian governance 

issues as well as Institutional operations in general. 

The Committee also had in-depth presentations from key Smithsonian staff to help it understand 

the unique legal nature of the Institution and the interaction between the Smithsonian’s federal 

and trust budget processes. 

This report was the result of an intensive drafting process. Over the last month, the Committee 

reviewed proposed recommendations against the landscape analysis, issues raised by 

stakeholders, and the relevant literature on nonprofit best practices, including BoardSource’s 

“Twelve Principles of Governance That Empower Boards.” 

Members of the Committee met with interested members of Congress and their key staff in an 

effort to ensure that their concerns were heard and, to the extent practicable, addressed in this 

report. The Committee expects that these conversations, as well as outreach to other 

stakeholders, will continue in the coming months. 

In the final week before this Report was completed, the members of the IRC met with the 

Regents and discussed their preliminary findings and recommendations. The Regents engaged 

the IRC directly in a frank review and discussion of their work. The IRC presentation and 

ensuing discussion informed the Governance Committee’s final recommendations. 

The Committee has also commissioned a survey of Regents, Regents’ staff, senior Smithsonian 

staff and the chairs of Smithsonian Advisory Boards designed to solicit their input on the Board 

of Regents’ governance practices. The results of the survey will be particularly useful as the 

Committee begins expanding upon and implementing its longer-term recommendations. 

 

APPENDIX C: COMMITTEE MEMBERS AND ACKNOWLEDGEMENTS 

Regent Members: 

Patty Stonesifer, Chair 

Chief Executive Officer, Bill and Melinda Gates Foundation 
38

Patricia Q. (Patty) Stonesifer is the chief executive officer of the Bill and Melinda Gates 

Foundation and previously was senior vice president of Microsoft. Ms. Stonesifer has served as a 

member of the U.S. delegation to the United Nations General Assembly Special Session on 

HIV/AIDS and currently is on the boards of DATA (Debt, AIDS, Trade, Africa); Amazon.com; 

and The Seattle Foundation. 

Robert P. Kogod 

President, CESM Inc. 

Robert P. Kogod is the former co-chairman and co-chief executive officer of the Charles E. 

Smith companies and currently a trustee with Vornado Realty Trust and Archstone-Smith Trust. 

He serves on the boards of numerous professional and civic organizations, including the Jewish 

Federation of Greater Washington; the District of Columbia College Access Program; the Island 

Foundation, Mount Desert Island, Maine; and Hillel International. 

Dr. Walter E. Massey (Regent 2001-2007, reappointment pending)

President, Morehouse College 

Walter E. Massey is the ninth president of Morehouse College in Atlanta. He previously served 

as provost and senior vice president of academic affairs at the University of California; director 

of the National Science Foundation; president and chairman of the American Association for the 

Advancement of Science; vice president of the American Physical Society; vice president for 

research at the University of Chicago; director of the Argonne National Laboratory; and dean of 

the college and professor of physics at Brown University. 

The Honorable Doris O. Matsui

Member of Congress, Fifth Congressional District of California 

Doris O. Matsui, a Democrat from California, has been a member of the House of 

Representatives since 2005. She is a member of the House Rules Committee and the House 

Transportation and Infrastructure Committee, and previously worked in the White House, 

serving as deputy assistant to President Bill Clinton. She has served on a number of nonprofit 

boards, including as president and board chair of KVIE, Sacramento’s public television station, 

and on the board of trustees of the Woodrow Wilson International Center for Scholars. 

Outside Member: 

Diana Aviv 

President and CEO, Independent Sector 

Diana Aviv is the president and CEO of Independent Sector, a national leadership forum for 

America’s nonprofit organizations, foundations, and corporations. She also serves as executive 

director of the Panel on the Nonprofit Sector, an independent panel of nonprofit and 

philanthropic leaders convened by Independent Sector in October 2004. 
39

Acknowledgements

The Committee first wishes to express its sincere gratitude to the Institution’s more than 6100 

staff whose dedication and commitment are critical to the Smithsonian’s current and future 

success. 

The members of the Governance Committee wish to express their appreciation to the following 

for their assistance in producing this report or providing guidance to the Committee during its 

deliberations: 

Committee Staff: 

Alexis Marks, Legislative Assistant to The Honorable Doris O. Matsui 

John E. Huerta, General Counsel, Smithsonian Institution 

James M. Hobbins, Executive Assistant to the Secretary, Smithsonian Institution 

Grace L. Jaeger, Administrative Officer, Smithsonian Institution 

Elaine L. Johnston, Assistant General Counsel, Smithsonian Institution 

John K. Lapiana, Special Advisor to the Regents, Smithsonian Institution 

Celia Roady, Esq., Morgan, Lewis & Bockius, Washington, D.C. 

Ann K. Batlle, Esq., Morgan, Lewis & Bockius, Washington, D.C. 

Outside Experts: 

Victoria Bjorklund, Partner, Simpson Thacher & Bartlett LLP 

Scott Harshbarger, Senior Counsel, Proskauer Rose, LLP 

William Josephson, Former Assistant Attorney General of New York, Charities Division 

William P. Ryan, Research Fellow, Hauser Center for Nonprofit Organizations, 

 Harvard University 

APPENDIX D: INTERIM POLICIES AND PRACTICES, APPROVED APRIL 9, 2007 

Approved by the Regents’ Executive Committee, April 9, 2007 

Approved by the Regents’ Governance Committee, April 6, 2007 

Recommended Interim Policies and Practices 

The Governance Committee has commenced a review of Smithsonian governance policies and 

practices to provide recommendations to the Board of Regents on whether those policies and 

practices might be strengthened to improve Smithsonian operations in support of its mission. In 

order to address areas of concern that have been raised in recent Inspector General reports and 

Congressional inquiries, the Governance Committee has made the following recommendations 

for interim policies and practices to be put into place immediately, subject to further review 

following receipt and consideration by the Board of Regents of the report of the Independent 

Review Committee and the further deliberations of the Governance Committee. 
40

 A. Reimbursement of Travel Expenses for Smithsonian Employees

Background: The Smithsonian travel policy applies to all Smithsonian-supported travel paid by 

federal or trust funds, and is compliant with federal government travel regulations. This policy 

applied to the former Secretary, except that his employment agreement allowed him to fly “first 

class.” 

Recommendation: All travel by Smithsonian officers and employees should be subject to the 

Smithsonian travel policy. The Inspector General should be requested to periodically review the 

travel of the Secretary, officials who report directly to the Secretary, and unit directors and report 

to the Audit and Review Committee on compliance with this policy. Any violations of this 

policy should be reported to management for appropriate action. 

 B. Reimbursement of Travel Expenses for Regents and Advisory Board Members

Background: Regents and members of Smithsonian advisory boards may request 

reimbursement for reasonable travel expenses in attending meetings on behalf of the 

Smithsonian; there is no reimbursement for spouses or guests of board members. Travel 

reimbursements to board members have not been subject to the Smithsonian travel policy. The 

Smithsonian generally arranges hotel accommodations for board members at favorable rates. 

Recommendation: Reimbursement of travel expenses of Regents and advisory board members 

should be consistent with the Smithsonian travel policy. The Inspector General should be 

requested to periodically review reimbursements of travel expenses for Regents and advisory 

board members and report to the Audit and Review Committee on compliance with this policy. 

Any violations of this policy should be reported to the Executive Committee for appropriate 

action. 

 C. Spousal Travel

Background: The Smithsonian does not pay or reimburse spousal travel expenses, except when 

the spouse’s service in an official capacity is demonstrated in advance and is approved by an 

Under Secretary or the CEO of Business Ventures, or in connection with authorized relocation 

expenses. This policy did not apply in the case of the former Secretary, whose employment 

agreement allowed him to travel with his spouse “when appropriate”. 

Recommendation: The Smithsonian should not pay or reimburse spousal travel expenses for 

any employees, except in compliance with the Smithsonian travel policy and with the prior 

written approval of the Deputy Secretary/COO and the General Counsel. The Inspector General 

should be requested to periodically review reimbursements for spousal travel and report to the 

Audit and Review Committee on compliance with this policy. Any violations of this policy 

should be reported to management for appropriate action. 

 D. Housing Allowance
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Background: The former Secretary received a housing allowance as specified in his 

employment agreement. The Smithsonian pays or reimburses housing expenses in limited cases 

in connection with relocation of new or transferred employees and overseas assignments. The 

Smithsonian is currently undertaking a review of its policies and practices for payment or 

reimbursement of employee housing expenses. 

Recommendation: The Acting Secretary will not receive a housing allowance. The 

Smithsonian should expeditiously conclude its review of policies and practices on payment of 

employee housing expenses and report thereon to the Audit and Review Committee. Prior to 

concluding this review, any new agreements to pay or reimburse employee housing expenses 

should require the prior written approval of the Deputy Secretary/COO and the General Counsel. 

 E. Social Club Dues

Background: The former Secretary and other designated senior officers and employees with 

representational responsibilities received reimbursement for social club dues. 

Recommendation: The Smithsonian should not pay or reimburse social club dues for any 

officer or employee. 

 F. Chartered Aircraft

Background: Smithsonian travel policy requires that the mode of transportation must be the 

most advantageous and the most practical commensurate with the nature and purpose of the trip. 

The Inspector General reported on use of chartered aircraft by the former Secretary. 

Recommendation: The Smithsonian should not pay or reimburse the cost of travel on chartered 

aircraft in the absence of demonstrated business necessity, such as in the case of transportation of 

a collection item that cannot be safely transported by common carrier. Any payment for travel 

on chartered aircraft should be approved in advance in writing by the Deputy Secretary/COO and 

the General Counsel. The Inspector General should periodically review the use of chartered 

aircraft and report to the Audit and Review Committee on compliance with this policy. Any 

violations of this policy should be reported to management for appropriate action. 

 G. Use of Trust Funds for Representational and Special Event Expenses 

Background: Smithsonian policy on use of trust funds for representational and special event 

expenses prescribes limits on and criteria for expenditure of trust funds for meals, gifts, 

entertainment, flowers, alcohol and similar expenses. The Inspector General reported on 

expenditures by the Office of the Secretary that were not consistent with this policy. A 

supplement to this policy has recently been issued as interim clarification. 

Recommendation: Smithsonian funds should only be expended for reasonable expenses in 

accordance with Smithsonian policies, and should not be used for expenses that are lavish or 

excessive. The Inspector General should be requested to periodically review the use of funds for 

representational and special events by the offices of the Secretary, officials who report directly to 
42

the Secretary, and unit directors and report to the Audit and Review Committee on compliance 

with this policy. Any violations of this policy should be reported to management for appropriate 

action. 

 

H. Use of Smithsonian Travel Card and Purchase Card 

Background: The Smithsonian participates in two federal government programs that provide 

for issuance of credit cards to employees for official use. Smithsonian officers and employees 

who engage in travel as part of their official duties are issued a Smithsonian travel card to be 

used solely for travel expenses. Smithsonian offices are issued a purchase card to be used solely 

by authorized employees for small purchases (less than $2,500) of office supplies, equipment or 

services. All expenses charged to a Smithsonian travel card or Smithsonian purchase card must 

be for authorized business expenses and in accordance with policies governing the use and 

payment of such cards as specified by the federal government. 

Recommendation: The Smithsonian should review its practices and procedures to ensure 

appropriate monitoring and compliance with policy on use of Smithsonian credit cards. The 

Inspector General should be requested to periodically review the use of Smithsonian travel cards 

and purchase cards and report to the Audit and Review Committee on compliance with policy on 

use of Smithsonian credit cards. Any violations of this policy should be reported to management 

for appropriate action. 

I. Documentation Requirements for Reimbursement of Expenses 

Background: Smithsonian financial policies require prior authorization and submission of 

adequate documentation supporting the business purpose of any expense to be paid or 

reimbursed from Smithsonian funds. The Inspector General reported that on occasion expenses 

were paid or reimbursed without having proper authorization or documentation. 

Recommendation: The Smithsonian should review its practices and procedures to ensure 

appropriate monitoring and compliance with policies for documentation of reimbursable 

expenses. The Smithsonian should adopt a policy providing that reimbursement requests may be 

denied if adequate documentation is not provided in a timely manner. The Inspector General 

should be requested to periodically review the Smithsonian’s practices on reimbursements for 

business expenses and report to the Audit and Review Committee on compliance with this 

policy. Any violations of this policy should be reported to management for appropriate action. 

J. Outside Activities and Board Memberships 

Background: Smithsonian Standards of Conduct require prior clearance and review of board 

memberships and paid outside activities that are related to an employee’s Smithsonian duties. 

This review requires approval by the employee’s supervisor and unit head to ensure that the 

activity is compatible with the discharge of official duties and a determination by the General 

Counsel/Ethics Officer that the activity does not give rise to an apparent or actual conflict of 

interest. 
43

Recommendation: All board memberships and paid outside activities of the Secretary and 

officials reporting directly to the Secretary should be subject to clearance and review under the 

Standards of Conduct, whether related or unrelated to Smithsonian duties. The Secretary should 

receive approval of the Chair of the Executive Committee before engaging in any proposed 

board memberships or paid outside activities. 

K. Regents' Events 

Background: Special events and activities hosted by or on behalf of the Board of Regents are 

governed by Smithsonian policies on representational and special event expenses. There is 

currently no process for Regents’ review of the expenses for these events. 

Recommendations: Expenses for Regents' events should be reasonable in light of the purpose 

of the event and should not be lavish or excessive. Expenses for Regents' events involving 

significant donor development or recognition should be appropriate to the occasion. Proposed 

budgets for Regents’ events should be approved in advance by the Executive Committee. 

CREATION OF NEW STANDING COMMITTEES OF THE BOARD OF 

REGENTS

Ms. Stonesifer next directed the Regents’ attention to the Governance Committee’s proposed 

motion to create two additional standing committees for the Board of Regents. Noting that the 

creation of such committees requires modifications to the Board’s bylaws, which in turn require 

a 30-day advance notice, the Regents discussed the proposed creation of a standing Governance 

Committee and a standing Facilities Revitalization Committee. Ms. Stonesifer added that the 

Governance Committee would absorb the responsibilities of the Regents’ Nominating 

Committee. When reviewing the division of committee responsibilities, the oversight of the 

Institution’s collections and research also was discussed, as such efforts make manifest the 

Institution’s mission to support the increase and diffusion of knowledge. Ms. Stonesifer noted 

that the review of the committees’ duties is an ongoing process that is under the purview of the 

Governance Committee. 

Accordingly, the following motion was unanimously approved: 

VOTED that, pursuant to Section 4.04 of the Bylaws and in accordance with the 

recommendations of the Governance Committee, the Board of Regents establishes 

the following new Standing Committees to have the responsibilities set forth 

below: 
44

Governance and Nominating Committee: This Committee shall be responsible for 

oversight of the governance policies and practices of the Board of Regents and 

the Smithsonian, for making recommendations to the Board to improve 

governance policies and practices, for assessing the effectiveness of the Board 

and its members and Committees, for recommending candidates for service as 

citizen members of the Board, for nominating candidates for election as 

Chancellor or members of the Executive Committee, and for such other 

nominations or recommendations as may be required by the Board from time to 

time. The Committee shall replace the separate Governance and Nominating 

Committees. Facilities Revitalization Committee: This Committee shall be 

primarily responsible for providing leadership and oversight in addressing the 

$2.3 billion shortfall in funding for the revitalization and maintenance of the 

Smithsonian physical plant. The Committee shall replace the ad hoc Committee 

on Facilities Revitalization. 

The Executive Committee shall propose amendments to the Bylaws to reflect these 

changes. 

APPOINTMENT OF NEW COMMITTEE CHAIRS 

The recommendations of the Governance Committee Report also prompted a decision by the 

Regents’ Executive Committee to propose new Regents’ committee chair assignments. These 

appointments are intended to support the Regents’ efforts to review and effect, with a fresh eye, 

changes to the Institution’s governance. The Chancellor thanked the new chairs in advance for 

their leadership efforts during this critically important time for the Institution. Accordingly, the 

following motion was unanimously approved: 

VOTED that the Board of Regents approves the appointment of the following 

Regents to chair the following Committees of the Board: Audit and Review 

Committee: Phillip Frost; Compensation and Human Resources Committee: Patty 

Stonesifer; Facilities Revitalization Committee: Robert Kogod; Finance and 

Investment Committee: Eli Broad; Governance and Nominating Committee: 

Shirley Ann Jackson. 

DISCUSSION OF STATEMENT OF THE BOARD OF REGENTS

Mr. Sant next presented a draft statement from the Board of Regents that was proposed for 

public distribution. The Regents agreed that the document provides an important statement of the 
45

Regents’ commitment to the comprehensive review and effective transformation of the 

Institution’s governance. 

Acknowledging that the draft statement was thoughtfully crafted, the Regents discussed 

modifications intended to better express the Regents’ commitment to these changes. The 

Regents’ immediate adoption of interim policies and procedures in response to the events of 

recent months was emphasized as a critical first step in the Institution’s movement towards better 

governance. The recent launch of a search for the twelfth Secretary of the Smithsonian also was 

cited as a positive action that signals the forward-looking efforts of the Board. In addition, the 

Regents’ commitment to transparency and accountability was made clear by the inclusion of a 

publicly accessible website address in the statement. 

In closing, the Regents expressed their deep appreciation for the ongoing commitment and 

efforts of Smithsonian staff and volunteers, noting that it is their dedication that enables the 

Institution to reach and enrich the lives of millions every day. 

* * * * * 

DRAFT 

A STATEMENT FROM THE BOARD OF REGENTS ON THE REPORT AND 

RECOMMENDATIONS OF THE GOVERNANCE COMMITTEE 

Nearly three months ago, in response to intense congressional and public interest about executive 

compensation and the handling of certain expenses by the former-Secretary, the Regents initiated 

a comprehensive review of governance at the Smithsonian. Since that time, we have been 

scrutinizing the way we had been overseeing the Smithsonian both from the inside and out. 

Internally, we created a standing Governance Committee of the Board, with a mandate to swiftly 

and comprehensively review the Smithsonian policies and practices as well as how the Board 

could better oversee this vast and complex Institution. We asked the Governance Committee to 

look forward and report back to the Board with recommendations to strengthen the Regents’ 

leadership and governance of the Institution. The Governance Committee, chaired by Regent 

Patty Q. Stonesifer, has admirably done so. 

At the same time that committee was working, we also wanted an outside/external perspective. 

The Regents commissioned the Independent Review Committee (IRC), chaired by Charles 

Bowsher, former Comptroller General of the United States, to review those matters identified by 

Inspector General and Senator Charles Grassley. Last Monday, the IRC met with the full Board 

of Regents to discuss their preliminary findings and recommendations. The Regents welcomed 
46

this opportunity to engage the IRC directly in a frank review and discussion of their work. We 

expect that the IRC’s final report will be released later this week 

The Regents are pleased to adopt the 25 recommendations suggested by the Governance 

Committee in its report. The Governance Committee’s recommendations address the serious 

problems respecting executive compensation and expenses that the IRC was directed to study, 

and take account of the IRC’s helpful findings and suggestions. The Governance Committee, 

however, looked beyond those problems. Its recommendations represent a “Blueprint for Better 

Governance,” address weaknesses in a variety of existing policies and practices, and seek to 

position the Board as a leader in 21st Century nonprofit governance. 

The recommendations are wide-ranging and will result in concrete change. They will strengthen 

board and committee structure, enhance monitoring and accountability, reinforce the 

Smithsonian’s strong ethical foundation, increase effective transparency, ensure that the critical 

“gatekeepers” — the General Counsel, the Chief Financial Officer, and the Inspector General — 

have direct access to the Board, and promote robust and informed deliberations. We expect that 

adoption of those recommendations will immediately improve the management, governance, and 

transparency of the Institution. 

We recognize, however, that much work remains. Over the next seven months, the Board will be 

studying issues ranging from the appropriate size and composition of the Board to creating an 

improved framework to strengthen our relationships with the dedicated Advisory Boards of 

individual museums and research centers. We will build the strong constructive partnership with 

Acting Secretary Cristián Samper and his staff necessary to advance the Smithsonian’s mission 

and maintain the public trust. 

The Regents appreciate the hard work of Patty and her fellow committee members, Robert 

Kogod, Walter Massey, Congresswoman Doris Matsui, and Diana Aviv, the President and CEO 

of Independent Sector, in producing this report. 

We are particularly grateful to the nearly 6200 members of the Smithsonian staff. Above all, it is 

their dedication and passion for the Smithsonian’s mission that enables the Institution to enrich 

the lives of millions of Americans every day. 

June 18, 2007 

EXECUTIVE SESSION

This special meeting of the Board of Regents concluded at about 9:00 a.m., after which the 

Regents met in executive session. At 2:05 p.m. Mr. Sant held a press conference to announce the 

Regents’ adoption of the Governance Committee’s recommendations. He also made known 

Deputy Secretary and Chief Operating Officer Sheila Burke’s decision of to resign, effective 

September 30, 2007. A meeting with the Institution’s directors was then held at 3:00 p.m. and 
47

included the participation of Mr. Sant, Mr. Spoon, and Ms. Stonesifer, as well as Acting 

Secretary Samper. 

RESPECTFULLY SUBMITTED, 

CRISTIÁN SAMPER

ACTING SECRETARY