In a Surprise Move, the Metropolitan Museum of Art Is Looking to Its $3.6 Billion Endowment to Cover Costs
The museum has extended pay for employees through May 2.
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face a set of restrictions about how the overall funds can be used, including a state cap on how much can be legally withdrawn each year.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.
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