Economics Trends Museums USA

US museums rebuild but fears of relapse linger

Directors’ optimism tempered by sluggish economy and slow recovery of investments

Seattle Art Museum’s Hammering Man: an institution hit hard by the financial crisis is now in recovery

Leading US museums are finally in recovery mode and their directors are much more optimistic about the financial outlook than a year ago, but few are feeling bullish. Endowments may have increased but they have not regained their peak of 2007. Of the ten richest museums we surveyed, seven were within sight of their previous levels, but the wealthiest, the Getty Trust, is only a third of the way to the $1.8bn it lost during the downturn (see table, p10). The road to financial health will be long for all but a fortunate few, and many fear that the economic recovery may prove short-lived. Nevertheless, many directors describe themselves as “cautiously optimistic”.

Thomas Campbell, the director of the Metropolitan Museum of Art, New York, remembers spending his first six months making 10% cuts in 2009. “It was all quite tough. We did what we needed to do,” he says. Seventy-four members of the professional staff were made redundant, and 95 took early retirement. His outlook is much more positive, buoyed by a return in the value of the endowment, booming attendance figures (see p35) and major donations, including $60m from a trustee, David Koch, announced in February. “I don’t want to tempt fate but the situation seems better,” says Campbell, who revealed that the museum raised more than the $100m it needed to renovate its wing of American art, which reopened in January.

The Met is among the museums in the best shape, almost back to its 2007 endowment high of $2.9bn. Others close to their pre-recession levels are the Museum of Fine Arts Houston, the Museum of Fine Arts, Boston, New York’s Museum of Modern Art and the Art Institute of Chicago. Some institutions with smaller endowments have recently started to focus on rebuilding them. The San Francisco Museum of Modern Art (SFMoMA) has raised $437m of a $555m capital campaign that will also double its $153m endowment, for example. Others were insulated from the financial crisis: last year, the Walton Family Foundation donated $800m to the new Crystal Bridges Museum of American Art, Arkansas, for its endowments—$350m for operations, $325m for acquisitions and $125m for capital improvements. In its darkest hours, the Seattle Art Museum had to close for a fortnight and its staff took unpaid leave (the equivalent of a 4% pay cut), while senior staff also took a 10% hit. Charlie Wright, the chairman of the trustees, says that while some senior staff are still on reduced pay, “by the end of this financial year [June 2012], we should be clear of those issues”.

The museum was directly ­affected by the banking crisis: it lost $5.8m in annual rent, which it was expecting from its tenant, the failed Washington Mutual bank. Help came in the form of grants from the Chase bank and the Gates Foundation. Now the museum has a stable tenant: the retailer Nordstrom. But the time is still not right to launch a campaign to increase the endowment. “Things have improved, but they just haven’t improved enough,” Wright says.

“Are things better? Yes. Are things good? No,” says Arnold Lehman, the director of the Brooklyn Museum. Post-­recession, fundraising staff have to work harder. “Instead of sending out 50 requests for support for a project, we must send out 100.” He says that corporate sponsorship is much more difficult to ­attract, and praises the individual donors who came forward when things looked their bleakest.

At the Philadelphia Museum of Art, Timothy Rub, the museum’s director, says: “I hope it’s the beginning of a recovery, but I think it’s going to be a long road.” As a result, the museum’s priority is “stabilising support for ­exhibitions and the presentation of the collection. We want to make sure these are well funded and sustained, rather than growing [the museum] at the margins with buildings or ­programmes.”

He also says support from individuals has recovered strongly, singling out a “remarkable” $28m given by Gerry Lenfest, a former chairman of the museum, made in 2008. His gift is a challenge grant, which has encouraged other donors to give a further $15m so far. “It will end up netting $55m to $56m to endow curatorial positions.”

Economists predicted that the Midwest would be hit hardest by the recession, due to a “triple whammy” of the slumps in car manufacturing, banking and housing. But the director of the Cleveland Museum of Art, David Franklin, is in “growth mode—and feeling pretty confident”. In 2011, the museum raised about $20m, and “in the eight months up to March we have raised $18.5m”, he says.

Cleveland’s museum is due to complete a $350m expansion in two years. “That’s encouraging people to be generous,” he says. He also says that corporate support has returned “even though the economy is tense”, and that companies want to show they are being active in the community.

Douglas Druick, the director of the Art Institute of Chicago, says cost-cutting measures have ended, while support from companies, foundations and individuals has remained “steady”. “But it will take a little more time to see any major shifts coming out of an economic recovery,” he says.

San Francisco and the Dallas-Fort Worth areas escaped the worst of the recession and museums in both are expanding. “We’re very optimistic,” says Neal Benezra, the director of SFMoMA. “We certainly tightened our belts, but we didn’t have to cancel any exhibitions or lay off staff.”

The museum has raised “about 79%” of its $555m goal, says Benezra, “but when you’re on a capital campaign, the danger is that you neglect annual giving. We’re really asking our friends to give twice, but the response has been positive.”

Maxwell Anderson, who moved from Indianapolis to lead the Dallas Museum of Art in January, is about to announce a capital project. “[They] are typically harbingers of returning confidence,” he says. “Patrons have not been that hard hit or felt the pinch in their inheritances [here].”

Other parts of the US and smaller institutions may not be as fortunate. “My sense is that museums are coasting—to see how things go,” says Ford Bell, the president of the American Association of Museums. “The economy seems to be improving but a lot of people are waiting to see if ‘the other shoe drops’—it might suddenly get bad again.” A sharp rise in oil prices “or a big tangle in Congress about how to stimulate the economy” could derail the recovery.

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Comments

13 Apr 12
15:20 CET

JIM MCCREIGHT, BEAVERTON, OR

Members of the Museum Trustee Association are seeing increased giving by board members to support the mission of their museum during these difficult economic times. Attendance and memberships are on the rise at many museums around the country. We are optimistic that the worst is behind us. Jim McCreight, President Museum Trustee Association

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