It sounds like an arts group's dream--turned nightmare. A wealthy benefactor announces the gift of a cool million. Then he dies, and his heirs decide there are better ways to spend the money.
That's exactly what has happened at the Irvine Barclay Theatre. Marjorie Barclay, the widow of developer Richard H. Barclay, announced she has no intention of giving the theater the remaining $600,000 of a $1-million pledge that added the Barclay name to the theater's. Now the theater is suing Barclay's estate to get it.
But while the unusual battle may have sent a collective shudder through the county's arts community, nobody sounds worried that Marjorie Barclay's action might set off a chain reaction that could threaten millions of dollars in pledges that their groups have yet to receive.
Four of the county's major arts groups, for instance, will add a combined $8.5 million to their coffers from a single donor.
In 1988, arts patron Edra Brophy established a $17-million trust, some of it earmarked for the UC Irvine College of Medicine, and some for the Orange County Performing Arts Center ($5.1 million), South Coast Repertory ($1.7 million), the Orange County Philharmonic Society ($1.2 million) and Pacific Chorale ($510,000), according to center spokesman Gregory Patterson.
But, Patterson said, the portion of the trust pertaining to these arts groups is "revocable" and specifies that the "choice of arts groups could change at any time."
Doesn't that warrant a case of the jitters?
Only a piddling case, if any, Patterson said. That's because the donation would be applied toward the center's endowment, which essentially is a rainy-day fund meant to bolster long-term financial stability, and never used to keep the center up and running on a daily basis.
"We don't accept revocable trust donations for our operating fund," Patterson said. That's a typical practice among arts groups. Likewise, the center accepted no such gifts for its now-complete $76-million building campaign. The center's endowment, currently with $6.4 million543780384amount" of pledges that are revocable, he added.
A quid pro quo agreement, in which a donor receives something in exchange for a pledge--from a membership that waives admission to the naming of a theater after him or her--is even more common among arts groups. It's the foundation of the Irvine Barclay lawsuit too, theater officials say.
Richard Barclay agreed in 1990 to give $1 million to help complete construction of the 750-seat theater on the UC Irvine campus. The Barclays paid $200,000 in 1990 and another $200,000 in '91 to the foundation. Payments stopped, however, after Richard Barclay's 1992 death.
The suit states that in exchange for the Barclays' $1-million gift, the theater would bear their name. It was filed earlier this month against Marjorie Barclay and her late husband's estate by the three groups that jointly financed the hall: the UC Irvine Foundation, the city of Irvine and the Irvine Barclay Theatre.
"It was very clear from the outset," says Irvine City Manager Paul O. Brady Jr., "that the Barclay family knew that the donation of $1 million was in exchange for having their name placed up on the theater and having their name as the identifier of the theater."
Indeed, when an exchange occurs, a pledge becomes legally binding, says Los Angeles attorney William Michael Ramseyer, a consultant to L.A.'s Center for Nonprofit Management, which advises arts groups.
"A pledge becomes legally binding when, under normal circumstances, the donee acts 'in reliance' in some manner," Ramseyer said. "For instance, if you pledge money to (public television station) KCET and KCET sends you a coffee mug and reads your name on the air, they have acted in reliance, and that makes the promise binding. . . . It changes from a simple promise to a contract."
Otherwise, a promise or a pledge--even one in writing--is just a promise until it results in this kind of a contractual agreement, Ramseyer said. "And promises are not enforceable in California. There's no such thing as a lawsuit for breach of promise. There's only the breach-of-contract lawsuit."
Meanwhile, if the Irvine Barclay Theatre loses its suit--Marjorie Barclay's attorney insists her name is not on any pledge documents--Brady said the city will have to decide whether to write off as a loss the remaining $600,000 of the pledge or take further action against Marjorie Barclay. There's also the possibility, he said, that the theater could be renamed if a new donor, willing to pitch in for the remainder, is found.
At the moment, the Bowers Museum of Cultural Art is the only local arts institution in the middle of a building campaign: It is converting a Santa Ana bank into Kidseum, a hands-on children's museum, and raising money to fund the reconstruction.
It has not, however, received any pledges for the project. Rather, the Bowers has received cash gifts for about half the $700,000 it needs to open the 11,000-square-foot facility on Dec. 18 as planned, said marketing and development director Pat House.
If any major pledges do come in, House said, the donor would probably have to agree in writing to receive something in return for the pledge, such as the naming of a gallery after him or her.
Said House: "We would obviously be very concerned about a major gift without a quid pro quo."
Wills bequests are another form of pledge commonly made to arts groups, even if wills can be changed until the donor dies and do not become legally binding until that time, according to Ramseyer.
Laguna Art Museum didn't worry about any of that, however, before it announced in September the bequest of a 140-piece collection of contemporary art from the trust of Laguna Beach art aficionado Richard H. Mumper, who died in May.
Mumper's gift, which includes works by such leading artists as Richard Diebenkorn and Billy Al Bengston, "was a pleasant discovery," said Bolton Colburn, curator of collections. "We had no prior knowledge that Mumper had named us in the will."
Even with gifts it was expecting, however, the museum has never had big problems and never sued a donor for the goods, Colburn said. Often, it takes artworks on extended loan with the understanding that the pieces will eventually be outright gifts.
"There have been instances where people have pulled things back--one or two paintings," Colburn said. "But it's such a piddling deal you don't want to make a big case out of it."
If the museum was promised a "substantial body of work," it would probably forgo its iffy "gentleman's agreement" generally drafted for small gifts and have an attorney negotiate a binding agreement, Colburn said. "But we have never been in that position."
There is a possibility that up to $400,000 pledged to the Pacific Symphony during a recent $5.2-million fund drive might not materialize, said Louis G. Spisto, the orchestra's executive director.
While the rest of the money "is very well secured," through irrevocable trusts and other arrangements, he said, if that portion doesn't come through as expected within about three years, "it wouldn't undo the orchestra, but it would hurt our cash position and our plans for the future."
Still, Spisto said, it's not something he loses sleep over. A case in which someone reneges on a pledged donation has "never happened here. . . . I think it's a very rare situation."
The Newport Harbor Art Museum hasn't faced such a situation either, but "if a donor came and said, 'I can't pay my pledge,' I'm not going to sue them," said director Michael Botwinick.
"I have no idea whether any court in California would find any of our pledges legal or not," he said, "and I have no interest in that; neither does our board. It's irrelevant to us. We think your biggest protection is in your relationship to your donors."
Current endowments for a selection of Orange County arts organizations show most are in cash rather than pledges. Amounts are listed in thousands of dollars:
Total Organization endowment Cash Pledges South Coast Repertory $8,800 $7,500 $1,300 Orange County Performing Arts Center 7,800 6,400 1,400 Pacific Symphony 5,200 3,000 2,200 Laguna Art Museum 3,061 1,629 1,432 Newport Harbor Art Museum 1,050 800 250 Bowers Museum of Cultural Art 400 300 100 Orange County Philharmonic Society* 175 175 --
* Endowment for student scholarships only
Source: Individual organizations