In a Surprise Move, the Metropolitan Museum of Art Is Looking to Its $3.6 Billion Endowment to Cover Costs

New York’s Metropolitan Museum of Art is extending
staff pay until May 2—a cost that could be covered by the museum’s
endowment.

Forecasting a budget shortfall of as much as $100 million, the
Met is looking into taking the unprecedented step of looking for
creative ways to use its $3.6 billion endowment reserves to pay its
expenses. “Our responsibility is to use that resource as we
are permitted to under the circumstances, and optimizing it where
we can. Specifically, we are reallocating existing endowment
resources for critical expenses,” the museum’s president, Daniel
Weiss, told Artnet News in an email.

While museums often draw a limited amount annually from the
interest their endowments generate, they also face a set of
restrictions about how the overall funds can be used, including a
state cap on how much can be legally withdrawn each year. (This
becomes more difficult when the value of the endowment drops with
the stock market, pushing up the proportion a museum might draw.)
The endowment is also not just a single fund—it is made up of
numerous kinds of gifts, some of which carry restrictions from the
donor about how the funds can be spent.

But even the suggestion from the Met is likely to be closely
watched by other museums, who are looking to the institution for
leadership on how to weather the crisis. The Met was the first
major museum in the US to announce that it was closing its doors, on March
12, with institutions across
the country quickly following suit as lockdowns took
effect.

It quickly became clear that the closures would not be a
short-term arrangement—and that the financial impact could be
devastating. “Even with our substantial endowment, we are
nonetheless greatly diminished financially at a time when we cannot
generate any of the revenue from admissions, membership, dining,
special events, and retail that normally constitutes 30 percent of
our annual income,” wrote Weiss and the Met’s director, Max
Hollein, to staff yesterday in an email obtained by Artnet
News.

“Our anticipated losses in revenue and new challenges in
fundraising cannot simply be replaced by drawing more from our
endowment. This is because of legal requirements governing how
endowments may be used,” the email continued, “[but] we are
capturing all of the support we possibly can from this precious
resource.”

Now, with the museum in all likelihood staying shuttered until at
least July—and with reduced tourism and consumer spending
predicted to extend into 2021—the Met has limited options for
continuing to pay its 2,200 employees, a figure that includes its
unionized security and maintenance workers, some of whom are still
on the clock keeping the collection and building safe.

The Met’s union, Local 1503, has negotiated for
time-and-a-half hazard pay for those essential workers still on the
premises, and has guaranteed there will be no layoffs for its
members through the end of April.

“Everyone has their job, their salaries, and medical insurance!
Everyone will continue to be paid,” the union said in a message to members.

At least one Met staffer who is not in the union is crediting
the Local 1503 negotiations for helping protect the jobs of others
at the museum. (Originally, the Met had committed to paying staff
only until April 4; that date has now been pushed to May 2.)
“Please send them my thank you,” one employee told the Art + Museum
Transparency Twitter account. “I’m
confident that this new deadline is due to their collective
efforts.”

But as the Met looks to stretch its resources ever further,
extending payroll without making cuts will become increasingly
difficult in the future. And tapping the endowment can have
deleterious effects in the long-term.

“No endowed organization that loses its revenue can spend down
its endowment without limitation since spending from it today has
to be balanced against preserving it to support operations
tomorrow,” said Weiss and Hollein in the email.

Despite its dire circumstances, the Met, as the nation’s largest
museum, is well positioned to get through the current storm. With
aid from the federal
government falling far short of what museums had called
for, it is looking increasingly likely that many smaller
institutions may not be as fortunate. And even for those that have
the resources to get through an extended closure, the financial
effects will continue to be felt for years to come.

The post In a Surprise Move, the Metropolitan Museum of Art
Is Looking to Its $3.6 Billion Endowment to Cover Costs
appeared first on artnet News.