Please Touch Museum feeling pain from debt load

The new Please Touch Museum has won adoration from 6-year-olds and other important critics, and its move to Memorial Hall undoubtedly kept a rare architectural artifact of the 1876 Centennial Exposition from sliding into irretrievable decrepitude.

But a little more than two years after moving from its small-scale Center City home to more expansive - and expensive - digs in Fairmount Park, the Please Touch Museum is struggling with a dip in membership and attendance and with debt payments that are large and growing.

Debt was expected, but the difficulty in handling it stems, in part, from the museum's failure to meet its fund-raising goal of $88 million. After opening day in October 2008, fund-raising nearly stopped and the Please Touch fell $21.5 million shy of its target.

The shortfall set off a series of events that the museum says has thwarted its ability to manage the $60 million debt assumed through a bond issue raised on the museum's behalf by the Philadelphia Authority for Industrial Development.

The museum had planned to offset the $60 million IOU by adding the anticipated $21.5 million to a special reserve fund, where it would have grown (at rates higher than those that can be expected in this recession or postrecession era).

Part of the unraised $21.5 million included $5.5 million that museum officials hoped would come from the sale of the museum's old facility, on 21st Street near the Franklin Institute. Like many a homeowner in this economy, they know they may have to settle for less.

The museum's annual debt payments on its new home are not only large for an organization of Please Touch's size, at $3.37 million this year (the museum's operating budget is $9 million annually), but are also on a schedule to grow each year, topping out at $5.65 million.

The museum's answer to its mounting financial pressures: It will raise money.

"We're looking for major gifts to raise the money we need so our future is secure," says Laura Foster, president and chief executive officer. "We have so much appeal - the building, the history, the music and theater. We think we're very diverse."

The museum's financial condition has caught the attention of the investment community.