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)
Decolonizing is the word of the moment. Symbolizing action, the old ways swept aside, as everyone left outside the museum narrative steps forward; it’s a powerful verb. For more than a year, we’ve witnessed decolonization at a multitude of levels from venerable European museums beginning the process of returning antiquities to countries once deemed too ‘backward’ to care for anything, much less their own patrimony, to American art museums mining collections for work by women and people of color long banished to storage or never purchased in the first place, and historic sites grappling–often for the first time–with the through-line of slavery. With that as back drop, it’s no surprise that the decolonization discussion finally turned toward money. Specifically, an argument’s been made that how money’s made, and where it comes from, impacts gifts to the museum, which impact the organization itself. And not in a good way.
The best-known example of this is Warren Kanders’ resignation from the Whitney’s board in July 2019. Kanders, who served as the Whitney’s board co-chair, joined the board in 2006, donating more than $10 million in his 13-year tenure. But Kanders is not alone. The Sackler family of Purdue Pharma is also persona non grata. Although their name is tied to spaces at the Smithsonian, the Metropolitan, Harvard’s Sackler Museum, and the Guggenheim’s Education Wing, museums–including the Tate, the Guggenheim, the Metropolitan and the Museum of Natural History have all decided they will no longer accept gifts from the Sacklers.
With all of this as background, in its summer issue of Museum Magazine, AAM published an article titled “Decolonizing Development,” by Chong-Anna Confora. In it Confora writes, “Decolonization is social justice, anti-racist work. In order to decolonize fund development, we must ask ourselves: What organizational practices can we dismantle that center whiteness and reinforce white supremacy through fund development?”
There is a lot here to grapple with. On the one hand a part of you–maybe not your noblest part–wishes you had an endowment big enough to turn down a gift like the ones the Kanders and Sacklers gave. On the other hand, taking money made by companies whose values you abhor may make you cringe. What should you do? Are there board members in your own organization who are consistently generous, but whose money comes from unsavory or conflict-ridden endeavors? And since we’ve opened that door, where is your organization’s endowment invested? Are those investments conflict-ridden as well?
If you are like many museum leaders, you may serve an organization built on the generosity of people whose values and opinions might distress you were you to meet them today. And yet there you are, darkening the same door that symbolizes white supremacy as Confora calls it. You may literally owe your livelihood to a group of white men’s careful investing. Your organization may have been the beneficiary of charity, which Confora underscores as different from justice. Charity, she says, quoting the Rev. Dr. Frederick D. Hayes, is often hierarchical, where the giver has all the power and the receiver very little. Justice, she writes, “is an ongoing process of rebalance, of achieving the equality that everyone is entitled to.”
Are you confused yet? Flailing between what feels like moral bankruptcy and the fear of plain old garden variety bankruptcy? Well you should be. And I don’t have any answers, only some thoughts. Here they are:
- First, if you haven’t read the inimitable Darren Walker on the politics of donors and museums, do so.
- Next, as we’ve said so often here, remember we’re all human, and change is difficult. Simply decreeing that something ought to be, won’t make it happen, even in the face of a pyrrhic victory like seeing Kanders resign. (Under other circumstances, the Whitney’s board would hardly be the poster child for narrow-minded, white, Waspy privilege.)
- Grapple with the fact that your values and belief systems may not be your board’s. Does that make any of you bad people? Is it your job as a museum leader to bring the board ’round to your point of view? Or is your job to serve your organization? If the latter, in slowly re-centering your organization, might its values change? Understand then, there is a difference between individual values and collective ones. As Darren Walker writes, “It’s relatively easy to talk about destroying a system. It’s harder to build and sustain one. While I appreciate protests, those of us who are focused on solutions can’t be distracted by extreme perspectives.”
- If you are going to set your flag on the moral high ground with big money as the enemy, make sure you know what you don’t know. Shaming one board member as a climate change villain while running a less than green museum campus might be a bridge too far. Not to mention that without major gifts you will need five times as many small ones, and will you investigate their sources as well?
Despite the fact that people like me blather weekly about museum leadership, museums and heritage sites are run by boards, who raise new money, supervise the investment of old money, and set the organizational tone and culture. If you want to make change, make friends and allies on your board. Board Source’s latest report reveals that in 2016 84-percent of boards were white and yet only 24-percent said that demographics is important in recruitment despite the fact that 79-percent of executive directors said that a diverse board advances mission.
So….in a nutshell:
- Help your board to change. Help them understand the need for diversity, and the role implicit bias plays in the non-profit workplace, including the board.
- Make sure your board understands the racial wealth gap and the gender pay gap, and that they understand that money is not the only way board members build organizations.
- Work on patience. Real change develops from human-to-human interaction in service of a common goal–your museum.
Leadership Matters was on the road over President’s Day Weekend, heading south to the Small Museums Association meeting in College Park, Maryland. There, we talked about “Lessons from the Workplace: Women in the Museum.” We’ll be back next week to report on the audience reaction to issues of gender and the museum world, but in the meantime, here are some things that have captured our attention recently.
Books: Women & Power-Manifesto by Mary Beard. A short (128 pages), but blistering account of how women have been silenced throughout history. Don’t want to spend the money on the book? Here’s the backstory from the New Yorker: The Troll Slayer.
Managing People and Projects in Museums: Strategies that Work by Martha Morris. Morris rightly states that “The majority of work in museums today is project based.” So, why not combine the topics of projects, people, management, and leadership in one easily accessible book from a veteran museums studies educator? In addition to a whole chapter on museum leadership, Morris takes a deep dive into creating, managing and sustaining teams, including the team leader’s critical role.
Articles & Blogs: Not enough ethical challenges in your leadership life? Read this: The Family That Built An Empire of Pain.
#MeToo and the nonprofit sector: Vu Le is the fertile mind behind the blog, Nonprofit AF. If you’re not reading, you’ll want to make this one of your weekly must do’s. In the post we highlight here, Vu offers up his thoughts about creating safe environments for staff, volunteers, and community members. “We must examine our implicit and explicit biases,” Vu writes. “We need to confront one another and point out jokes and actions that are sexist. And we need to do our own research and read up on all these issues and not burden our women colleagues with the emotional and other labor to enlighten us.”
In this Harvard Business Review article, the fastest path to the top of an organization usually isn’t a straight shot. The authors rely on extensive research to explore why big, bodacious, and bold may feel counterintuitive sometimes, but are usually the keys to CEO success.
The Women’s Agenda is a regular shot of women’s empowerment reading from across the big pond (Australia, that is). News and research is gathered from around the globe on women in leadership, politics, business, and life.
Are Orchestras Culturally Specific? Jesse Rosen, League of American Orchestras president and CEO, recently led a discussion with four thought leaders about orchestras and cultural equity. From the intro: “While diversity, equity, and inclusion (DEI) are complex topics that require thoughtful consideration and strategic action, the concept of equity can be especially nuanced. It challenges us to fundamentally reconsider what it means for orchestras to play a constructive and responsive role in their communities—a role that acknowledges and responds to past and current inequities in the arts and in society.” Museums and other cultural institutions, take note.
Video: This video features CharityChannel’s Stephen Nill and members of the Governance Affinity Group of the Alliance of Nonprofit Management discussing their research on nonprofit board leadership. The discussion centers around a ground-breaking survey representing the second phase of research on this topic. The first phase, the widely acclaimed Voices of Board Chairs study, investigated the roles and preparation of board chairs, surveying 635 board chairs across the United States. Not only is there very little research that investigates nonprofit board chair leadership, but there is even less about other pivotal leadership roles within boards such as the officers and committee chairs.
You may think there’s not much connection between endurance running and museum leadership, but perhaps there is. Take a look at this video on how to run a 100 miles. Perhaps there are some parallels?
Sound: A big thank you to podcaster Hannah Hethmon who assembled all the museum-related podcasts in a handy link for us all: https://hhethmon.com/2017/12/31/a-complete-list-of-podcasts-for-museum-professionals/
As the Berkshire Museum‘s (Pittsfield, MA) drama roils on, the museum world is thinking a lot about deaccessioning. And it should. The New England Museum Association even added a last-minute session to its annual meeting roster to talk about it. But here at Leadership Matters, the Berkshire Museum’s problems have made us think a lot about boards, board behavior, and organizational culture.
Remember Bill Clinton’s famous tag line, “It’s the economy, stupid”? How about a variation on that for the museum world: “It’s the board, stupid.”? How many of a museum or heritage organization’s problems, both financial and cultural, trace back to the board? Yes, yes, mission and vision are really important, but assuming they’re beautifully crafted in the beginning, they don’t have power on their own. They’re just words. The folks empowered to carry them forward into the world, to interpret them, to make the magic happen, are first and foremost, board members, and in a recent Stanford survey of non-profit boards 27-percent of board members lack a the depth of knowledge, and the engagement required to help their organizations succeed. Pretty shocking.
At larger museums, boards are often referred to with the pronoun “they,” as in “I wonder if they will give us a raise this year?” They are rarely seen except when they meet on site several times a year. Then, the most jaded staff make jokes about which board members will be able to find the meeting room. They have all the cookies, and yet it’s so easy for them to lose their way, literally and figuratively.
And who can tell them anything? They are the board. They hire the museum leadership that we write about each week on these very pages. This is not to say all museum and heritage organization board members are jerks. They are not. Many are exemplary human beings, but just as being promoted from assistant director to director doesn’t make you any smarter, neither does board membership. And yet so much depends on board members’ good work. So if you’re a board member, if you work with museum boards or if you’re a museum director who wields some influence, here are some things we hope you’ve tackled:
- Does your board understand its legal responsibilities? Is that information available in their board handbook? Does your organization have regular check-ins about those responsibilities vis a vis the organization?
- What kind of orientation does your board offer new members? If information is passed orally from member to member, you may want to re-think that. There is plenty of support for how to design a board orientation plan. We are particular fans of Joan Garry because of her clear, simple approach. You could do way worse than to take her advice.
- Does your board have a strong nominating or governance committee? Do they understand your organization deeply and completely enough to know that being wealthy and well-connected might not be all your organization needs?
- Is your board among the 52–percent of non-profit boards nationally whose work is done by a board within a board? If the answer is yes, do you understand when and how that happened, and whether it is still working?
- Does your board have a respectful, collegial relationship with your executive director? Does it have succession plans for board and staff leadership?
- Does your board understand that its primary responsibility is fiduciary? According to the Stanford survey only 42-percent of all non-profits have a “give or get” policy where members are required to donate or raise a particular amount each year. That might not work for your board, but even a modest required donation levels the playing field, and reminds all board members why they are there.
There is no nirvana of boards where everyone internalizes the museum’s mission, gets along with the executive director, contributes time and money and gets others to do the same, but if board members universally understood their trusteeship as work, based in a museum’s mission, perhaps there would be less disruption, less mediocrity, and more organizational success, and raising operations endowments by selling the collection would never ever be considered.