John Harvard's Journal
The Corporation Changes
James R. Houghton ’58, M.B.A. ’62, who joined the President and Fellows of Harvard College (the formal name of the Harvard Corporation, the University’s senior, seven-person governing board) in 1995 and became senior fellow in 2002, announced in December his plan to step down on June 30. During his service as senior fellow, Harvard underwent the transition from President Lawrence H. Summers, who resigned in 2006, to Derek Bok’s interim presidency through mid 2007; Houghton led the search that concluded with President Drew Faust’s appointment, effective then.
He will be succeeded as senior fellow by Robert D. Reischauer ’63, president of the Urban Institute, in Washington, D.C., who joined the Corporation in 2002, having previously served for six years as a member of the Board of Overseers, an elected position. That gives him some relative seniority compared to Robert E. Rubin ’60, the former Goldman Sachs and Citigroup executive and Secretary of the Treasury, who also joined the Corporation in 2002, but had never been an Overseer.
The search for a new Corporation member began in mid January. The committee comprises Faust, Reischauer, and two other Corporation members—Patricia King and University Treasurer James Rothenberg—and Overseers Leila Fawaz, Paul Finnegan, and Richard Meserve. Under Harvard’s charter, members are elected by the Corporation, with the counsel and consent of the Overseers. (Confidential nominations may be directed to firstname.lastname@example.org or to the Corporation Search Committee, Loeb House, 17 Quincy Street, Cambridge 02138).
The changing composition of the Corporation—always of interest within the University community—may be particularly significant now, given hints that at least some aspects of its operations may be under internal review.
“It’s been a true honor to have been able to serve Harvard over the years,” said Houghton, chairman emeritus of Corning Incorporated (and chairman of the Metropolitan Museum of Art board, and a longtime trustee of the Morgan Library and the Corning Museum of Glass), in the announcement. “I’ve been around Harvard for more than 50 years, through challenge and change, and the wealth of talent in our community never ceases to amaze me. I have every confidence that Harvard will continue to demonstrate the unique capacity of great universities to educate students and generate new ideas in ways that change the world.”
Houghton has served “with extraordinary devotion and a profound concern for the well-being of the University and its people,” Faust said in the statement. “He has seen Harvard through times of change with a steady hand and a constant commitment to the best interests of the University—above all, the quality of our students’ educational experience and the capacity of our faculty to shape the course of knowledge.…I’m one of many people at Harvard who have benefited from his thoughtful counsel and common sense, and who have come to value his friendship and generosity of spirit. We owe him our deep gratitude for his years of selfless service to Harvard.”
At the regularly scheduled Faculty of Arts and Sciences (FAS) meeting on December 15, the day after Houghton’s announcement, Faust spoke about the Corporation more broadly. During its fall meetings, she said, Houghton had led discussion about how the Corporation could most effectively carry out its roles and responsibilities. Faust said both he and she felt it important that the Corporation look closely at how it did its work and what practices would be most sensible: the sort of reflective review any such entity ought to undertake from time to time, and especially now, in light of changes in the University itself and in the larger world. Given that the Corporation rarely, if ever, discloses anything about itself or its work, her remarks were unusual.
Among the matters Faust said had been specifically raised were: how the Corporation sets its agenda and spends its time during its regular meetings; how it receives information and interacts with University constituencies; how it relates to the Harvard administration and the Board of Overseers; and how, generally, it benefits from advice available or offered to it. She invited faculty members to offer such advice (in person, by letter, or via e-mail to email@example.com), as part of the Corporation’s intention to consult widely.
The Corporation is unusual among modern institutional boards: it is self-renewing and appointment is not for a set term—although there are informal standards for how long members serve. It has not as a rule made efforts to communicate about its concerns or deliberations, or to convey information about its decisions on matters of policy, budgets, or other major issues.
Four years ago, Harvard Magazine published a roundtable conversation on the University’s governance and the Corporation’s distinctive characteristics, featuring two former Corporation members (one, Henry Rosovsky, a past FAS dean, now serves as president of the magazine’s board of directors) and two faculty members with expertise on institutional governance, including that of higher-education institutions. Their suggestions for how the Corporation might, at a minimum, communicate more openly, appear in “Governing Harvard,” May-June 2006, page 25.
The weekend before the FAS meeting, professors Harry Lewis (a former Harvard College dean) and Fred Abernathy published a sharp critique of the Corporation’s performance as an op-ed in the Boston Globe (“Shrouded in secrecy, decision makers gambled and Harvard lost”). They focused on the recent severe endowment decline and other financial losses, and the decisions concerning spending, fundraising, and increasing reliance on distributions from the endowment that were made earlier in the decade. Their conclusion:
The Harvard Corporation is a dangerous anachronism. It failed its most basic fiduciary and moral responsibilities. Some of its members should resign. But the Corporation’s problems are also structural. It is too small, too closed, and too secretive to be intensely self-critical, as any responsible board must be. Until the board can be restructured, the fellows should voluntarily share their power with the Overseers. And Harvard should reveal the risks of its business plans, as would be required if it were a publicly held corporation. That exercise in transparency would surely serve Harvard well.
The financial pressures facing the University have stimulated discussion about how budgets were made and spending priorities set—and about the Corporation’s work. Some of these issues had already bubbled up in an October 16 Harvard News Office interview with University Treasurer James Rothenberg, and in subsequent reporting on Harvard’s financial losses by the Globe’s Beth Healy (see “Further Financial Fallout,” January-February, page 45). In a late November dispatch, Healy reported that the Overseers were not told about Harvard’s fiscal year 2009 swap and general operating account losses (at least $2.3 billion, and potentially as much as nearly $3 billion) until shortly before the news was released to the public in mid October. (In fact, this may overstate matters. Overseers’ expertise and involvements vary, and at least some of those most engaged in financial issues appear to have known these details. What reports were made to the Overseers as a whole, and when, could not be ascertained.)
The Crimson’s coverage of Houghton’s announcement, by Esther Yi ’11, may be the clearest indication of change. She included comments from an unprecedented three Corporation members: Nannerl Keohane (president emerita of Wellesley and of Duke) and Rubin, in e-mails, and Reischauer himself, in an interview.
Any such change, it is clear, would emanate from within the Corporation itself, but these stirrings suggest that some new norms for outreach and communication, at least, are being tested.