It all sounds so simple: The Cleveland Museum of Art has petitioned the court for permission to use money generated by four funds within its $558 million endowment that are currently restricted to art purchases to complete its expansion plans. The museum wants to take $75 million over ten years to finish construction of its $350 million building by 2013, according to the Cleveland Plain Dealer. It quoted the museum’s lawyer, Stephen J. Knerly Jr., and other
officials as “expecting no controversy” over the request. They have previous experience:
The only precedent came in 1955, when the county probate court granted the museum permission to use income from art-purchase funds to build an expansion completed in 1958 (since demolished).
Why the request?
The museum needs access to the art funds because it’s in a financial squeeze. So far, it has raised $212 million for construction. To finish by 2013, it needs another $138 million. The museum is confident it will raise the amount, but not by 2013, because the poor economy has slowed donations.
But, the article explains, if construction doesn’t proceed on schedule, the whole effort will cost more. (You can read more details here.)
It’s true, the Cleveland Museum is one of the nation’s better-endowed art museums. But I still have worries.
Invading an endowment is always a risky business, and this one seems to be predicated on the idea that the economy and the markets will bounce back in the next few years to pre-2008 levels. Many experts are predicting otherwise, and history from the 1930s through ’50s is on their side. And there’s the issue of donor intent; they restricted their gifts for a reason, after all.
Cleveland’s move encourages less-rich arts groups, if and when they want to invade their endowments. One horrible example: The New York City Opera has run its endowment into the ground, thanks to lax oversight by New York State, and is now tottering, cushion-less, on hopes that donors will ignore ecomonic realities and give generously in the near-future. It may not survive.
And there’s another thing — is the Cleveland museum that rich? I’ve been watching endowments for a long time, and I had saved the Chronicle of Philanthropy’s May 31, 2007 list of top museum endowments. It cited the value of Cleveland’s at $726 million, about 30% more than the current total.
At the time, only the endowments of the Metropolitan Museum of Art, the Museum of Fine Arts in Boston, MFA-Houston, the Smithsonian and the Art Institute of Chicago exceeded Cleveland’s. (Curiously, the Getty is not on the list, probably because the museum is lumped in with the rest of the Getty Trust.) The rest had puny endowments — and many admitted it to me at the time.
Is there any museum whose endowment has not dropped in value since then?
And yet, many experts were saying even then that it would take decades for museums to boost their endowments enough to cover the increased operating costs of their expansions.
The court may give the Cleveland museum what it wants, and Cleveland may pull it off. But I hope this is an exception, not a rule. Too many arts groups are on thin ice already.
Photo Credits: The Cleveland Museum of Art