Since late September, when rumors of the museum’s financial troubles first surfaced, speculation has been rampant. As of Nov. 19, communication from the Board of Trustees to the public and to the museum’s membership has been nonexistent—with the exception of the Nov. 12 press release announcing the grant from the City. Press coverage indicated the most basic facts. The museum’s staff had been laid off and the current show would continue for two more weeks unless additional funding was secured, according to an Oct. 5 Los Angeles Times story.
Understandably, providing public comment when options are being considered and negotiations are incomplete requires prudence. However, the secrecy that has shrouded the museum’s Board of Trustees over the past two months appears to reflect a bunker mentality and a lack of trust in the museum’s membership and surrounding community. Surely the board could have found some way to communicate with the museum’s membership the seriousness of its position without jeopardizing negotiations that were underway. Why? Because the museum is a public trust; it should operate with transparency. The goodwill of the membership and the credibility of the board are at stake.
A number of local artists and museum members have privately expressed frustration with the board’s lack of communication. As one artist and independent curator, who wished to remain anonymous, put it, “So few real, quality opportunities for artists exist, especially in this area. The prospect of losing this one is profoundly disheartening.”
When the museum opened nearly three years ago, it was to a sense of excitement and optimism. But the trustees may well have turned a blind eye to the potential difficulties of the museum’s financial situation. The original business plan called for a $1 million annual operating budget and a $3 million endowment. One local nonprofit administrator commented on this plan as “overly optimistic.” Although this is largely a moot point, since the board never funded the endowment at any level, even a $3 million endowment would have been vastly inadequate. At a spending rate of five percent—the highest rate that would allow the endowment to retain its value long-term—would have generated only $150,000 annually, which is a small fraction of the projected expenses.
As early as one year ago, there were indications of financial problems. In September of 2008, when the Times reported a promised $10 million dollar gift to the museum, it also reported statements from trustees that the museum was “‘living hand to mouth.’” Board Chair Frank Chabre was quoted saying that the museum’s endowment was entirely unfunded. In the same article, Chabre also indicated that the museum had a “‘cash flow problem . . . We need a reserve for slower times.’”
Whether the museum survives long-term depends now largely on the Board of Trustees. And if the museum is to survive, the board must do the very difficult work of raising funds, not only for the short-term to keep the museum’s doors open during the coming year, but also for the long-term. They must address the arduous task of building an endowment. One wonders whether the better course would have been to postpone the museum’s opening nearly three years ago, in favor of conducting a five-to-seven-year campaign for the museum. It would not have been a particularly sexy idea. And therein lays the problem. Will we be reading the same story a year from now?