February 8th, 2002

The Enronification Of a Museum Near You

By Eric Gibson
Wall Street Journal

The Smithsonian Institution was saved from itself this week when Catherine B. Reynolds canceled her $38 million gift.

The money was for "The Spirit of America," an installation celebrating prominent Americans. The gift had sparked ire inside the institution and out because Mrs. Reynolds wanted unprecedented control over the exhibit’s content. When the Smithsonian told her, in the end, that this was just impossible, she walked. Given that her Hall of Famers were reported to have included Martha Stewart and Oprah Winfrey—another source of in-house irritation—we should probably all be grateful.

The Reynolds gift was the most visible symbol of the modus operandi of Lawrence M. Small, the Smithsonian’s secretary since 1999. A former Citibank executive—and the first Smithsonian head without a professional background in the arts or sciences—Mr. Small has dedicated himself to raising money with a single-minded zeal. Disturbingly so.

The $385 million Mr. Small has raised in the past two years has come at a price. Parts of the Smithsonian have been named after Orkin, Kmart, Fuji Film and General Motors. The National Museum of American History is now the Behring Center, after a benefactor’s $80 million donation. No fewer than five museum directors have chosen to leave or retire since Mr. Small took office, some in response to the secretary’s unscholarly priorities.

And two weeks ago Milo C. Beach, who left last year as director of the Smithsonian’s Freer and Sackler Galleries, wrote an op-ed article for the Washington Post that delivered a devastating critique of the new climate of the Smithsonian. The current administration "views the life of the mind with astonishing indifference," wrote Mr. Beach, who, over 14 years, shaped his museums into the nation’s pre-eminent showcases of Asian art. He noted that, in a recent address to the staff of the National Museum of American History, Mr. Small had "left the distinct impression that the day of curiosity-driven research was over," that the Smithsonian’s mission, "to increase and diffuse knowledge, according to the initial Smithson bequest," was now "to raise money and modernize."

In a conversation with the secretary last spring, Mr. Beach continued, "Mr. Small made clear that [in his view] a museum director should not be actively engaged with the collections and programs that give identity to his or her museum; a director’s duties should be restricted to fund-raising and public affairs." The Smithsonian, Mr. Beach says in an interview, "is being run as a business rather than being run as a cultural institution, and they’re very different philosophies."

But something else is happening, too. Call it the Enronification of the Smithsonian. Enron Corp. came to grief because, apparently, it flouted long-standing, well-established practices: in accounting, stock dealing and much else. The Smithsonian, along with many of its peers, has been ignoring well-established practices too.

For one thing, cultural institutions are supposed to discreetly acknowledge benefactors; Mr. Small is plastering their names all over. For another, they are supposed to conceive of an idea and then find someone to fund it. With the Reynolds gift, program and donor came as a package to be fit into the Smithsonian. Contrary to normal practice, the gift was accepted before the limits of donor involvement had been agreed upon.

Unfortunately, the Smithsonian isn’t alone. Indeed, there appears to be a growing Enronification of our culture.

Standard procedure is for nonprofits to invest their endowment money conservatively. But by June of last year, as the Journal reported last month, the Art Institute of Chicago had invested over half its endowment—now valued at an estimated $650 million—in hedge funds. In October, it learned that it had lost at least $20 million of that investment.

Endowments are supposed to be sacrosanct, with 95% of interest income reinvested and the principal never touched. Yet last November the New York Times reported that the Guggenheim Museum had used $23.3 million in endowment over the past two years to cover operating expenses and debt payments.

Museum directors are supposed to avoid conflicts of interest. Yet last summer David Ross, director of the San Francisco Museum of Modern Art, was forced to resign after it emerged that he had accepted a directorship in Eyestorm, a commercial London-based Web site that offers artworks for sale.

Art museums are supposed to put on scholarly shows of, well, fine art. Yet in April the Brooklyn Museum of Art will open "Star Wars: The Magic of Myth," a show of costumes, props and other paraphernalia from the hit movies. The show has nothing to do with art, of course. But it brought one million visitors to the Smithsonian’s Air and Space Museum in 1997. Maybe that’s why Brooklyn and four other art museums signed up for it.

Art is supposed to mirror life, but this is ridiculous.


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