0.6 Chapter four: the turning tide, 1960-1982  (Page 10/14)

The sale of the Bryan paintings and the establishment of the Bryan restricted fund illustrates another way in which the Society was becoming a more complex institution to manage. Determining what costs can be allocated to restricted funds and what cannot is a complicated process that can burden an institution's unre­stricted resources if not properly controlled. The Society experienced tremendous growth in the amount of restricted financial assets under its care during this period. In 1959, the Society's total balances in restricted funds (other than en­dowment) was $78,000. By 1974, the balance had grown to over $1.5 million.

Programmatically, the museum and library were not the only departments in the Society that were growing and expanding; public programs, specifically the education department, were expanding as well. In 1974, a new section was added to the annual report, titled "Education Department Activities." Initiatives under­taken in the mid 1970s included a program of repeated visits by neighborhood schools; participation in Growth Through Art and Museum Experience (GAME), a workshop program to join the city's schools and cultural institutions; and an alternative education program called City-as-School that offered credit to student interns who helped the department with its activities. Through the 1970s, a whole series of similar programs, some of them funded by restricted grants from the city, the New York Community Trust, and the National Endowment for the Human­ities were started and managed by the education department.

Holding other things equal, the expansion of the Society during the 1970s would hardly be considered as a negative; quite the contrary, the Society was serv­ing a broader clientele than it had at any time in its long history. However, at the same time the Society was expanding, its financial situation was deteriorating. Because the Society did not charge an admission fee, the explosive growth in vis­itors strained the budget, placing an additional burden not only on the Society's staff but also on its physical plant. In addition, by relaxing the acquisitions policy, effort was being expended on accessioning, cataloging, and preserving contem­porary materials, leaving fewer resources to care for and catalog the older and most valuable collections. Finally, the expansion of the education department placed additional burdens on the Society's core administrative staff. While some of the programs were presumably financed with restricted grants, some of the overhead costs of salaries, building, and infrastructure were paid for with general operating resources.

The combination of financial strain and programmatic expansion yielded pre­dictable results, but the speed with which the Society's fortunes changed is amaz­ing. The first major drop in the market value of the Society's endowment occurred at this time. In the days before the adoption of the total return policy, the Society, like most nonprofit institutions, tended to purchase a higher proportion of low-growth, high-yield investments of moderate to low risk. Once freed of this con­straint, the Society began carrying a much higher percentage of stocks. It is important to remember, however, that the allocation of investments in equities should be limited by an investor's tolerance for risk. Apparently, the desire to maximize the growth of the endowment took precedence over risk concerns. In 1967, the Society had 73 percent of its endowment invested in stocks; by November 1972, equity investments had grown to comprise 90 percent of the Society's portfolio. At that time, the market value of the Society's endowment was $17.5 million.