While five years have passed since former museum president John S. Carter pleaded guilty to defrauding the institution of $1 million, museum officials say they still face an ongoing physical problem: a less-than-accessible location across I-95, with nearby development slow to take hold.
The museum is planning renovations that could involve wrapping the building in glass, interactive exhibits focused on a new theme - the history of the Delaware River's connection to groups seeking freedom - and an art piece that makes so much of a statement that the museum's chief hopes people would come to Penn's Landing just to see it.
"That's the concept: to get people to the river's edge," CEO John Brady said. "And then once we have them here, the idea is to have a building that's open and has things visible that are so compelling that if you don't want to see them, your kid does."
The plans and price tag for the project haven't been finalized, and fund-raising has yet to begin. It's unclear how quickly the museum could raise the money.
Also unknown is the fate of the Olympia. The last surviving warship from the Spanish-American War and a longtime Philadelphia attraction, it requires millions of dollars of work. Six nonprofits applied to take over the ship, and two are still in the running, with the museum researching ways to preserve the ship if a viable alternative is not found.
It's clear the museum needs a new course, Brady said. Annual attendance, which peaked about a decade ago at 127,000, fell to 65,000 in 2010.
About 84,000 came through its doors last year, but that figure includes attendance at special events, a group not necessarily previously counted.
While museum officials say they're on track to see an increase in visitors and admissions revenue this year, attendance has to reach 110,000 for the museum to break even, Brady said.
The museum, which has a $3.7 million budget, has run operating deficits each year since 2008, ranging from $1 million to nearly $2 million last year, according to financial records.
Brady, who became interim chief executive in April 2011 and was later named to the post permanently, said he needed to spend more money last year - drawing $1.8 million from the museum's $10 million endowment - to invest in new programming and "act like we're alive."
The museum this year opened two larger exhibits - one featuring the Navy's role in the War of 1812 and the other, ship-related disasters on the Delaware River.
"People stopped coming, because we weren't doing very much," Brady said. "And we weren't doing very much because we were trying to save money."
Now, he said, "we're taking a much more aggressive approach."
Brady, 61, first came to the museum in 1983 and has worked for more than three decades in maritime preservation. He began working in the museum's boat shop in 1995 and served for 16 years as director of the Workshop on the Water.
"People think the boat shop is a lot more fun, and they might be right," Brady said of his former and current jobs. "But they're both about problem-solving."
Like other cultural institutions, the museum came under financial pressure as a result of the recession.
But years before the markets crashed, the museum was running significant deficits. Carter, who left the museum in 2006, later pleaded guilty to defrauding the $1 million, though prosecutors alleged he stole more.
Former State Sen. Vincent J. Fumo, once a leading museum board member, was also convicted of fraud after cruising for free on museum-owned luxury yachts. Both boats have since been sold by the museum.
After years of turbulence, several of the museum's board members said the institution was ready for a transformation.
The idea to renovate the museum began 10 months ago with what the board's chairman described as a "discovery process."
"We knew we had to do something transformative," said board chairman Bill McLaughlin.
With consultants, museum officials focused on questions of identity and project scope, planning to begin a capital campaign in early 2013.
The museum will approach previous supporters "and additional supporters as well," McLaughlin said.
To groups trying to bring waterfront development, the museum's plans are encouraging.
"In order for people to come here, they really have to know there's something exciting to see," said Tom Corcoran, president of the nonprofit Delaware River Waterfront Corp.
The museum's building had been envisioned as an anchor of future development at Penn's Landing when it was built around the time of the Bicentennial.
But the building wasn't designed for a specific tenant, and the museum didn't move in until years later.
In addition to being financially inefficient, "it's a very hard building . . . to see and to woo people into," said Meryl Levitz, president and CEO of the Greater Philadelphia Tourism Marketing Corp.
Still, the museum's difficulties extend beyond location, Levitz said.
For years, "it just wasn't emphasizing visitation, it was emphasizing collection, which is nice, but at some point, you need to populate the place," Levitz said. "I think it's been lagging a bit in terms of coming up with an image, a story, a consistent advertising campaign."
Philadelphia has 16 museums in Center City alone, and is second to only Manhattan in number of downtown museums.
That competition could make fund-raising challenging, particularly in light of the Carter scandal and past financial mismanagement, said Elizabeth Merritt, director of the Center for the Future of Museums at the American Alliance of Museums.
"In terms of looking for local support in Philadelphia, I would think it's an important issue of rebuilding trust and community confidence," Merritt said.
Though the museum has a troubled history, the change it has made in the wake of past embarrassments has validated the institution, said Peter McCausland, vice chairman of the museum's board.
The museum now has a strong leader in Brady, McCausland said, "which is something we haven't had in a long time."
Contact Maddie Hanna at 856-779-3882 or email@example.com