Derek Gillman, the Barnes Foundation’s president and executive director, speaking at its press preview in May
Photo by Lee Rosenbaum
Robin Pogrebin‘s piece in today’s NY Times—For Art Institutions, Thinking Big Can Be Suicidal—is based on the University of Chicago’s just released study, Set in Stone: Building American’s New Generation of Art Facilities (to which the Times should have linked).
Among the four case studies are two art-museums expansions—the Art Institute of Chicago’s Modern Wing (reviewed by me in the Wall Street Journal, here) and the Taubman Museum of Art in Roanoke, VA, which was aiming for a Bilbao Effect and instead sustained financial and attendance shortfalls.
What we know so far about the tenuous financial model for the new Barnes Foundation in Philadelphia seems to position it as a possible candidate for a future case study in disappointed expectations.
The fallacy in the capital plans of too many cultural institutions is: “If we build it, they will fund.” The odds of success are greatly enhanced if an institution raises, before undertaking construction, most of the operating endowment it will need to sustain its expanded facilities. (The Peabody Essex Museum’s recently announced capital plans are a good model for this.)
The financial information that Derek Gillman, the Barnes’ president and executive director, provided to me at last month’s press preview creates cause for concern.
Here’s what I then reported:
Gillman told
me that his institution’s financial model calls for it to raise a hefty
60 percent of its estimated $14-million annual operating budget through
attendance-dependent earned income—admissions, retail and restaurant
sales, parking fees, etc. And while it wants to raise $100 million in
endowment [emphasis added], it only had (as of May 16) some $30 million in hand, with
another $30 million in pledges. This looks uncomfortably like a familiar
but worrisome post-construction gambit: “If we build it, they’ll fund.”In an apparent acknowledgement of this problematic strategy, Barnes vice chairman Joseph Neubauer
recently said the following to an audience of about 500 members of
Philadelphia’s business, political, social and civic elite (as reported by the Philadelphia Inquirer‘s Stephan Salisbury): “This campus is debt free and with the biggest endowment [in Barnes
history]. But—there is always a but—we have to raise more
money.”
A financial model that relies on raising 60% of the operating budget through earned income is off-the-charts. The Metropolitan Museum—no slouch in the earned-income department—raises only 30% of its operating budget through a combination of admissions (14%), membership (11%) and auxilliary activities, such as retail, restaurants and garage (5%):
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From the Metropolitan Museum of Art’s Fiscal 2011 Annual Report
In her testimony at court proceedings that ultimately allowed the Barnes Foundation to move to Philadelphia from Merion, Rebecca Rimel, president and chief executive officer of the Pew Charitable Trusts and a prime mover in the Barnes’ relocation, told the Judge Stanley Ott that the usual financial support model for nonprofits like the Barnes is one-third from endowment, one-third from annual giving, and only one-third through earned income.
Of even greater concern than over-reliance on earned income is the status of fundraising for the endowment needed to support operations in the new facility. As described by Gillman above, only $30 million is in hand (with another $30 million said to be coming from pledges) of the $100 million he believes the institution needs.
From my recent return visit, a month after the press preview, it appears that the Barnes now has vast expanses of near-vacant space. The cavernous Light Court was almost empty (as you can see in this CultureGrrl Video, at 2:30), as was the vast lower level (except for the gift shop and the small coffee bar, which were buzzing). The intimate, well-populated collection galleries are now dwarfed by a handsome, modern, but under-utilized facility, which may see more action off-hours, if the desired event rentals materialize to bolster the bottom line.
As for the post-expansion status of the Art Institute of Chicago (a focus of today’s above-linked Times article), the University of Chicago’s just-released study traces the museum’s current economic challenges to the mindset of its previous director, James Cuno (now president of the J. Paul Getty Trust):
Cuno believed the capital campaign would pick up speed once construction started. “It’s one thing for me to say, ‘Please support this project—we might build a building some day.’ It’s another thing for me to say: ‘Please support this project–we are building a building.'”
James Cuno, speaking at the 2009 dedication of the Art Institute of Chicago’s Modern Wing (Tom Pritzker, the museum’s chairman, looking over his notes, seated at right)
Photo by Lee Rosenbaum
That said, Cuno had told me at the time of the Modern Wing’s opening three years ago that some $85 million
from the
capital campaign was being applied to the endowment, making the
expansion (in his words) “cost-neutral.”
As I reported on CultureGrrl in June 2009:
The design and construction costs
for the expansion totaled $294 million. The capital campaign, which has thus far raised $410 million, is also
funding the major reinstallations and renovations throughout the museum,
for which some $15 million [a relatively minor amount] remains to be raised.
What intervened, just as construction was almost completed, was the Great Recession, which wreaked unforeseeable havoc on everyone’s financial assumptions. (Pogrebin herself had written a December 2009 NY Times article about this, here, which I commented on here.)
For those institutions that had embarked on expansions before the meltdown, the financial stresses rapidly intensified. The financial plight that some recently expanded institutions experienced is probably as much a matter of bad luck and unfortunate timing as of inadequate fundraising.
As for the Barnes, its financial viability may depend in large measure on whether the philanthropists who lavished funds on the construction of a facility that brought an important cultural resource to Philly will continue being similarly munificent now that it’s there.