Carnegie Hall Joint Venture Policy
Adopted October 8, 2020
Statement of Purpose
The Board of Trustees (the “Board”) of The Carnegie Hall Corporation (“Carnegie Hall”), upon the recommendation of the Finance and Operations Committee of the Board, has adopted this Joint Venture Policy (the “Policy”) to govern Carnegie Hall’s participation in joint ventures with third parties.
Scope and Definitions
The requirements of this Policy apply to Carnegie Hall’s participation in any joint venture.
As used in this Policy, the term “joint venture” means an arrangement pursuant to which Carnegie Hall owns an interest in a partnership, limited liability company, or other entity in which one or more other owners of the entity is an individual or an entity that is not owned or controlled by Carnegie Hall. The term “joint venture” also includes a contractual relationship with any such person, the purpose of which is to jointly undertake a specific business or activity.
A passive ownership interest in an entity that is acquired for investment purposes is not a “joint venture” subject to this Policy.
Approval and Oversight
The Finance and Operations Committee will review, approve, and oversee Carnegie Hall’s participation in any joint venture. The Finance and Operations Committee may also refer a new joint venture to the Board for approval if it determines that the venture would be particulalry significant in scope or otherwise merits the attention of the Board.
The level of ongoing oversight of a joint venture by the Finance and Operations Committee is expected to vary depending on the size and nature of the venture and will be determined on a case-by-base basis consistent with Carnegie Hall’s general governance practices.
Carnegie Hall will only participate in a joint venture if
- the venture is in furtherance of Carnegie Hall’s mission;
- the venture is conducted in a manner consistent with Carnegie Hall’s tax‑exempt status;
- the anticipated benefits to Carnegie Hall are commensurate with the financial and in-kind contributions to be made to the venture by Carnegie Hall;
- the control rights and contractual protections granted to Carnegie Hall are sufficient to protect its interests and ensure that the minimum requirements of this Policy are satisfied on an ongoing basis; and
- the structure and tax implications of the joint venture have been reviewed by Carnegie Hall’s legal and tax advisors.
In determining whether a joint venture satisfies the minimum requirements of this Policy, the following factors published by the Internal Revenue Service are relevant. These factors are neither exhaustive nor conclusive, and they are included in this Policy solely as a reference point for discussions by the Finance and Operations Committee and/or the Board, as applicable.
- Does Carnegie Hall receive an ownership interest in the joint venture proportionate to the value of the assets it contributes?
- Does Carnegie Hall have voting control over the joint venture board with respect to policies and actions that affect Carnegie Hall's tax-exempt purposes?
- Does Carnegie Hall have voting control on joint venture policies and actions that affect Carnegie Hall’s tax-exempt purposes?
- Does the joint venture agreement require the joint venture to conduct its activities so as to assure that Carnegie Hall’s participation is in furtherance of its tax-exempt purposes?
- Does the joint venture agreement explicitly state that the joint venture’s duty to further tax-exempt purposes overrides its duty to operate for the financial benefit of its partners or members?
- Does a company related to a for-profit partner or member manage the day‑to-day operations of the joint venture? If so:
- Are the terms and conditions of the management agreement reasonable and comparable to similar arrangements in the marketplace?
- Does the management company have a binding and enforceable obligation to further the tax-exempt purposes of Carnegie Hall?
- Does Carnegie Hall have the unilateral right to terminate the management agreement if the management company is not acting to further (or is acting contrary to) Carnegie Hall’s tax-exempt purposes?
- If a CEO manages the day-to-day affairs of the joint venture, does Carnegie Hall have the unilateral right to remove the CEO if he or she is not acting to further (or is acting contrary to) Carnegie Hall’s tax-exempt purposes?
Review and Amendment of Policy
- The Finance and Operations Committee will review this Policy from time to time, in its discretion, and recommend any amendments it deems appropriate.
- All amendments to this Policy will be approved by the Board, upon the recommendation of the Finance and Operations Committee.