Layoffs, cost cuts for Jewish museum

After running a string of annual deficits, the National Museum of American Jewish History has embarked on a major retrenchment, including layoffs, museum officials said this week.

The institution, which opened a $150 million building on Independence Mall in 2010, laid off 12 staff members outright on Friday. Other positions, now empty, will not be filled; others will be made part-time or consolidated. All told, 18 of the museum's 50 full-time staff positions will be eliminated.

This fiscal year, ending June 30, the museum is running about a $1.8 million deficit; expenditures will be about $10.6 million.

"We've got a gap, and that's why we're doing what we're doing," said Ivy Barsky, the museum's chief executive and director.

Salaries have been frozen, she said, and top managers will be taking what Barsky called small pay cuts. In her own case, Barsky has accepted what she characterized as a "modest, voluntary" cut of $25,000 to her $324,000 salary.

The museum will be closing Tuesdays beginning in July, she said; it is already closed Mondays. The café will close, and its staff will be refocused on the museum store, web sales, and facility rentals. (In the future, the museum will be open Tuesdays during special exhibitions.)

Annual attendance, which had been projected at 250,000 when the museum opened its 25,000 square feet of exhibition space in 2010, had declined to about 126,000 in 2012. Barsky said it is now about 100,000.

Museum membership in the first year stood at 18,000; by 2012 it had dropped to 12,000. It is now 6,000. Barsky said the retention rate at that reduced level is about 90 percent to 95 percent, which she characterized as "the strongest retention rate you can imagine." About 60 percent of the members are from outside the region, she said.

Barsky said about $1.3 million will be saved annually via the layoffs, staff reductions, and consolidations.

At least one exhibition, a traveling exhibit from the Skirball Cultural Center in Los Angeles, "Light and Noir," exploring the Jewish refugee experience in Hollywood, has been canceled (cost savings: $200,000). The show had been scheduled for next winter.

"We've been burning brightly, making our mark programmatically and with education, so we've been doing what we planned to do," Barsky said.  "Our fund-raising and earned revenue, we haven't kept pace with the aspirations of our programming. So what we're doing now is right-sizing that."

Board chair Philip M. Darivoff, a former Goldman Sachs partner, said staff at the museum will be asked "to work harder" to bring various initiatives to fruition.

"We really need to get our cost structure in line with what we've been able to do, and we'll grow from there," Darivoff said. "I'm confident and have never been more confident in our future."

About 80 percent of the museum's annual income is contributed — a figure on the high side, according to cultural officials.

The museum goal is to bring operating expenditures down to less than $8 million annually, which Barsky said is in line with what the museum has raised in the past through sales and annual contributions.

"Historically, we've been able to raise and earn between $6 million and $8 million a year – that's how we've determined that our expense budget for next year should anticipate that," she said. "So the expense budget is less than $8 million, and we know that's what we can raise without extraordinary gifts, outsize gifts, to the campaign. We think we can do better than that, but we think we have a good conservative model."

She added: "With some of this restructuring, we're looking at the percentage of earned to go up this year and will continue to grow."

This is not the first time the museum has teetered financially.

When Barsky took over in 2012, about seven key positions were empty due to layoffs and attrition, and the budget deficit was somewhat higher than it is now.

Maud Lyon, president of the Greater Philadelphia Cultural Alliance, said that while the overall financial climate in Philadelphia had improved since the 2008 recession, cultural institutions in general – and  history museums in particular – face significant challenges.

"Large history museums are struggling more than other types of institutions nationally," Lyon said, citing large fixed costs in buildings, collections, and security. While performing-arts organizations have some flexibility in terms of space, personnel and costs of performance, history museums are locked into their infrastructure. (Barsky noted that it costs between $2 million and $3 million annually just to keep her museum doors open.)

"It's a lot harder to turn on a dime" for history museums, Lyon said. And in Philadelphia, unlike New York, for instance, there is no ongoing public operating support for cultural institutions, she pointed out. Buildings go up amid great enthusiasm, Lyon said, funds to build them are collected, and then the "private sector" is expected to take over operating activities, sometimes with outsize debt.

The National Museum of American Jewish History went through such a process. It had occupied a small space connected to Congregation Mikveh Israel on North Fourth Street before building the $150 million, 100,000-square-foot building at Fifth and Market Streets. The museum is still paying off building debt of $30.1 million. That amounts to $1.2 million due this fiscal year.

Darivoff, the board chair, said the board is very conscious of the debt, noting that about $17 million is a bank mortgage with a balloon payment due between five or six years in the future.

"We don't see that debt as creating any financial urgency on our part," he said. He noted that the museum is in the quiet phase of putting together a fund-raising campaign seeking $40 million to retire debt, among other things. About $6.7 million is in hand, officials said.

Going forward, Barsky said the museum intends to remain focused on critical projects and programming, including  a 2018 exhibition that it's developing to celebrate the centenary of the composer Leonard Bernstein's birth. The museum has been noted for its in-house exhibitions, including the popular "Chasing Dreams: Baseball and Becoming American" (2014) and "To Bigotry No Sanction: George Washington and Religious Freedom" (2012),

Another key program, dubbed "Recollection," involves creation of a family history app and related programs that will allow users to put together and share film, video, audio, documents, and other materials recounting personal family histories.

"The plan is to get smaller to get stronger," Barsky said. "So we're focusing on things close to the core of our mission, like education, with a few important national initiatives."