Nearly Broke, The Barnes Foundation Calls For Help Litigation And Rising Costs Drained The Coffers Of The Merion Art Collection. Now It Needs Millions To Survive.

Posted: September 10, 2000

The Barnes Foundation, guardian of one of the world's most spectacular collections of impressionist art, has exhausted its $10 million endowment and is seeking emergency relief to stay open.

Foundation leaders - who are making urgent appeals to corporations, individuals and foundations - remain optimistic. But executive director Kimberly Camp said the situation is "critical," and estimated that without donations, the Barnes would be unable to meet payroll and other basic expenses in six months to a year.

The Merion foundation's collection - which includes paintings by Renoir, Cezanne, Picasso and other masters - is worth billions at today's values.

But a gap between the foundation's ambitions and its limited resources has put the future of these masterpieces in question.

After decades as a reclusive art-appreciation school and gallery, the Barnes Foundation became an overnight sensation when some of its prize paintings went on a blockbuster world tour in 1994. The foundation's once-sleepy Merion gallery began attracting large crowds of tourists.

During that transformation, the Barnes was battered by ruinously expensive litigation, soaring operating costs, and conflicts with neighbors, former students, and Lower Merion Township.

Some of those problems have been resolved, and the foundation's current leaders have no personal ties to those battles. But the "ghosts" of past leaders still trouble the foundation, Camp said.

The scariest specter is the balance sheet.

The Barnes cashed in the last of its endowment a year ago after running up a $5.3 million cash deficit in the last three years, tax filings show.

It has survived until now largely through a $760,000 grant from the estate of former foundation leader Violette De Mazia.

With that money now spent, and no endowment to fall back on, the Barnes still has a predicted deficit of about $500,000 for this year. The foundation says it needs donors to contribute $15 million over the next five years to continue operating.

Building long-term financial stability will require far more - $85 million by the foundation's count.

Over the next five years alone, the Barnes seeks to raise $50 million for a long-term operating endowment. Smaller endowments for education, conservation and other efforts are planned for the same period. Looking ahead, the Barnes wants $15 million for capital improvements to its Merion campus and a farmstead the foundation owns in Chester County.

If it works, the $85 million campaign would be one of the largest cultural fund-raising successes in the region - far bigger, for example, than recent $50 million campaigns launched by the Please Touch Museum and the Franklin Institute.

Leading the ambitious effort is newly hired development director Anthony Ng. Ng left a job with the Pew Charitable Trusts and arrived at the Barnes last year to find "just a clean desk, a computer, and my own Rolodex to work from."

The foundation has made some progress, winning the $760,000 grant and an additional $340,000 from mostly corporate and government sources.

"My belief is that people in this community will not let the Barnes fail," Camp said.

Camp would not discuss what the foundation would do if it did not receive help soon, saying only that "drastic measures" would be taken.

"My understanding is that the situation is certainly very serious," said State Assistant Attorney General Lawrence Barth, whose office has jurisdiction over charitable trusts such as the Barnes.

"The wolf isn't at their doorstep, but it's approaching."

* Some of the foundation's long-term financial troubles can be traced to the unusual vision of its founder, Albert C. Barnes.

An iconoclastic doctor who made a fortune from a treatment for eye infections, Barnes pioneered a populist method of appreciating and evaluating art. He established the foundation to teach those ideas.

Before he died in a car accident in 1951, Barnes boxed the foundation in with bylaws and an indenture designed to preserve his artistic and educational theories.

No works could be sold, lent or copied. Public access to the gallery was sharply limited, and Barnes decreed that the "plain people" could not be charged for admission.

Those provisions preserved the doctor's vision, but also deprived the Barnes of traditional museum money-making techniques. Though the courts have eased some restrictions, the foundation can still charge just $5 for entry to the gallery - and attendance is capped at 1,200 a week by local zoning.

Had the doctor left his foundation a fortune, the restrictions might not have mattered. But Barnes left $10 million to carry out his mission, and he stipulated that the money had to be invested in safe but low-paying bonds. In the decades after his death, the limited investment income was used to run the school - rather than to expand the endowment.

The foundation's financial health became more precarious in the 1990s, after control of the Barnes passed to Lincoln University, as provided for in the doctor's will.

Led by Richard H. Glanton, then general counsel to Lincoln, the Barnes pitched a radical plan to sell 15 of the foundation's paintings.

The proposal died amid a hail of international criticism, but the early controversy set a tone for eight years of acrimony between the foundation, its former students, and the local community.

The first nasty legal dispute erupted between the Barnes and the De Mazia Trust. That was followed by accusations from Glanton that Lower Merion commissioners and local residents opposed the foundation's plans out of racism - he filed civil rights lawsuits against both groups.

Lower Merion commissioners countered with a defamation lawsuit against Glanton. That suit was settled after Glanton made a "conditional retraction" and agreed to pay $400,000 to the commissioners' attorney.

All told, the legal bills drained a total of $5.9 million from the foundation's limited savings in the 1990s, according to the Barnes' income tax returns for those years.

And though the Barnes won court permission to take its artwork on a world tour, the $17 million it raised was not a financial panacea.

The foundation immediately put $12 million into renovating its dilapidated gallery. The rest was put in a court-controlled fund designated for future building repairs. The fund cannot be used for day-to-day expenses.

After the tour and renovations, those expenses were higher. Electric bills soared from $1,000 a month to $12,000 - to power a new climate-control system. Custodians, security and other personnel were hired to handle the crush of visitors descending on the newly popular foundation.

Today, Glanton, who was president and de facto director of the Barnes through most of the tumultuous 1990s, blames the foundation's financial troubles on his successors.

"Any rational, truthful person would tell you I saved the foundation," Glanton said in a recent interview, noting the tour's success. "I did a good job of raising money and restoring the gallery, and it's being dismantled. Everything that I built is being torn down."

Others see Glanton's tenure and the new management much differently.

"I think we're encouraged by the current management and direction," Assistant Attorney General Barth said. He had expressed serious concerns about the foundation before. "They have a professional staff in place; they're protecting the collection, getting their operations in hand."

Glanton was ousted as board president in 1998 and left the board last year.

* Since then, there have been some healthy developments in Merion.

For the first time, trained and experienced museum and fund-raising professionals hold leadership positions. Camp is the first day-to-day leader with a museum background. The new board president is Bernard C. Watson, former head of the William Penn Foundation.

Those changes, Camp said, are part of an effort to break with the foundation's controversial past.

"I tell people over and over again, the Barnes Foundation itself - the Renoirs, Cezannes - didn't do anything to anybody," Camp said.

But the new leaders have had their share of problems.

The foundation is still "woefully understaffed," Camp said, and lacks a full-time registrar, conservator and other employees commonly employed to care for collections of the Barnes's size and value.

Expenses are growing, due mostly to the costs of the new development office and long-term strategic planning. Income has not kept pace.

The cost of a small parking lot finished last year swelled to $1.7 million once bus shelters, a guard house, and a storm-drain system were added to a more modest original plan.

And future grants from the De Mazia Trust - a possible lifeline until larger donations come through - depend on how leaders there feel about the education program at the Barnes, said Marvin Garfinkel, a spokesman for the trust.

* No one connected to the Barnes wants to talk about what would happen if the foundation fails.

But Albert C. Barnes himself anticipated the possibility.

He wrote in his indenture that if the foundation failed, its property should be given to a similar local institution.

"If it turned out that the foundation could not be operated in the way he had intended, he did not want the art sold off and the money to go to his heirs," said Bruce Mann, who teaches trust law at the University of Pennsylvania. "He wanted the art kept available for a public purpose."

If the foundation dissolved, the Montgomery County Orphan's Court - which has jurisdiction over wills and charitable trusts - would hear applications from local museums and educators, and award the paintings to "the closest possible match," Barth said.

Barth and Mann said that scenario was unlikely.

The court would probably relieve the foundation from some of its tight restrictions before letting it fall apart, Mann said. That could mean granting permission to charge more for gallery tickets, or even another tour of the paintings.

* To avoid the dissolution question entirely, the foundation is looking to raise far more money than it needs just to get by.

Camp and Ng, the development director, say their campaign will prevent the foundation's collapse and eventually enable the Barnes to build a visitors' center and expand its programs.

"We're asking for people to invest in our ability to do what we say what we're going to do," Camp said. "For some people that's risky; for some people that's exciting."

Patrick Kerkstra's e-mail address is pkerkstra@phillynews.com

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