Earlham and Conner Prairie squabble over ownership rights

Citing a possible conflict of interest, Indiana Attorney General Steve Carter on Saturday announced the need for a split between Conner Prairie and Earlham College.\nEarlham currently manages the public charitable trust for the living history museum, which was founded in 1964 and opened ten years later in Fishers, Ind. Founded by renowned philanthropist Eli Lilly, its current operating budget is $9.6 million. Earlham oversees a trust which has grown to $150 million and has historically distributed interest earned equally between the college and Conner Prairie. \nThe attorney general's office began investigating how the college handles the trust last June. The museum's management fell under scrutiny after Earlham's President Douglas C. Bennett fired 28 board members, citing rising budget deficits. Among those fired were museum president John A. Herbst and Board Chairman Berkley W. Duck. Twenty-three of the fired board members formed the non-profit organization "Save the Prairie," which is aimed at regaining control of the museum. \nIn a petition filed in the Hamilton County Superior Court, Carter asked to "direct the trustee of a trust for a benevolent purpose to file a verified written statement of accounts." Indiana state law prior to the year 2000 required trustees of charitable trusts of any size to file certification of accounting or fiscal records. According to Carter's petition, Earlham has never filed a verified written statement of accounts as a beneficiary of the Connor Prairie trust. \nCarter has also proposed the creation of the Conner Prairie Management Corp., which would oversee the general operation and property ownership of the museum as well as management of funds. \nBennett was traveling yesterday and could not be reached for direct comment, according to Earlham Public Information Director Richard Holden. In a statement offered on his behalf by the Indianapolis-based public relations firm Sease Gerig, Bennett maintained the University has "faithfully and honorably" fulfilled the trust set forth by Eli Lilly and has responded to the attorney general's requests for information.\n"We cooperated fully with the attorney general, responding to dozens of requests that were posed to us over the course of the fall, some of them concerning financial transactions more than 30 years old," Bennett said in the statement. "We provided thousands of pages of information, including audited financial statements. We believe we have fully complied with the law and will continue to be guided by Mr. Lilly's expressed intentions."\nA deed of gift delineating the terms under which Earlham was to administer 40,000 shares of Eli Lilly and Company stock was signed by Lilly on Jan. 24, 1969, according to Carter's petition. It established the museum as a public charitable trust and specifically noted that the principal amount could be used for capital improvements on facilities. The remaining funds and income were to be set aside to create an endowment fund managed by the board of trustees. \nLilly went on to donate additional shares in 1973 and provided for 10 percent of his estate's value to be donated to the college upon his death in 1977. \nFormer Earlham president Landrum Bolling, who helped negotiate the transfer of land and trust from 1958 to 1973, refused comment to the Indiana Daily Student. However, Bolling was quoted in the Jan. 19 Indianapolis Star as saying he feels the change "has been needed for a long time."\nYet in a letter obtained by the IDS and published in the Star after Monday's story, Bolling said he did not "and could never see this dispute as a conflict of interest between Earlham College and the Conner Prairie Museum."\nBolling went on to say since the museum was the creation of Earlham College, Conner Prairie should not be independent. \nRegarding his attendance at Carter's Sunday press conference, Bolling said he merely appreciated the manner in which the attorney general handled the dispute and his interest in a resolution that would best suit both parties. \nEarlham's ownership and trusteeship has been more openly challenged recently because the advisory committee created by the college to oversee the trust transformed into a board of directors in 1992, Bolling said. \n"That challenge makes it clear that there is a problem of governance that needs to be resolved," Bolling said. "I said in the press conference that there has to be a change in the unwieldy system of governance that has failed to work. The need for change is what we all agree on."\n-- Contact senior writer Holly Johnson at hljohnso@indiana.edu.