How Do Museums Pay for Themselves These Days?

Over the years, Los Angeles Museum of Contemporary Art chief curator Paul Schimmel has won praise from critics for his well-researched exhibitions, but you can't eat praise. Last month, Schimmel resigned and, in an Op-Ed article in the Los Angeles Times on July 8th, LA MOCA trustee and art collector Eli Broad cast aside claims that Schimmel was fired but noted that "the museum has...curated a number of exhibitions that were costly and poorly attended, often exceeding $100 per visitor. In today's economic environment, museums must be fiscally prudent and creative in presenting cost-effective, visually stimulating exhibitions that attract a broad audience."

"Broad was pretty up-front about it," Dewey Blanton noted, an official at a museum association. "Usually, that sort of thing isn't said."

Over the past four years of recession and lagging economic recovery, one museum after another across the country has cut back on hours, staff, salaries (and staff benefits) and programming, raised admissions, looked to sell objects from their collections in order to pay for operations or just closed for good. Righting the financial ship has been the order of the day, and Schimmel may just be the latest casualty of this decidedly non-art-sounding trend.

Many of the largest museums in the country have taken the cost-cutting steps, balancing their books, but others -- especially smaller and regional institutions -- have continued to struggle. The Detroit Institute of Arts is bet (and won) its financial future on a tax initiative that would keep the museum from cutting back on programming and hours open to the public. The August 7th referendum asked voters in three surrounding counties (Wayne, Oakland and Macomb) to increase the property tax by an average of $20 per year for a home worth $200,000 in order to raise an estimated $23 million annually over a 10-year period. We will now have to see if that infusion of money does the trick.

Without the tax assistance, Detroit Institute of Arts Director Graham W. J. Beal said, the institution would close some of its galleries, reduce its hours and be open only two or three days per week.

Beal noted that the operating budget of the Detroit Institute of Arts has fallen from $34 million in fiscal 2008 to only $24 million in the current fiscal year. Trying to be creative, the museum last year received permission from several donors to the museum's acquisitions endowment - as well as from the probate court in cases of bequests to that fund -- to use the endowment's annual $2 million income for operations. In 2009, the Detroit Institute of Arts laid off 20 percent of its staff, or 63 of its 301 employees, as well as reduced its hours of operation and postponed some traveling exhibitions, which saved $6 million. "That money we saved bought us some breathing space, as long as we can raise money at a serious rate," said Graham Beal, director of the museum. The serious money will come if the surrounding counties agree to a property tax levy dedicated to the museum.

Despite a variety of measures to cut costs and raise revenues at museums and other cultural institutions across the country, many continue to struggle to stabilize their finances, especially smaller and mid-sized institutions. "It's taking a while for the effects of the recession to work its way through the museum world," said William Eiland, director of the Georgia Museum of Art and a member of the accreditation commission of the American Association of Museums. "We continue to see more and more museums in distress," noting that art and history museums are struggling disproportionately. All 21,000 members of the association come up periodically for a renewal of their accreditation, "and we look at sustainability and the financial pressures they are under. It's hard to like what we're seeing."

Smaller museums may be having the roughest time of it. "Small museums are smaller in terms of their endowments and staff, and their operating budgets are pretty bare-bones as it is, so there isn't a lot of fat to be trimmed," said Michael DiPaolo, president of the Small Museum Association and executive director of the Lewes Historical Society in Delaware. The largest problem of many of the association's 500-plus members is that they are reliant on funding from a municipal, county or state governmental agency that itself was slashing its budget. At the association's annual conference, DiPaolo noted, "there was a lot of discussion of the need for a more diverse revenue stream," such as creating or bolstering an endowment, striving for more memberships, expanding sponsorship opportunities and using the Web to solicit donations.

Smaller institutions may have one advantage over their larger counterparts, since they have smaller paid staffs, relying on unbenefited part-timers and volunteers to a far greater degree. "Most of our staff is part-time," David Beck, president of Nicholls House in Boston, said, "and we can use people more or less depending upon visitorship."

Michael Botwinick, director of the Hudson River Museum in Westchester, New York and the former director of the Brooklyn Museum, noted that a number of steps that many museums across the country have taken -- including staying open later and offering admission-free days to encourage more visitors, focusing more on their permanent collections and less on major traveling exhibitions in order to save money, and using social media and networking to reach a potential younger audience -- are having a positive effect on these institutions' bottom lines. Overall, he noted that museums have been quick and creative in "dealing with the economic situation than many other institutions. Certainly, we're also seeing no raises, reductions in medical benefits, keeping vacancies open a little longer" and other moves to keep costs down, he claimed. The largest, most prestigious art museums have been able to draw more support from "the upper sector of the economy -- the hedge fund managers, bankers, hot-shot lawyers, Wall Street, the economic elites in general -- which has rebounded pretty fully and want to be associated with the Met and the Museum of Modern Art and places like that" than the smaller, more regional institutions.

Rusty Baker, executive director of the Pennsylvania Federation of Museums and Historical Organizations, offered a gloomier assessment for his group's members, citing "staff cutbacks, less programming, higher admission or the advent of admission in previously free institutions, wage freezes, and juggling hours of operation. We think we'll see even more of it. There is still a sense of denial in museums about change and about financial trouble. We have been in trouble so long, the instability is nearly structural." He added that the coming years will bring "more mergers or closures, too, a 'thinning of the herd' if you will."