0.8 Chapter six: attempting a turnaround, 1988-1992  (Page 12/19)

Debs pointed out that the Society owned tremendously valuable assets and that they should not escape scrutiny: "We must examine our asset base, which is enormous and inert (our collections worth at least a billion dollars, our land and building about 45 million) to see whether there are ways it can be made to work for us." Concluding her report, Debs posed a series of rhetorical questions: "Can a private ... underfunded institution with enormous value to the public continue to serve that public if entirely privately funded? Can the Society continue to exist in its present form and in its present location? It is time for the Board and staff to seriously examine the alternatives available to us with courage and imagination and in deadly earnest."

The most distressing aspect of the problems Debs described is that they were not long-range issues that could be put off or addressed over a long period of time. The capital repairs on the roof, the legal fees, and the expansion of the Society's programs had to be paid for, exerting added pressure on the Society's already depleted cash reserves. The Society was facing a cash flow shortage. At the time of Debs's annual report, the board took its first step to alleviate the cash problem; it passed a resolution canceling all board-imposed restrictions on funds, thereby freeing money to be used for unrestricted purposes.

Almost before it was even begun, then, the bridge plan in its original form was no longer viable. Not only did the Society's plan not include the unforeseen expenditures, but it also underestimated the cost of carrying out the basic programmatic objectives. An internal Society memo prepared in February 1990 presented a revised version of the plan, outlining three-year financial needs for operations, building, and endowment (see Table 6.2). The most notable changes were an increase in the initial operating budget, which went from $6.5 million to $7.8 million, and increases in expected government funding. In concluding a progress report on the bridge plan to the board, Debs indicated that "in order to accommodate current levels of operations in balance and the immediate needs of the building, we will require close to $40 million. In order to achieve the longer term goals of financial soundness, balanced operating budgets and growth, we will require either continuing massive fund-raising for operations annually or signifi­cant additions to endowment, or a combination thereof for the foreseeable future."

As the second half of the 1990 fiscal year progressed, it became clear that the Society was going to have difficulty balancing its budget. Revenues were run­ning far behind projections. Efforts to convince the state and city to provide reg­ular ongoing support took on added urgency. In January, the board unanimously resolved that "the chairman of the board and the president undertake discussions with the City and file such papers as may be necessary to qualify the Society for membership in the Cultural Institutions Group (CIG)."