Judith Neilson stepped in over institute’s $10m a year ‘massive vanity project’, sources say

The Judith Neilson Institute's plans for a "massive vanity project" - in the form of a $10m a year international prize for ideas - was the final straw for the billionaire philanthropist.Judith Neilson, who funded the institute to the tune of $100m in 2018, put the kibosh on plans for a prize when what was her initial idea blew out to include events, conferences and international speakers.

Last week the institute appointed two new directors - the donor's daughter Beau Neilson and her lawyer Daniel Appleby - after the four independent directors resigned in protest at plans to change the direction of the institute.

The institute's executive director, Mark Ryan, is negotiating his exit with lawyers after a falling out with Neilson and her allies on the board. Ryan has declined a request for comment.Sources told Guardian Australia that Neilson thought the concept for the prize had changed. She "baulked at it".Sources close to Neilson say the board was made aware from the outset that the patron would stop funding if she didn't like the direction of the institute, as she topped it up each year. She also had the power to change the directors for the same reason.

In 2018, however, when details of funding for the institute were first released, the announcement stated: "Judith Neilson will be the patron of the institute, however she will play no direct role in its management or programs. It will be an independent and non-partisan institution."

"As an avid consumer of news, I recognise the need to support evidence-based journalism and the pursuit of truth in an increasingly complicated and confusing world," Neilson said at the time."I am delighted to support the establishment of this institute and I will look for experienced journalists and other experts to manage and guide its work."

Initial grants included: the ABC for a media literacy program across remote communities; the Australian Financial Review to reopen a south-east Asia bureau in Jakarta; Guardian Australia's Pacific Project and Ngaarda Media, a community radio station in Roebourne, Western Australia, to support news coverage.

When Neilson overruled the ideas prize, Ryan and the independent directors - former New South Wales chief justice James Spigelman, the Australian's editor-at-large, Paul Kelly, the Free TV chief, Bridget Fair, and the former chief executive of the State Library of Victoria Kate Torney - objected.

The tension over the independence of the board led to the resignation of the four directors, who maintained that independence from the source of the funding was essential.

Ryan, a former adviser to prime minister Paul Keating and more recently Westfield founder Frank Lowy, is also on the board of the Lowy Institute, along with Spigelman.

Like JNI, the Lowy Institute is an independent, non-partisan organisation, but the founder and benefactor, Sir Frank Lowy, and two of his sons, David and Steven, are on the board.

The four independent directors believed that they were overseeing a grants, education and events program which was based on specific criteria, and they were unhappy when Neilson told them her family wanted to be more involved in decision making.

Neilson, who has wide philanthropic interests and owns the White Rabbit art gallery in Sydney's Chippendale, will finesse her vision to fund social change journalism before appointing a new team.

The Neilson Family Trust declined to comment.