Museum Endowments Aren’t Crisis Cash Cows

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By Steven Miller, Guest Blogger

On April 15, in an attempt to help member museums during the COVID-19 pandemic, the Association of Art Museum Directors (AAMD) issued a press release announcing it had “…passed a series of resolutions addressing how art museums may use the restricted funds held by some institutions.” Key wording in the announcement stated “… the AAMD will refrain from censuring or sanctioning any museum – or censuring, suspending or expelling any museum director – that decides to use restricted endowment funds, trusts, or donations for general operating expenses.” The information included how endowments are defined. It provided wording about ways they could be raided by museums. The resolutions also included new exemptions about how money gained from the sale of deaccessioned museum collections can be used for the “direct care of collections.” The statement went on to explain, “AAMD also recognizes that it is not within the Association’s purview to approve the redirection of restricted funds. However, it hopes that these resolutions will serve as an endorsement to donors or the relevant legal authorities, encouraging them to permit the temporary use of these funds for unrestricted needs.”

This blog post focuses on the endowment issue.

Museums are expensive places to run. Money primarily comes from three sources: earned income, endowments, and charitable donations. Earned income is customarily realized by such things as admission fees, retail sales, memberships, and space rentals. Endowments comprise funds gifted or otherwise allocated to sustain operations or designated programs. Charitable donations involve money freely given for general or specific uses.

Funding for American museums has been abruptly reduced as a result of the coronavirus epidemic. Most institutions are closed. This means attendance and retail profits are almost entirely lost. Downward valuations combined with large emergency withdrawals have reduced investment portfolio size and returns. Many museums find charitable giving reduced to a trickle as donors hold back.

Museum boards of trustees are going nuts trying to assure the survival of their organizations for which they are responsible. Their struggles are almost insurmountable. Practical solutions are almost entirely of a fiscal nature. What will it cost to survive, how is survival defined, and, where will the money come from, not to mention when?

The AAMD’s resolution announcement was made “…in recognition of the extensive negative effects of the current crises on the operations and balance sheets of many art museums – and the uncertain timing for a museum’s operations, fundraising, and revenue streams to return to normal.” In the abstract it’s a nice gesture. In reality, it has little weight. In fact, museum boards have always had the right to go to donors or their heirs to make restricted funds less restricted in order to survive a financial crisis.

Museum endowments range from huge to negligible and their purposes and structures range from specific to general. Usually they are invested in conservative monetary instruments, mostly stock and bond portfolios. These are managed either by professional money managers or designated members of a museum’s board of trustees. Responsible museums have investment policies. They spell out how funds are retained and used. As with other policies, the one regarding investments is agreed on by a board of trustees and kept in governing documents.

Anyone familiar with the American museum world knows boards of trustees do as they wish within sometimes broad legal parameters. For the most part their decisions are beneficial or at least not too damaging. Now, all face terrible choices regarding the very survival, much less longevity of museums, in this country. For the most part trustees are doing whatever they legally can with whatever resources they have, which include endowments.

Having directed a museum in 2008 when the Great Recession hit, I witnessed how one board of trustees dealt with endowments. Their example is unfolding again. The board analyzed the institution’s endowments. Unrestricted funds were spent down to cover operating costs. Trustees approached people who had established restricted endowments, or the donor’s heirs to request a release of the restrictions. Permissions were granted for all such endowments. Substantial cost-saving measures were instituted by me, starting with a voluntary 40% cut in my salary. Other compensation was reduced incrementally with the lowest paid employees suffering the smallest cuts. Furlough weeks were also instituted. We emerged from the mess having cut one position and that person was quickly rehired. A dozen years later, as COVID-19 unfolds, the lost endowment funds from 2008 have still not been replenished to their original levels.

My time dealing with the 2008 fiscal debacle was the most difficult leadership challenge I ever faced in my career. I am grateful to avoid the current boondoggle. But, as a member of two non-profit boards (an art conservation center and a college alumni/ae group) I am witnessing trustees struggling to make ends meet and how the AAMD’s resolutions have no meaning. Censuring or sanctioning member museums or directors will carry little weight. When push comes to shove, boards of trustees need to make difficult decisions based on a lot of unknowns. Unless the AAMD can pony up significant cash assistance, given the fiasco museums face now, they have sound arguments for contradicting their best intentions.

AAMD Board of Trustees Approves Resolution to Provide Additional Financial Flexibility to Art Museums During Pandemic Crisis (Press release, April 15, 2020)

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On COVID-19 and Managing Separation

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Nothing changed this week, and yet everything did. Pandemic numbers continued to climb, all while public health officials predict the worst is still to come. Lines for food banks grew as the number of unemployed multiplied. Museums and heritage organizations made headlines with massive layoffs of front line staff. Midst it all, those of us lucky enough to work from home, found our worlds simultaneously shrink to the size of our houses or apartments and expand to the farthest reaches of the world as we spend more and more time online.

This week I’ve been thinking about separation. As museum folk, our livelihood depends on our interaction with things — paintings, documents, buildings, living things or objects. Suddenly, we’re apart. Apart from the stuff we care for, caring that comes in many forms, through leadership, advancement, scholarship, education, conservation or transportation. Whatever our role, we’re separated. And in this case we’re separated not just from the heartbeat of our museums or heritage sites, we’re separated from colleagues, our human communities, volunteers, tiny children, bigger children, budding artists and scientists, families, and elders.

Is there such thing as a good separation? How do you manage disconnection yet stay attached? How many novels, plays and movies take shape when one character announces they must leave, but they’ll be back? How do relationships deepen between absent friends? Does absence may the heart grow fonder?

And what sustains us through a separation? It used to be letter writing. Now, not so much. Are separations also defined by how we choose to fill the absence?

This week I read a wonderful piece by John Stromberg, director of Dartmouth’s Hood Museum to his community. Stromberg talks about the Hood’s commitment to art “by all, for all.” But more exciting to me is his open acknowledgement that however empathetic and caring the Hood’s exhibitions were, now the museum is closed, he acknowledges his staff must pivot. He writes:

As the Hood Museum staff continues to transition to our new digital work format, we are challenged to revitalize and update a key tenet of what we do: putting individuals in direct contact with original works of art and each other. How do we move forward without the physical proximity that has been critical to our practice? Can digital means replicate the intimacy of face-to-face dialogue about today’s most pressing issues?

So must separation incorporate a willingness to change and grow?

Then there is the Philbrook Museum of Art whose relationship with its community, both virtual and actual is a marvel, thanks in part to the leadership of Scott Stulen, a multi-talented artist who admits his directorship is about putting community building into “overdrive.”[1] Who doesn’t want to know a place that in a matter of days changed its tagline to “Chillbrook Museum of Staying Home, Stay Home, Stay Social” as if this were just another day in the life. The Philbrook’s  website makes you believe all your emotional and intellectual needs are in hand. Whether it’s listening to podcasts, hearing a tiny concert or participating in a children’s art class, it’s clear that separated or not, the museum percolates along, even for those of us who’ve never been to Tulsa, OK. This week the Philbrook put its money where its mouth is, announcing it is expanding its edible garden in order to support the food bank. How could anyone forget a place that offers so much for so many, and who manages to be winsome, and serious, musical and witty, all at the same time? Maybe a good separation is about enhancing what’s already there, making it richer in the absence of human contact?

Although Old Salem Museum and Gardens closed ahead of some North Carolina museums and heritage sites, the door was barely shut before it launched #wegotthis, a series of online events that included the History Nerd Alert and the Old Salem Exploratorium. About a week ago, it began transforming its historic gardens into Victory gardens to support the city’s Second Harvest Food Bank. That prompted another online series called Two Guys and a Garden. In addition Old Salem has put its head pastry chef back to work producing 50 loaves of bread a day for the food bank, while its head gardener offers videos on seed starting. Does giving back make an organization more memorable? Is it easier to ask, once you’ve given? 

Last, but not least, Raynham Hall Museum, The Frick (What’s not to like about Friday cocktails with a curator?) and the Tang Teaching Museum: All used Instagram before the pandemic, but since COVID-19, they’ve ratcheted things up, speaking directly to their audience, making connections between collections and past epidemics, illness, inspiration, art and spring. And there are many more museums and historic sites you know who, despite separation, are enriching connections, building bridges, and creating new audiences.

So what makes a difficult thing like separation doable? Ah…wait for it….because maybe it’s similar to museum life back when things were normal: How about honest, authentic communication that builds outward from mission and collections to connect with community? Opportunities abound for learning the “how-to’s” of social media, but knowing your own site, and your own community, and translating your organizational DNA to images, video, tweets and Instagram, that’s on you. Because when the separation is over–and it will be–how will your organization be remembered? As the site that closed its doors and then 10 weeks later woke up like Rip Van Winkle? Or as the online friend who made people laugh, taught them some stuff, and helped out the community?

Stay safe,

Joan Baldwin

Notes

[1] Scott Stulen, “When an Artist Becomes a Director,” American Alliance of Museums, May 17, 2018. Accessed April 13, 2020.

Image: Chillbrook (Philbrook) Museum Instagram post, “Our cats are lonely and would love to hear from you. Write them a letter and they’ll write back. 🐾”


The COVID-19 Impact on Museum Consulting

As COVID-19 moves across the country, every sector of the museum workforce feels the  pandemic’s power from the still employed, but working from home, to the temporarily suspended, to the recently let go. Every day museums and historic sites announce closures and massive layoffs, leaving many to wonder how museums will recover. One sector not much has been written about is independent consultants. Not museum employees who consult sporadically, but the group who work independently across the field in collections, education, governance, art handling and more. They work from job to job, shouldering the full costs of benefits, building careers while offering services many museums and heritage organizations need, but can’t afford on a full-time basis.

Being a consultant means you need to take work when it’s offered because a month from now when your calendar opens up the offer may have evaporated. It means your rates need to account for your business expenses, Social Security benefits and health care. It means working from home, punctuated by travel is your normal. And it means your access to COVID-19 Paycheck Protection Program is delayed ’til April 10. Amidst the tidal wave of museum layoffs and closures, we checked in with a group of consultants to see how they’re doing. Here are their voices:

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On Museums, Clarity, and Hope

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Remember your pre-COVID-19 life when you wished you could just stay home and work? How peaceful it would be, how much work you’d get done if only you weren’t at work distracted by meetings, angsty colleagues, or workplace deadlines. Well, be careful what you wish for. Now we’re caught in a devilishly dystopian movie with no end in sight, a little workplace angst seems like heaven.

Many of us have completed our first week of either government or self-imposed isolation. For those of us lucky enough to collect a salary while working from home, it has its moments. Everyone uses Zoom like a pro, bouncing from meeting to meeting as we struggle to stay on point, while small children and dogs step into the picture. But there’s no doubt there’s a price to pay, and social isolation is the least of it.

So after five days, what do you as museum leaders know? There’s the obvious: that collections managers and curators’ work transfers home a lot easier than that of your front line staff. But how about protecting as many of your workers as you can, and while acknowledging layoffs are horrible? Then there’s social media: those of you who have a robust platform may no longer feel as though it’s the icing on the cake, but the main course. And of course, there’s the money: If you didn’t understand your museum’s endowment portfolio two weeks ago, you may be getting a crash course–no pun intended–in stock market physics; that some of this country’s leading philanthropies are already banding together to help support museums and heritage organizations. And the advocacy piece: We owe Laura Lott, Elizabeth Merritt, and the AAM staff thanks for leading the museum world’s advocacy effort on Capitol Hill. Fingers crossed, it pays off.

For many museums the Metropolitan is a kind of a bellwether the same way New York’s fashion world influences dress months later in the heartland. So when the Met announced that even if it were to open again in June, it will face a $100 million loss, it was enough to scare the crap out of many smaller museums and heritage organizations. Even the Met, with its $3.6 billion endowment, has only guaranteed salaries through early April while it studies how to navigate the coming months. Its plan, though, is interesting: Short term, it’s paying salaries and those who can work from home are; beginning in April it will use furloughs, layoffs and retirements in addition to shifting spending from funds associated with programming, acquisition, and travel to keep the museum operational. The hope is it will re-open some six months after the virus began in the U.S. with reductions across the board. (Not shared is whether Max Hollein or Daniel Weiss will take pay cuts for the duration of the crisis. #sharethewealth) So the model is short term, pay those who can work; figure out what you can jettison; shift funds you won’t need, and plan on opening a trimmed down version of yourself in two to four months. The more egalitarian among you may choose to take pay cuts, but that’s for you and your board to work out. There is by the way already a place to aggregate staff layoffs in the wake of the virus. Cold comfort, I know, but as more information amasses, you will have a sense of what other organizations are doing.

For those of you who are now thoroughly depressed, we hope you read Colleen Dilenschneider’s piece on COVID-19 and intended as opposed to actual visitation. As always with Dilenschneider, it is a clear and weirdly hopeful piece. She writes that as of March 13 the public was staying away because they were self-isolating or museums were closed or closing, but long-term, their intent is to return. Could a lack of discretionary income affect that? Yes. But do people need the beauty, the knowledge, the third space museums provide? Yes.

As my friend Franklin Vagnone, President of Old Salem Village writes,

“As museum leaders we must be thinking ahead of this to April 2021. What do you want to be? Who do you want to serve? How will you use your resources to achieve that goal? It’s not the time to be nostalgic for what we lost, we must embrace the butterfly that will grow out of this imposed cocoon.”

In closing, we want to thank history museums and archives who are already starting to collect reminiscences about the pandemic for future generations. We want to thank museum IT and social media folk who keep us entertained and in touch through Instagram, short videos and virtual visits. We want to thank conservators everywhere who donated equipment to first responders, and funders who recognize that museums (and all non-profits) are businesses too and need support as well. We want to acknowledge living history sites who are turning their history gardens over to raise food for community food banks.

And last, we want to send thoughts of encouragement and strength to our colleagues around the world affected by COVID-19, and especially all the museum people in Italy who are in the midst of such a desperate struggle. 

Be strong and stay in touch with each other. Email your professional friends and colleagues and set up a Zoom call today. Don’t wait. Talk.

Joan Baldwin

Image: The Mercury News