Counting on being "too big to be allowed to fail"

Two high-profile arts non-profits on the East Coast are right now engaged in a familiar sort of public brinkmanship, with a distinct odor in both cases of "save us from ourselves."

Having worked in big-city regional non-profit theater myself I was quite startled to learn that the Paper Mill Playhouse in New Jersey is on the verge of collapse. (I'm actually familiar with a couple of the principals involved, since both the departed CEO and the current managing director were hired away in recent years from major Chicago theater companies.) The Paper Mill has long been a poster child for robust successful suburban repertory theaters; twenty years ago they led the nation with a whopping 45,000 subscribers.

So the state they've fallen to is pretty startling: fewer than 20,000 subscribers now (which is a far more drastic falloff than the general national trend), and a budget for the current season which depended on increasing annual fundraising by almost $3 million in one gulp. They're now in so many words daring legislators to let the "official state theater of New Jersey" collapse, with perhaps predictable results.

There's nowhere near enough information in the media coverage to be clear on how this situation came to pass for Paper Mill, but a quick glance at their tax returns on Guidestar does support what Playbill wrote, that "the board at Paper Mill has either not had the ability to get outside contributions or has not seen the need due to the once-high subscribership." It's hard to see that as anything but seriously negligent in a society where per-capita individual contributions for the arts quintupled after inflation from 1964 to 2004.

Meanwhile in Miami, the mammoth Carnival Center for the Performing Arts which opened to huge fanfare only last October is apparently already in financial free-fall. The thing appears to have been a financial Potemkin village actually: a half-billion dollar multi-facility arts complex that opens with zero endowment? For which the pro formas assumed operational profitability from day one? Almost no onsite parking (in South Florida??), and the operating budget didn't include the cost of stagehands? Surely no one with any experience running an actual arts center (or a service-sector business of any kind) was in charge of the planning on this thing.

All the bailout scenarios being discussed are fairly gruesome but they include at least one that's fairly innovative: blackmail the city's major newspaper. Quoting from that article in the area's business newspaper: "The Miami Herald...has a contract to sell its land around the center for $190 million, but the unsold land's value would plummet if the center shut down. Because the land's value soared about $180 million as the center rose nearby with the Herald's strong editorial push, the paper could protect its holding by handing the center, say, 10% of the gain the center caused." The paper does seem to have been covering the center's problems reasonably bluntly, anyway. And what a fine mess it is.

U.S. museums are bursting out all over

The American Association of Museums' new annual "state of the sector" report has spurred some media coverage of a building boom now underway. It's not clear whether the trend cuts across all sizes among the estimated 17,500 museums in the U.S., but the big ones at least seem to be merrily satisfying their edifice complex.

Major museums are adding on in literally dozens of cities; a number of new wings or buildings opening now were first planned in the 1990s economic boom. The mix of public and private funding for the capital projects seems to vary widely, which is also true with the operating finances of museums.

The obvious question here is, can the sector afford to operate all this new space? I notice that most of the capital-fundraising campaigns now seem to include new endowments to cover overhead, so somebody has learned something. Still the question of whether the building boom represents supply appropriately rising to meet demand seems unanswered: the Association press release doesn't seem to provide long-term trend data on things like museum attendance and revenues, and data sources like Giving USA don't specifically aggregate museums as a category. (The press release does repeat the non-profit sector's autocomplaint about reduced public funding having forced an increased reliance on private fundraising, but the statistics they offer don't actually support that statement so I dunno.)

How NOT to deal with a $20 million donor

The wire-service story seems clear enough:
MIAMI, Nov. 10 (UPI) -- A medical entrepreneur has withdrawn a promised $20 million donation to the planned Florida International University medical school.

Herbert Wertheim, a former optometrist [and a university board member for nearly 20 years] , said that Florida International University President Modesto Maidique hurt his feelings by saying he was getting the medical school named after him "on the cheap," the South Florida Sun-Sentinel reported. Wertheim has also resigned from the board and has asked that the name of the school be changed.

The dispute, which appears to have ended a long friendship between Wertheim and Maidique, began with a disagreement about structuring the gift. After promising a lump sum, Wertheim said he needed to change that to 26 months of installments for tax reasons and was told that a lump sum was needed to get a matching grant from the state. "Most offensive to me was your comment that I was given the naming rights of the medical school 'on the cheap,' and that you could now get $100 million for it," Wertheim wrote Maidique. "After we finished speaking, I felt hurt, empty and disappointed."

[Yea, that's not really the feeling one hopes to leave behind from a call with a longtime major donor to one's organization is it?. Methinks the rest of the university's board might soon be making President Maidique feel "hurt , empty and disappointed".]