The New York Metropolitan Museum of the Art is a non-profit institution with an established history as a behemoth of the artistic world. It was founded and maintains today the mission of “establishing and maintaining in the city of New York a museum and library of art, of encouraging and developing, the study of the fine arts, and the application of arts to manufacturing and practical life, of advancing the general knowledge of kindred subjects, and, to that end, of furnishing popular instruction.” Although the museum has run a deficit in the past two years, faces the prospect of rising operating expenses and lacks consistent strategy in its initiatives, it has strong fundamentals which include a membership base of
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Financial Structure – The Met faced serious budgetary deficits of $2 million and $2.6 million for the years 1990 and 1991 respectively, with future deficits expected. This is due to a greater increase in total expenses than in revenue. Specifically, we can see (Exhibit A) that the increase in auxiliary expense is generally higher than the increase in auxiliary revenue in the past four years. Profit remains positive, but it is rapidly decreasing (Exhibit B shows a shrinking profit margin from auxiliary activities). Furthermore, auxiliary activities account for about 50% of total revenue and expenses. The most important source of the deficit problem, however, is operations. We can see a trend of persistent deficits in revenue from operations, in the past four years (Exhibit C), and significantly larger deficits of the two most recent years. This greatly contributed to the losses in 1990 and 1991. The operational revenue on average accounts for 17% of total revenue, whereas the operating expenses constitute roughly 50% of total expenses. The remaining 33% of revenue comes from external funding from government and corporations.
Exhibit A: Revenue and Expense Growth Analysis
*dark cells represent expense growth greater than revenue growth