Legacy Institutions Table Big Capital Projects and the Donations Pour In. A Coincidence?

The Met. photo: njene/shutterstock

Back in October, David Geffen lashed out at New York City's monied class for failing to support the renovation of the New York Philharmonic hall named after him.

At the time, I argued that his complaints may have had less to do with New Yorkers' overall stinginess and more to do with donors' stinginess regarding his pet project. The orchestra has run deficits for most of the century. The cost of the renovation had ballooned to $500-800 million. And the track record of massive capital projects across the past few years has been dubious at best.

Can you really blame New Yorkers for sitting it out? What's more, wouldn't donors be more amenable to a high-risk capital project if the organization had its financial house in order before launching a massive fundraising effort?  

It certainly seems like a reasonable expectation, and recent news out of the Big Apple suggests it may be catching on among the city's donor class. A few months after Geffen's tirade, the philharmonic's new president and chief executive, Deborah Borda, announced $50 million in new donations. Ms. Borda, according to the New York Times, has "pushed the Philharmonic to rethink the costly and disruptive plans to rebuild its Lincoln Center home."

Meanwhile, the Metropolitan Museum of Art announced that trustee Florence Irving and the estate of her husband, Herbert Irving, a co-founder of the food services giant Sysco Corporation, gave the museum $80 million.

The Met, as you may recall, delayed a $600 million capital project earlier this year after failing to secure a lead gift. Since then, according to Daniel H. Weiss, the Met’s president and chief executive, the museum has been able to increase revenue, reduce costs, boost transparency, and improve communication between the administration and the staff.

In other words, two cash-strapped legacy institutions, within the same week, announced impressive gifts after shelving controversial capital projects and streamlining its operations. Coincidence? Not if you believe that donors vote with their pocketbooks.

Lifelong New York Philanthropists

Borda, who quintupled the L.A. Philharmonic's endowment during her 17-year tenure there, would not identify the "longtime supporters" behind the New York Philharmonic's $50 million windfall. Perhaps she's trying to shield them from a still-seething Geffen. (Just kidding!)

Much more is known about the donors behind the Met gift.

Herbert and Florence were born in Brooklyn and married in 1941. Herbert got his B.A. and M.A. from UPenn and co-founded Global Frozen Foods, a frozen foods distributor for the greater New York area. In the late 60s, he helped form a distribution network that became Sysco Corporation, whose 2016 net income hovered just above $50 billion.

Herbert stepped down from the Sysco board in 1994. An avid art collector and longtime supporter of the Met, he passed away last year at the age of 98.

The Irving bequest, the largest financial gift to the Met in recent history, will establish an unrestricted art acquisitions endowment fund, as well as several endowment funds for the department of Asian Art. An endowment will also support the Florence and Herbert Irving Galleries for South and Southeast Asian Art, named by the Irvings in 1994. In 2004, the museum designated the Florence and Herbert Irving Asian Wing.

Another big recipient of the Irvings' largesse has been the New York-Presbyterian Hospital/Columbia University Medical Center. The couple began donating to the hospital in the late '80s and had given around $300 million prior to Herbert's passing.

The Met announcement was paired with a $700 million bequest from the Irvings to the hospital to advance research and clinical programs for cancer treatment.

Death and Capital Projects

Which brings me back to the philharmonic and the Met.

Do recent developments suggest that both organizations have seen the light and will indefinitely table costly capital projects in exchange for less risky priorities? Not exactly.

When asked if the $50 million infusion would postpone fundraising for David Geffen Hall, Borda said the gifts would actually strengthen the philharmonic's position by getting its house in order first. "It positions us to move ahead on the rest of the capital campaign," she said. 

As for the Met, the wing renovation project remains on the backburner. That said, Weiss has an eye on its Breuer building, which houses modern and contemporary art. The brainchild of billionaire businessman Leonard Lauder, the Breuer was part of the Met's initial $600 million renovation plan, and has been an unqualified success since its opening in March of 2016.

The big question for Weiss moving forward is what to do when the Met's eight-year lease on the building is up. "If we continue beyond eight years, we want to have a sustainable operating model, and we haven't done that yet," he said. "We’re now looking at how to do that more efficiently. There is a significant amount of fundraising involved."

Bottom line? T0 paraphrase Ben Franklin, there are two certainties in the nonprofit museum fundraising world: Death and capital projects.

The latter will remain an integral component of a museum's strategy to grow, excite donors, and engage and the public at large. This won't change anytime soon. What has changed is the environment within which organizations plan, promote, and execute such projects.

The Pendulum Swings

As previously noted, the New York Philharmonic has been in the red for quite some time. The Times called its finances "shaky." Yet that didn't stop its leadership from launching a capital project whose budget ballooned to three-quarters of a billion dollars.

Nor did the Met's yawning budget deficit, which forced it to lay off 34 employees in 2016, prevent it from it from delaying its $600 million renovation project. (Indeed, it wasn't until the Met's annual debt was approaching $40 million, in addition to an outstanding museum bond for $250 million, that it pulled the plug on the project.)

Those were heady, freewheeling days. So much so that at the time, I wondered if New York's collective $3.47 billion capital project gamble would actually pay off.

Two years later, the results are in, and the answer, at least for the philharmonic and Met, is "not exactly." Neither organization could secure a transformational lead gift, and while no two projects are the same, both organizations eventually discovered that the ground beneath them had shifted.

The philanthropic landscape now finds more arts donors concerned about measuring impact, backing activist arts projects, and engaging disenfranchised audiences. Donors may still be inclined to support bold capital projects, but they do want the organization to have its financial house is in order. Donors also want the organization to be out in front of these timely, socially driven challenges.

The New York Philharmonic and the Met understand this.

Earlier this year, we reported that Lincoln Center is doubling down on arts equity through Lincoln Center Education and its Lincoln Center Cultural Innovation Fund, which aims to boost participation in cultural opportunities in the diverse neighborhoods of Central Brooklyn and the South Bronx.

Meanwhile, the Met recently partnered with the North Carolina-based William R. Kenan, Jr. Charitable Trust and other New York City organizations to explore how arts-based organizations can serve as "positive, relevant, and inspiring forces in the daily lives of diverse communities." 

In short, overdue fiscal prudence and accelerated social outreach may explain why the New York Philharmonic's Borda, a mere three months after Geffen's outburst, quickly raised an impressive $50 million and why the Irvings gave $80 million to the once-beleaguered Met.

"We’ve made really good progress," said the Met's Weiss, adding that the museum had stabilized over the last nine months and that "the community is in a much better place." 

Donors to the philharmonic and Met seem to agree.