Real Clear Arts

Judith H. Dobrzynski on Culture

Museum Funding-Fundraising

Breaking Now: DIA Commits to Rescue Deal

GargaroThe Board of Trustees of the Detroit Institute of Art has, afterall, committed to raising $100 million as part of the deal engineered by Judge Gerald Rosen to save the museum’s collection from sale. The museum just issued this statement, in part:

…Today, the DIA’s Board of Directors approved a commitment by the DIA to raise $100 million from corporate and individual donors toward these efforts. The DIA joins the foundation community ($370 million) and the State of Michigan ($350 million) in support of Chief Judge Rosen’s plan to benefit the people of Detroit and the State.

“The DIA’s management and volunteer leadership forthrightly agreed to accept this challenge, despite its difficulty and the many other fundraising commitments the museum manages annually,” said Eugene A. Gargaro, Jr. [at right], chairman of the DIA Board of Directors. “We are hopeful this agreement will allow Detroit’s bankruptcy to move forward smoothly as we all work toward a brighter and better future for Detroit.”

None of the funds raised by the DIA will directly benefit the DIA. The funds will be directed to a third party, which will disburse the funds for pension payments. As part of the agreement, the City of Detroit will transfer to the DIA free and clear legal title to the museum building, the art collection and all related assets. The DIA will continue to operate the museum with funds raised from its current donor base and from the tri-county millage.

 

 

Day’s Wrap-Up For DIA: Settlement Link To Pensions Is The Key

Michigan governor Rick Snyder made a statement this afternoon affirming, as predicted this morning, a settlement that would probably rescue the DIA, though some details need to be worked out.

detroit-institute-ofAnd it seems that whoever, several weeks back, made the link between saving the museum from selling art and ensuring that pensioners got paid provided the key to the settlement in the legislature. Snyder said — addressing the press in Lansing today (The Detroit News has a video of the occasion, as does the Free Press) that that was a condition, as well as the promise that “the state could not be held liable for future legal claims by retirees.”

As he has said before, the state would pledge $350 million in state funds over 20 years, essentially matching foundation money, to “protect both city retirees and the priceless collection of the Detroit Institute of Arts,” as the Free Press put it.

The DIA issued a statement, saying:

Governor Snyder’s announcement is continued good news for the City of Detroit, its pensioners and the DIA. Support from the Governor and legislative leadership, the foundation community and our supporters underscores the importance of the DIA in building a strong, healthy city and state. We are working hard to play an active and thoughtful role in this ongoing process that will allow for a significant contribution to this effort and ensure long-term support for the City’s pension funds and sustainability for the DIA. While there has been a great deal of speculation as to the DIA’s participation in this effort, the DIA remains focused on continuing conversations with the mediation team, state, county and city officials, our board members, staff and supporters to determine how we can be as productive and supportive as possible in this process, with the ultimate goal of a balanced, achievable solution that provides for strong DIA involvement in this emerging plan and ensures the museum’s ability to meet its immediate budget commitments and long-term endowment needs.

Earlier in the day, various people had criticized the DIA director Graham Beal and Executive Vice President Annmarie Erickson for saying that the museum could not raise the $100 million that was expected as part of the deal (on top of the $300 million they must raise in 10 years for an endowment to replace the tri-county millage currently providing operating funds).

Much of the state’s contributed funds would come from the tobacco settlement state reached with cigarette manufacturers in 1998.

This is what I hoped would happen last month.

Obstacles definitely remain: Snyder said, as the Free Press put it, that the “state’s contribution would be conditional on “independent fiduciary management” of Detroit pension funds. It also would have to be part of a settlement of the bankruptcy that included the unions and retirees and ended court cases.” Also, bankruptcy judge Steven Rhodes has to approve it.

No surprise, Emergency Manager Kevyn Orr (who was appointed by Snyder) is going along, according to the Free Press:

Detroit Emergency Manager Kevyn Orr said “we now have an unprecedented commitment of public and private resources to help the City of Detroit fulfill its commitments to retirees and preserve one if its cultural jewels, the Detroit Institute of Arts.”

“The level of proposed investment by the philanthropic community and the state will go far in helping reach a timely and positive resolution of the city’s financial emergency,” Orr said.

Also today, judge Steven Rhodes turned down a request by the city’s creditors for another evaluation of the DIA’s city-owned art; they had complained that the evaluation by Christie’s was too low. And he “raised questions about whether he would even allow the sale of DIA art to settle city debt — while also emphasizing that he had not yet made up his mind on the matter,” the Free Press said.

Bottom line: the conversation re: the DIA has turned the corner, but the museum is not home free. Requiring the DIA to raise $400 million in ten years, plus the money it now raises for operating funds the millage doesn’t cover (in the neighborhood of $7 or 8 million annually if memory serves), could simply kick the museum’s problem down the road.

 

 

Detroit Relief? Deal Said To Be Coming Today

Gov. Rick Snyder of Michigan apparently has his political ducks lined up.

Detroit-Institute-ArtsBoth Detroit newspapers are reporting that Snyder met yesterday with state legislators and reached a bipartisan deal to provide state support to the Detroit Institute of Arts and protect pensioners. But it could still come undone.

The Detroit Free Press said that “The DIA also is widely expected to contribute to the rescue fund,” resurfacing an idea floated last week that the DIA would have to raise $100 million as part of the deal. DIA director Graham Beal has said that was impossible, given the $300 million the museum must raise in the next ten years to increase its endowment for the time when tax revenues from three surrounding counties, voted in in 2012, runs out.

A few details:

Said The Detroit News:

The main proposal under discussion is Snyder’s initial pitch a week ago to commit $350 million over 20 years to a fund to soften the blow to pensioners and protect the Detroit Institute of Arts, said House Speaker Pro Tem John Walsh.

“I haven’t heard anybody asking for more or offering less,” said Walsh, R-Livonia. “They are trying to work toward (a consensus plan) that we can take to our four caucuses and see what a vote might look like.”

Discussions center on how to fund the state’s potential contribution using tobacco settlement money or long-term bonding secured by state funds in the $250 million annual fund from the 1998 settlement with tobacco companies.

The Free Press noted:

As part of the deal, the DIA would be spun-off from city control into an independent nonprofit.

And:

Some lawmakers have said they want greater public access to DIA artwork around the state, and greater state control over how Detroit’s General Retirement System is managed as part of any agreement involving state money.

“I’d like to expose more people to that culture throughout the state,” [Senate Majority Leader Randy] Richardville said last week. “I would cheer that kind of effort.”

Under any deal, “the state is going to have some say-so,” Sen. Mike Kowall, R-White Lake Township, said last week.

So it’s not perfect, but the movement is encouraging.

End Of The Year Thoughts On Museums And Money

PAYARTFORWARD_bannerToday, and for the last week, I’ve been getting emails from museums and other non-profits asking me to give to the annual fund. Likewise, when I visit museum websites in recent days, many carry a banner asking for a hand. (In fact, I am surprised when I visit a website in these final days of the year that doesn’t ask for donations…). Here’s one from LACMA, cropped, at right.

This all reminded me that way back in March, I promised here that I would be back here elaborating on an article I wrote for the Museums section of The New York Times. And then I promptly forgot about it. In the article — Country Music Temple Stays in Financial Tune – I explored the business model of the Country Music Hall of Fame and Museum in Nashville. Year in, year out, the Hall gets some 80% to 90% of its budget from earned income.

What’s the applicability to art museums? The answer isn’t simple. A percentage anywhere near that high is clearly out of the reach of art museums, and rightfully so. Country music is a far more popular art form than museum-quality art — and the Hall does things that would not be acceptable at an art museum. And yet, given the economic turmoil of the last few years, which has dried up some sources of contributed income and government support, art museums must strive to maximize earned income. When money is needed, trustees generally push for museums to earn more before they reach deeper into their own pockets.

Pretty much everyone agrees that income is tied to attendance, which unfortunately leads to shows that directors tend to call “populist” but really mean “commercial.” That’s why we’ve had more exhibits lately like Jewels by JAR at the Metropolitan Museum*, which Roberta Smith eviscerated in her recent NYT review; and there have been plenty of others. 

So where does this leave art museums — which are criticized (including by me) when they do something too commercial and yet pushed to boost attendance as the be-all and end-all, the solution to money problems.

I’ve nothing against attendance, but it isn’t the whole solution. The “gate,” as we all know, provides a small proportion of earned income — though it does drive shop and restaurant expenditures. I agree with a point made by Kyle Young, the Country Music Hall’s director, in my March article, that “museums could be a lot more creative about the way they do earn money.” To a certain extent, that may mean — certainly at some museums — better management of costs. It may also mean negotiating better terms with restaurateurs (or managing in-house), selling more wine, changing operating hours, etc.

If that sounds impractical, I can only suggest a re-read of the article I wrote last January for The Wall Street Journal, about the financial model at the Peabody Essex Museum, in which director Dan Monroe laid out a vision that is nearly the opposite of the Country Music Hall of Fame. By 2018, the Peabody Essex expects to get 24% of its budget from earned income. Instead:

By 2017, when the campaign is complete, the Peabody Essex expects to finance 58% of its annual budget (projected at $35 million, up from $23 million in 2012) from the endowment. That compares with 25% in 2011.

I prefer the PEM model for art museums. But it means changing the mindset of donors. I hope that really starts happening in 2014.

Photo Credit: Courtesy of LACMA

*I consult to a foundation that supports the Met

Is This The Light At Tunnel’s End For DIA?

RickSnyderThe Detroit Institute of Arts issued a new statement about its predicament a short time ago:

 The Detroit Institute of Arts is pleased that the negotiations around the thoughtful and creative plan initiated by mediators Chief Judge Gerald Rosen and Eugene Driker continue to progress. The positive comments regarding potential state support by Governor Snyder (left) and other lawmakers will continue to provide momentum to the discussions. The DIA is actively engaged in these talks and continues to be optimistic about a positive outcome.

Which sent me looking for some good news from the Governor. About the only thing I could find was a statement from him printed in The Detroit News, which had an editorial board lunch yesterday with Snyder. It printed a summary of his comments, including this one:

On whether the state will contribute to a fund to protect the Detroit Institute of Arts: “It would be much more likely … if it were part of settling the case, if it really said this will wrap things up and not have to worry about a September deadline That’s a different story. I wouldn’t be close-minded to that.

While hardly definitive, that statement is a positive one. If you remember, a state rescue was what I had hoped for when I write my last published article about the DIA-Detroit bankruptcy. My fingers are crossed.

Meantime, I asked the DIA for clarification and will update if there is something more definitive. UPDATE — there’s no need to update; the statement above is what the DIA was referencing.