Wednesday, October 21, 2009

Cleveland Museum Donor Intent Correction and More Thoughts

I should have known that anger was making me write my two Cleveland Museum posts too fast. The general violation of donor intent, is still very bad but their actions are considerably better than I stated.

First the facts---- The museum, (at this point)is not actually selling any works in it's collection to pay for it's expansion.

"To be able to proceed, the museum has chosen a highly unorthodox way out of its quandary. It has gone to court for permission to draw up to $75 million over 10 years from the interest paid out on two endowment funds and two outside, restricted trusts for acquisitions. A decision is expected by the end of this month."

Now my thoughts.

Dropping the morality of violating, donor trust, lets look at what they are doing.

Basically, the museum's leadership is taking a very high stakes gamble that by expanding the museum's size and profile, it can draw in enough visitors and supporters to secure it's fiscal health. An interesting and honestly, plausible theory. Companies and private individuals take chances like that all the time. (they used to do it with their own money) This is a major museum, with core collections in areas like Asian art that might very well attract a lot more people.

The big problem here, is that none of the people involved in making this gamble have real "skin in the game".

How high is the risk? Pretty damn high! They are planning to double their size while at the same time shrinking the endowment cushion set aside to support the museum's operating expenses in a state suffering near depression conditions. If they can barely swing the expansion costs what are the chances they can cover the costs of operating a much larger institution?

Now, let's look at the incentives these people are operating under.

Heads the gamble works and they get to play around in a much larger institution and raise their career profile. Will they get higher salaries for running a bigger place?

Tails--- it ain't their problem.

In fact, one of the main actors, Timothy Rub is scheduled to take up the directorship of the Philadelphia Museum, leaving the people of Cleveland with the risk he took on.

Here's my personal take. The institution is really engaged in an act of economic terrorism. Behind their decision is the same twisted logic that gave us the financial crisis- an attempt to secure their power by becoming "too big to fail".The funds for a somewhat more modest and rational expansion had been raised already. moreover, Cleveland is a city with tons of empty and underused warehouse and industrial buildings that might have been adopted and reused at what might have been a great savings making the city an example of innovative fruagilty instead of irrational waste.

The bigger they get, the more risks they take, the greater the impact they have on the Cleveland region; the greater chances are that people or more accurately politicians will ever allow the full impact of a screw up to be felt.If this thing blows taxpayers small businesses and any non profit without their profile will bear the costs.

Directors of non profits and politicians like Tom Murphy should be made to put some real skin in the game and be made to pay financially for the long term consequences of their decisions.

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