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Arts and Culture

New York Arts Institutions in Jeopardy

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Posted on Aug 4, 2009

The Metropolitan Museum of Art in Manhattan is resorting to major cutbacks after its endowment dropped precipitously last winter.

The economic downturn has been rough on countless industries, and arts organizations in New York City that rely on endowment money to survive have been hit hard—not just, as City Journal’s James Panero points out, by the immediate effects of the meltdown felt round the world, but also by the “indirect effects” of how some of their funds have been managed.

City Journal via Arts & Letters Daily:

“All of the charities, all of the institutions lost money, but they didn’t have to lose 25 to 40 percent,” says Frank Martucci, a financier who has sat on several arts boards and opposed their aggressive strategy. “Why weren’t there some down only 10 percent? If you are all sharing the same strategy, it’s not really a diversified approach. Advisors are all pretty much the same. They tell you 10 to 30 percent in bonds and the rest in private equity, stocks, foreign securities, distressed securities. There are times you take your chances, but with charities I don’t think you ever do, and putting 85 percent of your money in equity and illiquid instruments is gambling. I hope this has taught people to be more conservative in their approach towards charity.”

Martucci advocates an eventual shift in endowment allocation to 40 percent to 50 percent in conservative fixed-income investments and the rest in equities—and only 5 percent to 15 percent of that in alternative investments. He also suggests that arts endowments move away from relying on active management and use volunteer board members with financial expertise to oversee investments, which can largely be maintained through bond index funds. “Managers of managers are like funds of funds,” says Martucci. “You can end up paying fees three times over.”

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Leefeller's avatar

By Leefeller, August 9, 2009 at 11:50 pm Link to this comment

Our community Health Clinic is closing its doors on 21 Aug, some people do not seem to want change, but it is happening anyway.

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By dobby, August 7, 2009 at 6:13 am Link to this comment
(Unregistered commenter)

At some point, the leadership of these museums and non-profits are going to have to have their compensation packages cut.  Their boards have pulled them over to the Wall St. elite payments distortion schemes and they have been corrupted by this.  They truly believe in their eliteness.  Living lives of multi-dwelling luxury, with zero debts, they don’t hesitate to lay off workers making 40K, a fraction of their salaries.

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By Duro, August 5, 2009 at 8:40 am Link to this comment
(Unregistered commenter)

Museums? Who needs them? Close the lot and give the proceeds to the NRA.

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By NYCartist, August 5, 2009 at 7:07 am Link to this comment

Museums have not been very kind or “open” to artists
in the 4plus decades that I have been a professional

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