The Metropolitan Museum’s pandemic-related “Emergency Relief Fund” (ERF), parsed by me in this post, was just one of several recent aberrations in that financially challenged museum’s erratic money-management maneuvers. In my decades of scrutinizing the Met’s annual reports, I’ve never seen one as anorexic as the Annual Report for Fiscal 2021 (ended June 30). Usually a hefty 100 pages or so under four different directors about whom I’ve written (starting with Tom Hoving), this one, overseen by Max Hollein, weighed in at a mere 21 pages.
Here’s how (in very small type) the Met explained the report’s brevity (on P. 4):
Beginning with fiscal year 2020-21, the Annual Report is being published in a simplified format that both reflects its use within the institution and aligns with best practices of the Met’s peer institutions.
The Met used to be the institution that set standards for “best practices,” in the promulgation of clear, detailed financial information. It was formerly the pacesetter for its “peer institutions,” with whom it now says it is “aligning.”
For the Met’s comprehensive financial disclosure in times past, we had this man to thank:
Daniel Herrick, the Met’s first chief financial officer (who assumed that post under Hoving), unstintingly taught me almost everything I know about museum finances and financial transparency (with the rest filled in by James Gara, the Museum of Modern Art’s long-serving financial expert, who remains there today as its chief operating officer). Herrick set the standard for full, detailed disclosure of museums’ funding sources and expenditures, and the Met, until now, has largely continued his practices.
But the new format for FY21 seems deliberately designed to obfuscate, not elucidate. Just getting to the financials (as distinguished from projects undertaken and programmatic goals achieved) is such a complicated operation that it will likely frustrate the attempts of all but the most patient and persistent to follow the money. For those who are up to the challenge, here’s your roadmap for getting to the numbers underlying the narrative, as contained in the Report of the Chief Financial Officer, Statement of Operation, Balance Sheet, Statement of Activities, Statement of Cash Flows and Notes to the Financial Statement. as audited by PricewaterhouseCoopers (PwC):
—Scroll to the bottom of the Met’s homepage
—Click on About the Met
—Scroll down to Policies and Documents
—Click on the “+” sign next to the year of the annual report that you’re interested in, and/or click the link for Financial Statements for the Year 2020–2021 (PDF).
If you want to compare the FY21 Financial Statements with those from previous years, you must follow these further instructions:
Until the year ended June 30, 2021, the Audited Financial Statements and Footnotes were incorporated in the Museum’s Annual Report. Please see links above for prior-year Annual Reports that include Audited Financial Statements. Beginning with fiscal year 2020–21, the Audited Financial Statements and Footnotes will be posted below.
In prior years, the annual report’s introduction to the report of the CFO (link is for FY20) clearly set forth the museum’s operating results, including the amount of its surplus or deficit, with a pie chart that showed the percentages of financial support provided from different sources (i.e., admission, endowment, membership, city funding, etc.)
That pie chart is still baked into the FY21 report:
But missing from the FY21 report is a second pie chart that in previous years had graphed the distribution of operating expenses (i.e., curatorial, guardianship, administration, special exhibitions, etc.) Here’s the tasty pie from FY18, in which “Curatorial” scored the biggest slice:
Accompanying the pie charts in the Report of the Chief Financial Officer for FY18 was this promising forecast, now overturned by Covid:
The Museum’s three-year financial transformation plan is projected to lead the institution toward long-term financial stability by 2020. [If only…]
Here are a few telling figures that are included the FY21 report:
—Endowment funds rose to $4.35 billion in the year ending June 30, 2021, from $3.26 billion the previous fiscal year.
—Operating deficits were $7.7 million and $7.6 million in FY2020 and FY2021, respectively, but only after “significantly reducing spending through substantial cuts in programmatic, acquisition, and other discretionary project budgets; and the reduction of its workforce through voluntary retirement programs and other staff actions,” according to the President’s (Dan Weiss’) and Director’s (Max Hollein’s) Letter on P. 7 of the FY21 annual report.
—Proceeds from sale of art totaled a mere $1.23 million in FY 21, compared to $13.78 million in FY 20.
—“Auxiliary activities” (predominantly retail and restaurant operations) resulted in a net loss of $13.6 million in FY20, compared to $1 million in net income in the previous year. In FY21, revenue and support from auxiliary activities was less than half of what it had been the previous year, and resulted in a net loss of $9.21 million. (The $9.21-million loss figure was my own calculation, arrived at by subtracting the revenue and support from expenses.
—Operating appropriations from the City of New York and unrestricted gifts and grants decreased by $2.4 million and $11.8 million, respectively
As widely reported (including by me), one controversial financial development in FY20 and FY21 was the temporary loosening of restrictions imposed by the Association of Art Museum Directors on the use of deaccession proceeds. Here’s the description of how that has played out at the Met, as stated in its FY21 Annual Report (P. 18):
The Museum revised its Collections Management Policy to be consistent with the Association of Art Museum Directors (AAMD) guidelines for using deaccessioning funds during a limited period of time for the direct care of items in the Museum’s collection [emphasis added] and, on March 2, 2021, the Board of Trustees approved revisions to the Museum’s Collections Management Policy that permit the Museum to adopt such guidelines on a temporary basis. In fiscal year 2022, ending June 31, 2022, the Museum will apply $7,186,078.80 of deaccessioning proceeds toward the direct care of its collection in accordance with its Collections Management Policy.
The museum’s IRS Form 990 for 2020 (2021 is not yet posted) defined “Direct Care” to encompass a very broad range of purposes:
The Museum’s interim policy for using deaccession proceeds, which is set forth in its Collections Management Policy, aligns with AAMD’s guidelines and permits the Museum to use deaccession proceeds not only for the purchase of art, but also, for a temporary period expiring on April 10, 2022, for the “direct care” of the Museum’s collection. As set forth in the Museum’s Collections Management Policy, direct care expenses include costs associated with the conservation, preservation, registration, storage, and safeguarding of the Museum’s collection, including scientific research related to the Museum’s environment, analysis, treatment, inventory, documentation, photography, framing, imaging, digitization, and the provision of safe and secure, climate-controlled storage (whether on-site or offsite) [emphasis added]. The Museum adopted these interim provisions permitting the use of deaccession proceeds for direct care and as a result, used deaccession proceeds to cover $7.2 million of collection care management expenses in the Statement of Activities for the year ended June 30, 2021.
That long list of applications now envisioned by the Met for its deaccession proceeds goes far beyond what was originally outlined to me by the museum’s spokesperson early last year—“conservation, preservation, registration and storage,” including the salaries of staffers engaged in those activities. (AAMD left it up to each museum to define what “collection care” would mean for its purposes.)
One metric I missed this year was the list of deaccessioned objects valued in excess of $50,000—a feature that has long been part of the Met’s annual reports. (For example, see the bottom of this page from the FY18 Annual Report.) The Met is legally required by the NYS Attorney General’s Office (due in part to the fallout from this 1973 deaccessioning controversy regarding the estate of Adelaide de Groot) to publicly list its higher-valued disposals in its annual report.
When I asked about the lack of such reporting this year, a Met spokesperson told me: “You are correct. The report you are reading has no deaccessioned objects at or above that [$50,000] level.” In light of the loosening of deaccession standards that was intended to free up more funds for crucial purposes (included the ones explicitly listed on the Met’s IRS Form 990 for 2020, as cited in the paragraph above), the reported decline in proceeds from art sales from $13.78 million in FY20 to a mere $1.23 million in FY21 is a bit puzzling.
It remains to be seen whether Met President Dan Weiss‘ upbeat outlook for the coming year will prove to be prophecy or fallacy. As captured in this CultureGrrl Video from the Met’s Dec. 3 press briefing about future plans, Weiss said this:
The people are coming. They feel safe to do so, and it’s all good….We’re playing the long game here: We’re open, and we want people to come when they can and when they feel right to do so….The museum is secure, it is strong, we are resilient and we’re looking forward to what comes next with great excitement and great anticipation.
Then along came the Omicron surge, accompanied by this Met announcement of its planned visitation reductions, done in an abundance of caution. Speaking of which—I got a PCR test today, not because of any symptoms (yet) but because I keep hearing about new cases among my friends, relatives and colleagues.
Stay healthy, art-lings!
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