The National Gallery of Art’s Teflon budget

August 30, 2013

It was the perfect backdrop for business. Inside the West Atrium, near enough to the visiting statue, Washington’s plexus was pumping at full speed. An exasperated Nancy Pelosi couldn’t get the crowd to hush for her speech on Italian-American relations. State Department and embassy dignitaries posed for photos with the sculpture. Big donors, the kind who give to both political and capital campaigns, imbibed sweet Sicilian wines. Though the fiscal cliff loomed during the final weeks of 2012, the National Gallery of Art staged a glamorous, almost retro opening for Michelangelo’s David-Apollo, on loan from the Bargello in Florence.

The evening recalled flusher times in Washington, when museums were hubs for political and diplomatic showmanship. But the David-Apollo opening revealed that the National Gallery still provides a forum for Washington’s power circle, earning it favored-nation status among the capital’s cultural elite.

In this era of shrinking federal budgets, the gallery has suffered little, thanks to support from Congress. From 2001 to 2011, federal appropriations to the National Gallery grew from $73 million to $158 million — or rose 70 percent when accounting for inflation — a growth rate nearly triple that of other federally-funded cultural institutions such as the National Archives, the Library of Congress and the U.S. Holocaust Memorial Museum. When compared with museums across the country, the gallery’s growth is staggering. On average, museum budgets have grown by less than 15 percent since 1991, according to a report by the American Alliance of Museums.

For a decade, the largest congressionally chartered art museum in the country grew steadily, quietly and with bipartisan federal support. The effects of such growth are in plain view on Pennsylvania Avenue. The gallery’s West Building is covered in scaffolding, a symptom of ongoing maintenance projects. Acquisitions pour in as the gallery maintains high attendance and free admission: its 4 million annual visitors routinely make it one of the 10 most popular art museums in the world, according to annual reports by the Art Newspaper. The gallery’s longtime director, Earl A. Powell III, a celebrated art historian, is one of the highest-paid museum directors in the country. The gallery’s success breeds friends in high places. With fans on the appropriations and oversight committees in Congress, not only has its budget grown, but its campus could expand, as well. In 2011, Rep. John Mica (R-Fla.) proposed that the Federal Trade Commission give its current headquarters, the historic Apex Building across the street from the gallery, to the museum for a much-needed expansion.

Though the gallery suffered a budget cut of $5.7 million due to sequester, big projects sail forward. In March, the gallery announced that renovations will close the I.M. Pei–designed East Building for three years beginning in 2014. At the same time, a privately funded $30 million expansion of the building's towers will occur.

In an increasingly hostile political climate where Congress rarely agrees on anything, let alone appropriations, Congress emphatically supports the National Gallery of Art. Its balance sheet would make any museum director wonder: what’s the gallery’s secret for success?

“If there’s a secret, it’s hidden in plain sight, it seems to me: It’s the original agreement that established the National Gallery and separated operations and maintenance funding from program funding,” Powell said, referring to a 1937 Act of Congress that established the National Gallery. “It’s a really unique and private-public partnership that doesn’t exist inside or outside of Washington beyond the National Gallery.”

“It’s the object of envy,” said Timothy Rub, president of the Association of Art Museum Directors and director of the Philadelphia Museum of Art. “The National Gallery of Art is the flagship, and is so uniquely associated with the government and serves so many populations, not simply Washington. From my perspective, it’s well funded and well maintained, and that’s a good thing.”

Still, Congress is tasked with financing many organizations, ranging from regulatory agencies to other museums. It has never been shy about slashing the budgets of less lofty institutions. To some, the Gallery’s growth is simply a byproduct of Congress’s promise to preserve one of the country’s most priceless assets. But others see skillful leadership. Indeed, the gallery’s steady growth under multiple administrations is unique even by Washington standards.

“It means that there’s someone who is very good at lobbying,” said Diana Aviv, chief executive of the Independent Sector, a nonprofit coalition, and a former member of the Smithsonian’s Board of Regents’ Committee on Governance. “Generally speaking, when a budget increases that substantially, they’ve developed lay leaders or friends who are close to lawmakers.”

Much of the gallery’s growth is related to capital renewal projects or renovations, such as $80 million of repairs to the facade of the East Building in 2010 and 2011. Its budget now hovers around $130 million, since federal budgets have remained stagnant since 2011, but the Gallery is requesting $144 million for fiscal year 2014.

During the three years that the East Building will be closed, the gallery’s staff will remain intact. Harry Cooper, curator of modern art, says the gallery has much work to do.

“I hope it will be a chance to rise above some of the daily tasks and think ahead,” Cooper said in a previous interview about the closure. “Of course, we’re spending a lot of time thinking about how the collection will be presented.”

Meanwhile, many of Washington’s smaller public-private museums, such as the Smithsonian’s Renwick Gallery, must raise matching funds for renovations.

“It’s the new world we’re in,” said Elizabeth Broun, director of the Renwick Gallery. “It used to be that the federal government took care of all renovations. . . . Now, we’re tasked with raising half of the funds to replace wiring, plumbing and fire extinguishers.”

Though some worry that federally funded cultural institutions may experience severe budget cuts in 2014, a decade of growth at the National Gallery is helping to buffer it against austerity measures.

“I don’t know that I worry; it’s hard to speculate going forward,” Powell said of the future of the gallery’s federal funding. “The chairmen of appropriations committees over 20 years have always been supportive, and I’m very grateful for that.”

‘Miracle on the Mall’

The Smithsonian Institution calls itself “The Nation’s Attic,” referring to its 137 million-piece collection. In contrast, some have called the gallery the “Miracle on the Mall,” a nod to its unique origins. In the 1920s, Andrew Mellon, the industrialist and philanthropist, sought to build a national art gallery in Washington that could rival the Louvre in Paris or the National Gallery in London. Mellon had collected old masters for five decades and after becoming treasury secretary in 1921, he was in a position, as one of the wealthiest men in America, to fund a national art museum.

“He believed that Washington should be a national capital as great as any other,” said Maygene Daniels, archivist for the National Gallery of Art. “Its founding was rooted in patriotism.”

Much political maneuvering went into the gallery’s creation. The title of the “National Gallery” already existed at the Smithsonian, and Mellon had to approach the subject delicately. In the 1930s, he earned the ear of Franklin D. Roosevelt and publicly announced his intentions to build the gallery for the country in 1937. Months later, at the height of the Depression, Congress accepted Mellon’s gift of the John Russell Pope-designed building and Mellon’s impressive art collection, which included works from Russia’s Hermitage Museum by Botticelli, Titian, Raphael and Rembrandt. History would repeat itself during another recession in the ’70s when Mellon’s son Paul donated the funds for the East Building. Completed in 1978, the forward-thinking design symbolized another expansion during economic crisis.

“I think the gallery established itself as a world player right about the time of the East Building opening,” Powell said. “We’re a different museum than any other in the U.S. We were not trying to be a Metropolitan, which is a general museum that covers world history, nor were we setting out to be a museum of modern art. We were setting out to be comparable to the national museums of Europe.”

The miracle of the gallery, though, is not only in its impressive collection of over 120,000 works or its swift rise to international acclaim: It’s the language of the act of Congress that requires the federal government to “provide such funds as may be necessary for the upkeep . . . administrative expenses and costs of operation” of the gallery. According to some, that phrase — along with Mellon’s insistence that the gallery maintain a separate board of trustees from the Smithsonian — is what keeps the National Gallery immune to the financial woes that plague similar institutions today.

“It was designed to leverage that support of the federal government, to get people to give,” Daniels said. “What Andrew Mellon envisioned was a compromise. He donated the endowment, the buildings and the art, and what was left to Congress was a rather concise piece: the maintenance of the building and operations.”

High finances

Like the Smithsonian, between 70 and 75 percent of the gallery’s operating budget is federally funded, which pays most salaries, day-to-day operations and maintenance projects. But unlike Smithsonian appropriations, which are split among 19 museums and a zoo, the gallery receives its own federal appropriations.

Autonomy has helped to grow the gallery’s private assets in the last decade. Since 2001, those assets — excluding the art — have grown by over 50 percent. With a diverse portfolio of international equities and hedge funds, the gallery has weathered economic crises skillfully. Even after suffering sharp losses in the financial crisis — as did most major museums — investments recovered nearly all of their value, reaching $700 million this year, according to William W. McClure, treasurer of the National Gallery of Art.

Though charitable giving to the arts fell nationwide after the 2008 crash, the gallery’s donations have remained steady and acquisitions remained strong. Its collection, financed privately, has grown by more than 20,000 works since 2001.

“Art museums have a history of support from wealthy donors,” said Elizabeth Merritt, director of the Center for the Future of Museums at the American Alliance of Museums. “Brand names in higher education and museums help [finances]. So the Met or Stanford, they’re doing really well and will be for the foreseeable future, while small and midsize places are having a hard time keeping up.”

As the gallery grows, so too does its compensation for its top brass. Powell is among the highest-paid museum directors in the country. Powell’s compensation grew by 100 percent adjusted for inflation since 2001, from $479,000 in 2001 to $1.23 million in 2011, according to tax records. His compensation is on par with Glenn Lowry, director of the Museum of Modern Art in New York, who was paid $1.55 million in 2011 and Thomas P. Campbell, director of the Met, who earned $1.04 million in 2011.

In Washington, Powell ranks among the top-paid arts and museum executives, along with the Kennedy Center’s Michael Kaiser, who earned $1.3 million in 2011. (Salary information for 2012 is not yet public.) Powell’s compensation is double that of Wayne Clough, secretary of the Smithsonian, who made $557,000 in 2011.

The gallery’s nine-member board decides executive compensation annually, paying its top brass salaries that are comparable to that of executives at peer institutions, McClure said in a statement.

“It reflects the corporate culture of the members of a board,” Merritt said, speaking about the growth of compensation at major art museums. “Some board members think, ‘If we’re an important museum, we should be paying our director a lot.”

Because gallery executives are paid with private funds, the gallery has been free to use alternative forms of compensation rarely used by federally funded institutions. When the gallery hired Powell in 1992, he received a no-interest $1 million-plus mortgage loan that has since been paid in full, according to tax filings from 2004. The practice, though not uncommon among universities and major art museums such as the Guggenheim and MoMA, is considered controversial among some charity specialists, since these institutions maintain tax-exempt status while acting as lenders. The practice is even rarer among congressionally chartered institutions and signals that the gallery functions more like a New York museum than its Washington counterparts.

“We don’t have data on that,” Merritt said of the practice. “It’s rare enough we don’t even ask about it.”

Industry experts note that to recruit talent, the gallery must compete with top art museums where seven-figure salaries and housing loans are increasingly becoming the norm. Such was the rationale of New York University, which has recently come under fire from Congress for providing multimillion dollar loans to top executives and faculty members to buy homes in New York City and vacation homes.

While data on compensation and finances is public, some officials find the gallery’s private finances to be opaque during the appropriations process. In June, the Government Accountability Office noted that the National Gallery provides little information regarding private funding. The report recommended that the gallery and similar institutions provide a fuller picture of their resources so Congress can assess where money is most needed. Powell responded with a letter citing the 1937 resolution of Congress that gives the gallery’s board “full fiduciary responsibility over the private funds it raises.”

Not that Congress questions the gallery’s budget. While the gallery submits a budget request itemizing its public spending and needs, since 2001, Powell has testified only twice about budget requests. A source close to the House Appropriations Committee maintains that the National Gallery’s request is one of the few that “is pushed through relatively easily. They don’t have too many detractors up here.”

A p olitical force

The gallery has a close working relationship with Congress, whether Republicans or Democrats are in power. And Powell, too, is politically ambidextrous: he was appointed to U.S. Commission of Fine Arts twice, once by President George W. Bush and again by President Obama.

Still, the gallery has longtime fans in the House who have helped its interests in Congress and vow to find it more space. The most vocal supporter is Mica, a senior Republican member on the House Oversight Committee. He instigated a turf war when he proposed transferring the Federal Trade Commission’s headquarters to the gallery. Located across Pennsylvania Avenue from the gallery’s West Building, the FTC’s historic headquarters, called the Apex Building, would add an additional 300,000 square feet to the gallery’s campus. Mica notes that of the gallery’s 127,000 works, fewer than 3000 are on display.

“The gallery needs the Apex Building,” Mica said. “You couldn’t find a better location for the National Gallery’s expansion. The great capitals around the world are the ones that preserve their cultural treasures. It’s not a partisan issue. ”

Another proponent of Mica’s plan is Rep. Jim Moran (D-Va.), the longtime representative from Alexandria and the ranking member on the House appropriations subcommittee tasked with approving the Gallery’s budgets. Mica and Moran have become the public faces of the proposal, writing op-ed pieces in The Washington Post and elsewhere.

But what of the FTC? Commissioners have said they don’t appreciate Mica’s proposal. For one, the FTC has been headquartered at the Apex Building for 75 years. Roosevelt dedicated the building around the same time the gallery opened across the street. FTC supporters suggest such a move would prioritize the needs of a semiprivate institution over those of a federal agency.

But Mica isn’t giving up on expanding the gallery’s footprint.

“The commissioners like their views of the Capitol,” Mica said. “It’s very disappointing that to satisfy the egos of a few bureaucrats we would leave millions of people behind.”

Some officials think Mica’s plan is far-fetched but not an impossible proposition. As the gallery has always proved, miracles do happen on the Mall.

Alice Crites contributed to this report.

Katherine Boyle reports on arts, museums and culture for the Style section.
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