Museum of Fine Arts, Boston: The Museum Year 2012


Report of the Budget and Finance Committee: July 2010–June 2011

Fiscal Year 2012 continued the momentum of the prior year with the opening of the Linde Family Wing for Contemporary Art. Along with the new Art of the Americas Wing and our ongoing gallery renovation program, we now have more than 70 new galleries for visitors to enjoy. As a result of these new spaces, along with a diverse special exhibitions schedule, the year saw attendance reach 1.2 million for the second year in a row, up from just under 900,000 in 2010. We are pleased to see this level of attendance as we evaluate and monitor the “new normal” on revenue and other operating characteristics. Prior to the opening of the new Art of the Americas Wing the 10-year average Museum attendance was 1 million, so for the past two years we achieved 20% growth relative to that average. Our hope is to sustain that level of attendance in the future.

The economy continues to be less than robust and many feel that we are close to a new recession. In spite of this environment, the Museum had an overall operating surplus of $1.8 million, approximately $400,000 better than the surplus we budgeted for the year, with each business segment contributing to the surplus. The Museum achieved a surplus of $1,180,000; Retail had a surplus of $356,000; and the School had a surplus of $260,000. Among our peer institutions only the Museum of Modern Art in New York and the MFA have generated a surplus in each of the past 10 years.

The capital markets saw lackluster investment performance across the spectrum this past fiscal year. The endowment realized a negative 2.7% performance return overall and was valued at $516 million on June 30, 2012. Although our endowment modestly declined this past fiscal year, the Museum endowment’s average annualized return for the past three years has been 11%, exceeding our long-term planning assumption. In addition, our three-year average annualized return of 11% places the MFA in the top quartile of three-year returns for all endowments measured by Cambridge Associates.

Moody’s rating agency downgraded many United States banks in the late spring, including the Museum’s main credit support provider. This kept the Budget and Finance Committee busy as we monitored the environment and sought options to protect the Museum. Late in the fiscal year we decided to diversify our credit support and we are in the midst of finalizing that now.

With regard to the Museum itself, our financial staff met recently with both Moody’s and S & P for a ratings review, and I am pleased to report that S & P has reaffirmed our AA rating, and we expect to hear from Moody’s shortly.

During the spring, as part of the FY13 budget process, we reviewed the Museum’s financial performance against our long-term planning model and made appropriate adjustments to our forward planning assumptions. The Budget and Finance Committee recommended to the Board a budget for FY13 that again provides for an operating surplus in each Museum segment for the new fiscal year. We also reviewed the School’s financial models and related assumptions as part of its new Strategic Planning process, which the Board is reviewing later this month.

In order to insure the cultural and educational mission of the MFA, we are continuing to do our part to achieve the long-term financial strength of the Museum in spite of the uncertain economic environment. I thank the Budget and Finance Committee for all that they do in this regard.

In closing I would like to acknowledge the exceptional effort of the Museum’s CFO, Mark Kerwin, and his staff. We are especially proud of Mark, who this summer was recognized by the Boston Business Journal as CFO of the Year in a nonprofit organization.

Respectfully submitted,

Steve Fine
Treasurer and Chairman of the Budget and Finance Committee