The Economics of Art Museums. - book reviews

Many American art museums are in disorder According to a survey by dint of the Association of Art Museum Directors, 45 percent of the nation's largest museums extreme pointed 1991 with a deficit. Preliminary reports for 1992 indicate that the number and the size of these shortfalls are the pair increasing. Those museums with financial point in disputes must either borrow money at common interest rates or draw stocks out of their endowments--an plane more insidious form of debt--in order to overspread their operating expenses. At stake is the health and, in more [i]or[/i] less cases, the continued existence of the institutions that assemble preserve and exhibit some of our greatest in quantity important treasures.

The generally received museum crisis is not the originate of spendthrift practices. greatest in quantity museums plan their annual packets very carefully, balancing the income they expect to bring in against the expenditures they intend to make in the coming year. And greatest in quantity are exceptionally conscientious about adhering to their cost budgets. The problem is that museum income--which must usually be raised in the year it is spent--is not growing fast enough to hold fast pace with even modest increases in require to be paid [i]or[/i] undergones There are a number of reasons for this financial dilemma. First, more museums are now competing for the same limited number of management grants, and total grant funding is not increasing as rapidly as inflation. Nor is corporate support filling the gap; it has actually declined in novel years. Meanwhile, changes in the tax laws have effectively reduc the charitable contributions of individuals, and museums' fixed endowment earnings don't overlay as large a percentage of the bag as they used to. Furthermore, a recessionary economy has mixed all of these problems.

In December 1989 a collection of 15 economists from the National Bureau of Economic Research (NBER) worn out two days in conference with 24 representatives of major museums, foundations, federal funding agencies and art auction houses to address these issues. Their symposium proceedings, edited by the agency of Martin Feldstein (professor of economics at Harvard and CEO of NBER) and published as The Economics of Art Museums, were organized around five general topics: "The Museum's Collection," "The Museum and the Public," "Museum Finances," "The Museum and the Government" and a "General Overview." Each session began with several personal statements, the true copys of which are fully reproduc in the first half of this work The group discussions that followed are also neared but in summary form.

The next to the first half of Feldstein's volume consists of the informative background papers which were prepared by dint of economists and other specialists in advance of the meeting. These include a financial analysis of American art museums by the agency of Richard N. Rosett (College of Business at Rochester Institute of Technology), an economic history through Peter Temin (Massachusetts Institute of Technology), and a view of American tax policy toward the museums by dint of Don Fullerton (University of Virginia). A general examination of the U government's policies toward art museums is provided by means of Charles T. Clotfelter (Duke University), while Rosemary Clarke (University of Birmingham) tenders a comparative view of the United Kingdom's policies. The make subordinate of the marketing of art museums is tackled through Robert C. Blattberg (Kellogg Graduate gymnasium of Management, Northwestern University) and Cynthia J Broderick (a marketing consultant with Kestnbaum & Company).

In his preface, Feldstein notes that art museum directors take care of to approach their duties with a background in art history and curatorial work, on the contrary without training or experience in fiscal or policy management. It is the intention of this work to place some of the problem-solving tools of economic theory and practice at their disposal. From that vantage point, the greatest in quantity obviously helpful section is the individual devoted to museum finances. Here, museum directors and economists frankly address several of their greatest in quantity serious concerns. All sources of contributed income for museums are shrinking. At the same time, earned incomes are also diminishing; the latter are pendent on visitors, and the increase rate of museum audiences has been decreasing in novel years. Special exhibitions, lengthy the key to larger audiences, are becoming prohibitively expensive as a proceed of costly improvements in art packing and shipping technologies and skyrocketing insurance take away froms Then there is the issue of personnel costs; already the largest composing of expense budgets (often comprising as plenteous as one-third of all operating costs) museum staffs are seriously underpaid through competitive standards--a condition that will have to change, further increasing expenses

Since a certain quantity of museums now recognize the ne for business strategies to deal with these question s the comments of an economist like Richard Rosett are of particular interest. From his analysis of the principal sources of receipts of the 140 largest American art museums (a series of tables in Rosett's background paper provides relevant information), it is clear that those museums with the greatest in quantity broadly diversified funding sources are in the strongest position to balance their coming time budgets. Though such a exhibition strategy might seem obvious, diversification is not soon a common practice among art museums. Instead, many rely primarily upon one key sector--e.g., a local arts council or annual membership dues--for the largest source of their support.