Museums look for university partners to put them on viable financial path
Despite all the hand-wringing about the long-term financial viability of higher education institutions, one group of institutions views universities as a rock-solid bet on which to stake their futures: museums.
And that’s likely because many of them face larger existential threats than their counterparts in higher education.
In the past few years, multiple museums and other nonprofit cultural institutions -- struggling financially in the wake of the 2008 recession -- have turned to colleges and universities for help, asking them to strike partnerships with or acquire them in a bid to provide financial sustainability.
The museum-university combination has a lot of upsides, proponents say. Partnerships can create new avenues for fund-raising and generate economies of scale. Museums get a financially secure partner that could help them remain viable. And universities get access to new human and educational resources to bolster their curriculums.
But such partnerships have drawbacks as well. The museums in question often lose autonomy when they become part of larger institutions, which can leave them neglected when leadership or priorities change. Such action also raises the question of whether universities, many of which haven’t exactly been thriving financially, are taking on dead weight when they acquire struggling institutions, and whether the resources they pour into supporting such partners will distract from other priorities.
The trend could also extend beyond the world of museums. Universities have recently taken on other types of nonprofits, including conservatories and independent research labs. Several administrators involved in such efforts said universities will increasingly become a home for nonprofit ventures that might not be able to survive on their own.
“Noncommercial arts will require the prestige and refuge of universities,” Bard College President Leon Botstein said when his college acquired the Longy School of Music in 2011. "It gives an imprimatur that an effort is worthwhile, even if it’s not profitable,” he said.
“Universities are ideally suited for these combinations,” said George W. Gephart, president of the Academy of Natural Sciences in Philadelphia, which became part of Drexel University in 2011. “They’re a more stable entity than many others we could choose and they tend to think about collaboration generally and comprehensively. “
A Tough Time for Museums
Ford W. Bell, president of the American Alliance of Museums, said the past few years have presented unusual challenges for museums. While museum attendance and ticket receipts increased during the recession -- as they often do in times of economic stress, since they present a relatively inexpensive entertainment option for families -- almost every other revenue stream has come under stress.
“Like all nonprofits, we were hit by the downturn that began in 2008-09,” Bell said. “There’s no question that that created a challenging financial environment. Government funding, which is always small, has decreased. People who made capital campaign pledges tend to stretch them out. People move to a lower membership category."
During recessions, arts and cultural institutions tend to take a larger hit than educational, religious and health care organizations, fund-raisers said. For many arts and cultural institutions, 2012 was the first year since 2008 that they saw fund-raising grow.
Even museums that attract large numbers of visitors have struggled to cover their operational costs. Earlier this week the Associated Press reported that Washington’s Newseum, which has drawn more than 4 million guests at about $20 per person since it opened in 2008, is struggling to cover its costs without dipping into the principal of its endowment.
For such reasons, there has been significant talk about museums partnering with universities, which are large enough to generate economies of scale on costs such as technology, purchasing and human resources.
The Manges Museum, unable to pay for upkeep of its collection, turned the collection over to the University of California at Berkeley in 2010. While UC-Berkeley was experiencing its own financial struggles at the time, administrators said the university was still in a better position to maintain the collection.
In July, 2011, the Textile Museum, in Washington, D.C., announced a partnership that would move the museum onto the campus of George Washington University. Museum and university officials said at the time that the museum was financially sustainable and balanced its annual budget, but that the partnership would create an opportunity for increased visibility, increased foot traffic and growth.
The Jewish Museum of Florida announced last year that it would become part of Florida International University. Like their counterparts at the Textile Museum, administrators at the Jewish Museum said a university partnership was one of the only ways to ensure that the museum could continue to grow.
This year the University of Maryland at College Park announced that it would explore a partnership with the Corcoran Gallery in Washington, which has been struggling financially for several years and looking for a partner. The gallery has been running operating deficits of about $7 million a year in recent years, and trustees had considered various options for moving forward, including selling the museum's home in downtown Washington.
Details of a potential partnership are still forthcoming, but Maryland administrators have talked about the possibility of using the museum’s location for alumni and fund-raising functions, as well as expanding the university’s offerings in art, art history and design.
Many universities operate museums and galleries that were created within them. A handful of mergers between museums and universities have occurred in the past, Bell said, including a merger between the Hammer Gallery and the University of California at Los Angeles in the mid-1990s. But for the most part, he said, the recent movement of museums into universities is new. “The sort of conglomerations you’re seeing now is a new phenomenon, driven in part by economic concerns about stability,” he said.
When Does it Work?
One of the largest moves in recent years was Drexel's 2011 acquisition of the Academy of Natural Sciences in downtown Philadelphia.
Gephart, who became president of the academy in 2010 and whose background is in finance, said part of the reason he was picked for the job was to help chart a new financial path for the institution after several years of struggle. The museum’s revenues were stagnant and administrators said they couldn’t see many other places to cut costs.
“This is a 200-year-old institution with a wealth of assets, but it has frankly an arcane business model,” Gephart said. “Not just in 2010, but with the shape of things to come, you cannot exclusively rely on philanthropy to fund success, certainly not in a region like Philadelphia where there’s a burgeoning number of well-intentioned and need-oriented causes.”
Gephart began to consider the idea of a partnership with a local university, a move that could generate new paths to revenues. He said he had a lot of standards for what he was looking for from a potential partner. He wanted a partner that was focused on science, one that could think about working with the academy in a comprehensive manner, and one that understood the region. He said he thought there were a handful of local institutions that could fit that mold, particularly universities.
The first person he reached out to was John Fry, who came into his job as president of Drexel University around the same that Gephart assumed his. The two began talks of a partnership, and signed a formal deal relatively quickly. Gephart said Drexel was the first and only institution approached. He said a partnership with Drexel was the first choice since the academy could offer Drexel something it did not already have: expertise in certain natural sciences.
The academy became a wholly owned subsidiary of the university, a 501(c)3 organization that files separate tax forms and maintains its own board.
Both Gephart and Fry say the process of incorporating the museum into the university has at times proven difficult, but that it has benefited both over all. The merger created a new biodiversity, earth and environmental science department within Drexel composed of 20 faculty members, including 13 academy scientists. The academy gets a new source of revenue in tuition from the academic department.
Drexel gained 13 faculty members -- seven of whom are already tenured -- in areas in which it did not previously have expertise, particularly environmental science and environmental policy. The university has already started offering courses in those areas. The affiliation has also opened up new potential co-op and internship opportunities for Drexel students.
The museum also cut its costs by about 5 percent as part of the affiliation with the university through shared services. Gephart said that some positions were eliminated, but that the academy was able to find jobs -- either inside the university or elsewhere -- for every employee who wanted one.
Gephart said the partnership with Drexel has been a boon to the museum’s fund-raising. “The merger gives us a new way to talk about ourselves in the present tense and an incredible opportunity to go out with a new strategic plan, a new story to market that’s about growth and investment, which is a stark contrast to the static experience of several years ago,” he said.
He said large donors who previously said they weren't going to donate to the museum anymore came back to offer support after the affiliation was announced. The Pew Charitable Trusts gave the partnership a $1 million grant to help cover transition costs.
The academy enrolled its first students in the biodiversity, earth and environmental science department last fall, with the expectation that the department will grow to enroll about 50 students annually in a few years. The university and museum are also exploring other potential programs, such as one in environmental engineering, Gephart said. (This paragraph has been updated from an earlier version to correct when the program began enrolling students.)
Gephart said the partnership works because both institutions recognize the benefit of being associated. “The best partnerships are the ones where each party can articulate what they need and what they bring to their partners,” he said.
The relative success of the model employed by places like Drexel raises questions about whether other types of struggling nonprofit institutions might find a home within universities.
Last month the Marine Biological Laboratory in Woods Hole, Mass., a previously independent research center, announced that it would begin an affiliation with the University of Chicago. In the release announcing the affiliation, the lab cited the fact that it had struggled financially and that the affiliation could provide a financial boost.
“The affiliation will bring new resources with the University’s help, including efforts to expand access to federal and private grants, cooperation in philanthropic efforts, and expansion of educational programs,” the release states. “The institutions also expect to realize some cost savings from administrative operations as the [laboratory] benefits from the University’s favorable insurance rates, financial strength, and high-performing investment management.”
And museum proponents say incorporating such additional structures into the university can help higher education institutions build public support, since they provide other avenues for community engagement. “A museum creates a unique portal to the public for the college,” Bell said, comparing museums to sports teams in their ability to attract unaffiliated individuals to campus.
And while museums might not be able to generate the same level of excitement as sports, they are also not as likely to bring major negative headlines and national media attention when something goes wrong.