Getty Trust to Slash Budget as Investments Tumble
March 16, 2009, Los Angeles Times — The J. Paul Getty Trust, envied as the economic Goliath of the museum world, is slashing its operating budget nearly 25% for the coming fiscal year, an emergency response to investment losses that have totaled $1.5 billion since July and nearly $2 billion since mid-2007.
President James Wood said the financial stability of the Getty, the world's richest arts institution, could "fall off a huge cliff" if it delayed drastic cuts and hard times continued.
The Getty relies almost exclusively on investment earnings to cover expenses for its two Los Angeles art museums as well as the research, art conservation and grant-making operations that extend the trust's reach around the world.
Its portfolio dropped 25% during the last half of 2008, from $6 billion to $4.5 billion. That still dwarfs the $2.1-billion endowment of New York's Metropolitan Museum of Art, which announced plans Thursday to lay off 10% of its workforce, partly because of an endowment loss approaching 28%.
The reductions at the Getty should focus on operations that can easily expand again, Wood said Friday. Cuts may well be in store for temporary exhibitions, which have totaled more than 20 a year. The Getty may also defer buying new works for its collections of ancient art, European art from before the 20th century, illuminated manuscripts and photography.
Wood said the core operating budget for the fiscal year starting July 1 would be $216 million, compared with the current year's budget of $284 million.
The Getty's financial statements show that overall spending has reached as high as $339 million in recent years, when added costs such as interest on $627 million in construction and art acquisition bonds are factored in.
The Getty Trust was established as an operating foundation in 1976 with a $700-million bequest (the equivalent of $2.6 billion today) from oil magnate J. Paul Getty. Since then, it barely has lifted a fundraising finger while covering 93% or more of expenses with its portfolio's earnings.