Soaring in Art, Museum Trips Over Finances

Monica Almeida/The New York Times
The Museum of Contemporary Art in Los Angeles faces a financial crisis that threatens its survival as an independent institution.

By EDWARD WYATT and JORI FINKEL
Published: December 4, 2008

LOS ANGELES — When this city’s Museum of Contemporary Art appointed a classically trained curator from the Art Institute of Chicago as its director in 1999, many viewed it as a welcome sign that art rather than business would be kept at the forefront of one of the most dynamic museums in the country.

They did not know how right they were. Nearly 10 years later, the museum remains internationally renowned for its collection of postwar art and for organizing some of the most serious and ambitious contemporary art exhibitions anywhere.

Yet by putting art ahead of the bottom line, the Museum of Contemporary Art has nearly killed itself. The museum has operated at a deficit in six of the last eight years, and its endowment has shrunk to about $6 million from nearly $50 million in 1999, according to people who have been briefed on the finances.

Now the California attorney general has begun an audit to determine if the museum broke laws governing the use of restricted money by nonprofit organizations. And local artists, curators and collectors, including current and former board members, are lobbying to remove the museum’s director, Jeremy Strick, its board, or both.

The museum’s tailspin has brought an outpouring of grief and disbelief in a city that has recently cast itself as a rival to New York as the nation’s art capital. The closing of such a respected museum, or even its merger into another institution, would leave a formidable hole not only in the city’s psyche but in the national cultural landscape as well.

“The museum has a very significant role beyond the culture of Los Angeles,” said Connie Butler, a former curator there who is now chief drawings curator at the Museum of Modern Art in New York. “People in the art world feel they are going to wake up one morning and one of the greatest resources in terms of contemporary art in the Western world is going to be permanently altered.”

Museum officials say they expect a solution to the crisis by the end of the year, if not by the next board meeting, on Dec. 16. A possible merger with the Los Angeles County Museum of Art has been discussed and is supported by some trustees, although the museum’s official position is that it wants to remain independent.

Eli Broad, the billionaire philanthropist who frequently plays the role of Medici here, offered $30 million last month in support of the Museum of Contemporary Art, on the condition that half of it be matched by contributions from other donors. So far, no other donors have stepped forward.
Museum officials would not agree to be interviewed for this article or to discuss the scope of the state’s audit. In written responses to questions, the museum said it was “pursuing and assessing all of its options,” including talks with Mr. Broad and with the Los Angeles County Museum of Art about possible partnerships. “Central to all these discussions is MOCA’s commitment to its core mission,” the museum said.

Part of its challenge may be that the very people who are considering the museum’s options include those who oversaw its decline. One of the board’s two co-chairmen, Tom Unterman, for example, has served on the board’s finance committee for the last eight years and was finance chairman the last three. David G. Johnson, the other co-chairman of the board, was previously head of its governance committee.

“It’s obvious that there needs to be new management,” said Jane Nathanson, a member of the boards of both the Museum of Contemporary Art and the Los Angeles County Museum of Art. “MOCA needs to look deeply into the way it has functioned and move forward to rebuild the reputation of the museum.”

Some trustees have departed in recent years, frustrated with what they called the museum’s financial recklessness and lack of leadership. “I saw the train wreck coming,” said Susan Nimoy, a collector who left the board in 2006 after pushing hard, she said, to bring the budget in line with available money.

“My main complaint to the board was that none of you would run your household budget the way this institution is run,” Mrs. Nimoy said. “I think every one of those trustees should resign and Jeremy should resign.”

The museum was founded in 1979 by a corps of collectors after the demise of the Pasadena Art Museum left Los Angeles without a major museum dedicated to modern or contemporary art. The city agreed that if the founders could raise $10 million for operating costs, it would help pay for construction of a new museum downtown.

While the building was in development downtown, a nearby city warehouse was renovated for use as a temporary home. It opened in 1983, three years before the main building was completed on Grand Avenue. (The warehouse, known as the Geffen Contemporary, remains in use, and the museum also maintains a small gallery at the Pacific Design Center in West Hollywood.)

Dean Valentine, a media entrepreneur and former museum trustee, described the museum as central to the city’s becoming a major cultural center. “For many artists in Los Angeles, it was the first institution that expressed interest in their work,” Mr. Valentine said, comparing its importance for West Coast artists to that of MoMA in New York for the Abstract Expressionists some 50 years ago.

Historically, one problem dogging the museum has been the lack of a proper home for its permanent collection, which features early work by John Baldessari, Ed Ruscha and Robert Rauschenberg, among others. The Grand Avenue building is considered too small by today’s standards while the larger Geffen Contemporary lacks necessary climate controls to preserve art.

“It’s a source of frustration for many of us,” Mr. Valentine said. Like Mrs. Nimoy, he left the museum board in 2006, unhappy with the leadership; both have since joined the board of the Hammer Museum here.

Given its financial crisis, the Museum of Contemporary Art has announced plans to close the Geffen for six months next year and is promoting the location online for rental to film crews.

According to its financial statements, the only time in the last seven years that the museum has managed to finish with a surplus was in the 2007 fiscal year, when its revenues topped expenses by $3 million. But much of that surplus came from a gain on the sale of investments; admissions and membership revenues had declined, and the budget surpassed $21 million, the highest ever.

The museum said it expected its audited financial statements, once completed, to show that it generated a surplus in the 2008 fiscal year as well, although it declined to provide details.

Yet in nearly every year since 2000, the museum has drawn down on the principal of its endowment to pay for operations, a practice frowned upon as risky in the museum world.

And at times the museum has secured financing for exhibitions in ways that many other museums would shun. To help pay for last year’s Takashi Murakami exhibition, the museum solicited hundreds of thousands of dollars in donations from art galleries that represented the artist and therefore stood to gain from any related career boost.

The museum said in a statement that it recently bolstered its ability to raise money, hiring a new director of development and nearly doubling its donations in the last two years. It noted that in the last seven years, 20 of the board’s 40 members, including life trustees, have given more than $1 million in addition to their required annual gifts.

But others say the reluctance of potential donors to respond publicly to Mr. Broad’s offer of matching money stems from a lack of confidence in the museum’s stewardship.

Meanwhile, his rescue plan has stirred concern that Mr. Broad will try to call the shots at the Museum of Contemporary Art, as he did while a trustee there in the 1980s, before a rift led to his departure. Some potential donors have said privately that his role as a major benefactor of the Los Angeles County Museum of Art would give him too much power if he were to lead the rescue of the Museum of Contemporary Art.

In an interview this week, Mr. Broad offered details of his plan, saying he would give the museum $15 million in installments equal to however much the museum raised, plus $3 million a year for five years to pay for operations and exhibitions.

Mr. Broad has also said privately that he favors a management change, according to people who have been part of the discussions. Although the museum does not receive direct city financing, its main buildings were financed by or leased from the city. Eric Garcetti, who as president of the Los Angeles City Council is a nonvoting member of the museum’s board, said, “There does seem to be a consensus forming that new leadership should be brought in to run the museum, that the board should be reinvigorated and there should be a paring down of the budget.”

“I believe,” Mr. Garcetti said, “that the public deserves more reassurance that an institution that the public helped fund will be held to a higher standard