Late last week Peter French, chief operating officer at Brandeis University, spoke to Judith Dobrzynski at Tina Brown’s website The Daily Beast. In that conversation he offered a more detailed picture of the Brandeis financial predicament than anything we’ve had so far from the school beyond “trust me, it’s bad”.
We’d heard before that, no surprise, the school’s endowment has dropped, like everybody else’s, in their case about 25% over the last six months. The numbers from French are that it’s $530 million now, down from $712 million last June, and expected to decline somewhat again this year. (At a campus meeting with students last week, French gave further details. He said that he expected the University to exhaust its $100 million reserve fund by fiscal year 2010-2011 and didn’t expect to be able to draw on its dwindling endowment until after 2012. He projected a shortfall by 2014 of $23 million.) In all, says French, the school now faces a $79 million deficit over the next six years. And under Massachusetts law, he says, the school can only spend income and capital gains. It can’t invade the original capital.
French also says that before deciding to close its Rose Art Museum, the school made “an emergency appeal to donors”. But as I surmised last week, that would be a tricky undertaking, because some of the biggest Brandeis donors, like Carl Shapiro and his wife Ruth, had seen both their family and foundation money, hundreds of millions of it, sink into the vasty deeps of the Bernie Madoff illusion. This isn’t to say that the Madoff disaster is what set off the Brandeis problem, but obviously it narrowed their options going forward.
Her interview with French seems to make Dobrzynski more sympathetic to the Brandeis argument — if not to the argument that it should monetize the Rose collection, at least to the argument that the school is in deep waters. But over at Portfolio.com Felix Salmon, who usually argues that museums should be allowed to sell their art when they need money, turns out to be skeptical that Brandeis needs to trash its museum. He points out the legal doctrine of cy pres, “whereby state attorneys general can bend the laws binding endowments in order to prevent the entire institution from failing.” Salmon returned to that argument again this morning.
In other words, if the Massachusetts attorney general can be prevailed upon, and if it’s within her power, it might be possible for Brandeis to spend from its endowment principal for a few years. An extreme measure, to be sure, but as the economy recovers the funds can be replenished. Meanwhile, selling whatever portion of your art collection is a permanent setback, Once the art is gone it’s gone for good. As for closing the entire museum, that inflicts immeasurable — and irreparable — harm not only to your student body generally but especially to your art history students.
Meanwhile, what does all this mean for the museum association rules meant to discourage museums from selling art from their collections? Brandeis is presumed to have decided simply to close its museum in order to get around those rules and have a free hand to sell what it pleases. To some people this whole sorry episode suggests that museum association rules are such a hassle they will just encourage schools to trash their museums entirely rather than answer to anybody’s code of ethics. But what it still demonstrates to me is how important the rules remain, especially for campus museums, because in times of trouble university trustees and administrators will always be tempted to look at their museums as giant piggy banks, with lots of very valuable, very portable assets. (By comparison, it’s not that easy to sell your cyclotron — not that Brandeis has one.) If there’s no defensive perimeter, no way to penalize museums that sell, in no time they’ll all do it. And when they do, more often than not —much more often than not — their public works will fall back into private hands. Because when art is sold at auction, other museums can’t usually afford to buy it. (And yes, I’m fully aware of the forthcoming Crystal Bridges Museum, one of the few that buys much these days, because it’s basically a purchasing operation for Alice Walton, of the Walmart fortune.)