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Standoff at the Confederacy

An internal rift over finances dogs the Museum of the Confederacy as it looks to move a national landmark.

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Waite Rawls is perturbed. The executive director of the financially ailing Museum of the Confederacy is upset that two "disgruntled employees" have started a ruckus over his handling of the museum's budget.

"I'm an expert in finance," Rawls deadpans between puffs of a Winston cigarette on the museum's rain-soaked steps last week. His resumAc: former managing director of Chemical Bank in New York; vice chairman of Continental Bank in Chicago; chief operating officer of Ferrell Capital Management in Greenwich, Conn.; member of the foreign exchange committee of the Federal Reserve Bank of New York and the Borrowing Advisory Committee of the U.S. Treasury; and former director of the Public Securities Association.

"Go ahead and interview all the disgruntled directors," he tells a reporter, dripping with sarcasm. "I think it would be useful for the validity of the article."

Indeed, the Confederate museum has seen more than half a dozen members resign from its board of trustees in the last year. But one is garnering particular attention. Former trustee and treasurer of the museum David H. Rankin Jr. says Rawls was "dishonest" and "deceitful" with him while preparing a draft of the museum's budget in 2004, appearing to inflate revenues and expenses "out of thin air."

Nancy Witt, former director of finance and human resources at the museum, echoed similar concerns in a report to the museum's board Nov. 4, 2004.

"Waite and I disagreed a lot on this as he would inflate and deflate figures, and I would list them accurately, based on past performance reports," she wrote in the report. "He said, 'Budgets are only guidelines and not meant to be followed exactly.' I laughed and replied, 'No, budgets are not guidelines here. … if it is not budgeted you cannot spend it, simple as that!'"

News of internal discord comes at a precarious time for the museum. Literally and figuratively, it's fighting for its financial life. Attendance figures are down significantly as it continues to get swallowed up by Virginia Commonwealth University's ever-expanding medical campus around it. And Rawls is still trying to drum up support to pick up the White House of the Confederacy and move it, an effort recently stymied by intense criticism from local preservationists, historians and the Virginia Division of the Sons of Confederate Veterans.

Now, in order to stay afloat, the museum is lobbying the General Assembly for about $500,000 in state subsidies to bide more time. By mid-December, the museum was on pace to run a deficit of $500,000 by the end of the 2005-2006 fiscal year. But if attendance continues to drop as Rawls expects, that deficit will balloon to $750,000.

"That leaves the museum bankrupt," Rawls says. "We do not have unrestricted endowments."

The museum's delicate financial situation is about the only thing on which Rawls and his critics can agree. Rankin, who is still receiving monthly financials from the museum (he assumes by mistake), says at the end of November the museum had just $231,000 in cash in its checking account, and $1.15 million remaining in its endowment. And it's only halfway through the fiscal year.

"I told [other members of the board] what was going on and nobody seemed to care, and I said to heck with it," says Rankin, who stepped down as treasurer and resigned from the board of trustees in September 2004, shortly after being nominated to serve a fourth term as treasurer. "I said that's too much of a deficit," he recalls. "You better cut your expenses in other areas. You've got to do something."

At the heart of the internal rift is a simple question: How much of the museum's financial woes are its own making?

More than Rawls is letting on, some former board members say. Ginger W. Miller, a former trustee from Dallas who resigned in August, says the museum's financial situation took a turn for the worse shortly after Rawls came onboard in January 2004.

"I just think the museum is being mismanaged financially," she says. "We would see things in the budget, operating expenses, salaries — very large numbers — but we didn't know whose salaries or what the salaries were for. Money was spent on things the board was not aware of."

Miller points to Atlanta-based NCDS, a consulting firm she says the museum hired to help with its capital fund-raising campaign. She says NCDS was paid $25,000 a month by the Confederate Memorial Literary Society (the official name of the museum's board). Miller says she assumed Rawls would be handling the fund-raising and didn't understand why the board hired an outside firm.

In an interview last week, Rawls wouldn't disclose how much NCDS had received. According to the museum's most recent IRS filing, NCDS received $150,000 for its fund-raising work during the 2004-2005 fiscal year.

Rawls says NCDS was hired to put together a "feasibility study" for its planned capital campaign. What Miller and other former trustees don't understand, Rawls says, is that an outside firm was necessary to gather honest, unbiased information, particularly regarding the board's plan to move the White House.

"I've gone through a lot of capital campaigns," Rawls says. "One of the first things you don't do in a feasibility study is have the people who run the place ask the questions because you will bias the answers."

As a result of the consulting firm's work, the museum found that there was sufficient support from potential donors to move the White House. But the capital campaign has been temporarily put on hold for lack of finances.

Thomas Gates, a local financial planner who chairs the board of trustees' finance committee, says Rankin's assertion that the board has run up expenses is unfounded. Taking into account the $150,000 it paid to NCDS for fund-raising, Gates points out that the board managed to keep expenses roughly in line with the 2003-2004 fiscal year. Minus the fees to NCDS, the museum spent about $2.10 million in 2004-2005, a less than 2 percent increase from the previous year of about $2.06 million.

Because the museum's situation was so precarious in the fall of 2004 — with all the talk of possibly moving the museum and the White House — the board had decided to approve a "rolling" four-month budget for the 2004-2005 fiscal year, Gates says, at "my insistence," and do its best to keep expenses in check. When NCDS came back with its findings in the spring of 2005, he says, the board agreed to meet again and approve a full "annualized budget."

"I think like any nonprofit organization, I think there are always issues around how you budget and spend your money," says Gates, adding that he appreciates and respects Rankin's concerns. "That's what brings strength to any board — creative tension."

Rankin, however, insists that the General Assembly should conduct an "independent audit" of the museum's finances before coughing up state funds. That's why he sent the state subcommittee studying the cost and feasibility of moving the White House a memo questioning the museum's handling of the budget, he says.

Delegate R. Lee Ware Jr. (R-Powhatan), chairman of the subcommittee, says he didn't read the memo, which Rankin mailed Nov. 14, until after the subcommittee met for the final time Nov. 21 and adopted a resolution recommending the 2006 General Assembly allocate state funds to keep the museum afloat while it further studies its options.

"The subcommittee has concluded its deliberation, and we did not discuss it," Ware says of Rankin's memo. So the issue is now in the hands of the General Assembly. "Obviously, if there are real financial problems, the state has to be wary of that. We are stewards of the public purse and the public's trust. … For any money to be spent, it has to be taken up by both the assembly and the governor." S

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