Economics USA

Recovery after annus horribilis

But directors are still making cuts in museum budgets

NEW YORK. Despite the recovery in US museums’ endowments as the stockmarkets rose towards the end of 2009, museum directors are continuing to cut or freeze their budgets, The Art Newspaper has established in a survey of 25 leading institutions.

A year ago, with forecasters predicting another Great Depression, museum directors were slashing operating budgets as the value of endowments fell by at least 15%. The results: cancelled exhibitions, redundancy notices and pay freezes for those who survived (a few directors voluntarily cut their own salaries). Even the wealthiest museum was affected. The J. Paul Getty Trust was forced to make a 24% cut in its annual budge and lay off 97 members of staff, as the value of its endowment shrank to $4.4bn in June 2009, from $5.9bn a year before, a fall of 25%.

But at the beginning of 2010, a mood of cautious optimism prevails among those at the helm of America’s leading art museums. Arnold Lehman, the director of the Brooklyn Museum, anticipates that the US economy will continue to improve over the coming year. He warns, however, that there will be “blips” in the economy. He expects museums will take longer to recover because they also depend on individuals, foundations and corporations. Last year the Brooklyn Museum laid off 12 staff. And like other museums it raised admission fees (from $8 to $10 for adults) and also dropped exhibitions, cut the pay of senior managers and imposed a one-week pay furlough last summer.

Thomas Campbell’s first year as the director of the Metropolitan Museum of Art, in New York, was a baptism of fire. Its operating deficit leapt to $8.4m in 2008/9, following a deficit of $1.9m the previous year. This was despite a cut in its general operating costs by nearly $6m. The museum laid off 71 people, while 97 others took early retirement. With commercial staff, a total of 357 posts were axed—14% of the workforce—saving the museum $10m.

The museum’s latest annual report describes last year as “the most challenging fundraising environment in decades”. Last year, half of the Met’s gala benefit events held at the worst possible time to raise money, spring 2009, but the museum reports that income from fall 2009 and spring 2010 events has rebounded to pre-recession levels. Gross benefit event revenues received last year fell 17% over the previous year.

Many museums are currently setting their operating budgets. The Indianapolis Museum of Art (IMA) anticipates that its endowment—like other museums’—will grow this year. Its endowment was worth $319m at the end of December, recovering from a low of $262m, and is expected to grow by 8.5% during 2010. Director Maxwell Anderson says: “We are relieved that our endowment has regained some of the value that it lost, but we realise that the declines in 2008 and early 2009 will have an impact. We continue to budget with conservatism.” In real terms that means $2m less income from the endowment this year. The Museum of Fine Arts, Houston’s operating budget is also going to be $2m less than the year before, although its endowment increased by $100m from its lowest point.

Malcolm Rogers, the director of the Museum of Fine Arts (MFA), Boston, who is “very optimistic about 2010”, is overseeing its Art of the Americas Wing, due to open in the autumn. Its latest annual report reveals that the museum had to draw down its reserves to balance the books when its endowment fell in value by 21% at its lowest, from $538m to $409m.

James Cuno, the director of the Art Institute of Chicago, which opened its Modern Wing in May 2009, says last year was a challenge. “A bad year carries over [into subsequent years] because, like many non-profits, we have a rolling average pay out [from the endowment].” But the strong philanthropic culture in Chicago, says Cuno, means funders have maintained their support.

The Los Angeles County Museum of Art (Lacma), however, has put the renovation of the Lacma West building on hold. A spokeswoman says this is due to “a slow-down in major campaign gifts”. On the plus side, the museum’s estimated operating budget for next year is up to around $55m from $53.5m last year.

The near-death experience of MoCA, Los Angeles, dominated the headlines in early 2009. It was rescued by philanthropist and founding chairman Eli Broad, who injected $30m. No saviour emerged in time to save California’s Claremont Museum of Art and the Fresno Metropolitan Museum from closing in the past two months.

It was a good year for the San Francisco Fine Arts Museums, however. John Buchanan, the director, says 2009 “was rather remarkable”, with record-breaking attendance of 2.3m visitors, attracted by exhibitions like “Tutankhamun”.

Instead of cutting back on exhibition costs, he is going ahead with “Birth of Impressionism” (22 May-6 September) and “Van Gogh, Gauguin, Cézanne and Beyond” (25 September-18 January 2011) from the Musée d’Orsay. “These types of projects are quite wonderful investments,” he says.

Adrian Ellis, director of AEA Consulting, questions how much advantage museums have taken of the crisis “to effect fundamental changes”. The square footage of museums that threw up wings or new buildings during the good times, “has pushed up fixed costs as a proportion of the total. So the sector is still hurting and squeezed badly,” he says.

This article has been updated to reflect corrected information provided by the Metropolitan and Getty museums after we went to press

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