Career Bets: Museum Directors and the Logic of Risky Capital Projects

The new san Francisco Moma

The new san Francisco Moma

Major donors often get excited by major projects like new buildings and new wings. It gives the wealthiest and most ambitious among them a chance to make something big happen for an institution or, for lesser mortals, a chance to be part of something big that's already happening. You can see why museum directors and development chiefs might like to tote around blueprints to donor meetings; what better prop for a big ask? 

But we've spent an extensive amount of time at IP arguing that expensive and risky capital expenses at museums can do far more harm than good. Such investments can lead to long-term deficits, a vortex of never-ending fundraising, and staff layoffs.

But we're mindful that the museum world is a complicated place right now, and simple polemics are risky. For one thing, attendance has lately been booming across the board, creating some counterintuitive news items. How, for example, can the Metropolitan Museum of Art report a $10 million general operating deficit after welcoming a record 6.7 million visitors?

A recent piece in the Observer surveys the museum landscape and surfaces a handful of key challenges moving forward. Let's look at a couple, shall we?

First off is the fact that while museums are spending more on programming, they're taking in less revenue per visitor. I can empathize with museum directors in this regard. After all, everyone from consultants to donors to philanthropy bloggers have consistently urged museums to open their wallets for exotic programming to boost audience engagement, especially on the digital front. But this stuff doesn't come cheap, and return on investment is hard to come by.

At the same time, there's only so much blood you can squeeze from a stone on the revenue side. Visitors have many options vying for their attention and a finite amount of disposable income. What's more, certain demographics—ahem, we're looking at you, millennials—don't even seem to like the arts at all anyway.

Well, perhaps that's not a fair assessment. Millennials, we are told, like the arts. They just want different kinds of arts experiences. "Increasingly, people are rejecting the artificial distinctions between art forms, as they want the participatory, interdisciplinary experience," said Salvador Acevedo, vice-president in charge of strategies for the San Francisco-based museum consulting firm Scansion. "Younger philanthropists also are demanding that kind of experience."

Compounding matters is the fact that funding from the usual sources—individuals, foundations, corporations and government grants—haven't been able to plug the gaps.

All of which brings us back to the perils of gap-inducing capital expenditures.

You'd think that persistent revenue shortfalls, expensive programming investments and insufficient donor support would dissuade museum directors from pitching that new multi-million dollar wing or renovation.

Evidence suggest this is not the case. The Observer lists over a dozen completed or in-progress expansion projects, many of which have been profiled here on IP, suggesting that directors, while aware of the risks involved with such projects, happily take the leap anyway.

Interestingly enough, the Observer piece floats the idea that one of the reasons directors take the capital campaign plunge has less to do with the financial interests of the museum and more to do with their own professional development.

"Expansions and erecting big new buildings appear to be part of the unwritten job description for museum directors," said Geri Thomas, president of Thomas & Associates in Manhattan. She noted that more and more museum directors have long-term visions not so much for their institutions but for their own careers. "These days, museum directors do things that demonstrate they are ready for the next position (at some other museum)," she said.

As cynical as we can be here at IP, that thought actually never occurred to us.