Eric Brady | The Roanoke Times

The museum's atrium is frequently used for special events, including concerts and wedding receptions. Special events and rentals generated nearly $442,000 in the museum's first fiscal year.

The Museum Store at the Taubman Museum of Art earned $158,896 in fiscal year 2008-09. The store is featuring its own exhibit, "Jewelry in July," through the end of this month.

Museum patrons view a collection of American art last month at the Taubman Museum of Art in downtown Roanoke.

The Taubman Museum of Art's financial struggles in its first year weren't just the consequences of lower-than-expected attendance or donations drastically reduced by recession.

The radically expanded art museum's expenses actually exceeded $6.8 million in its first fiscal year, according to a tax filing and external audit recently released by Taubman officials, far overshooting a projected $3.75 million operating budget.

The amount included one-time startup costs, but also payroll for 52 employees, likely more than the museum could have sustained even in healthy economic times.

"Reality began to set in pretty quickly after the opening," said John Williamson, who was museum board president at the time. "And it's been a struggle ever since."

The museum's board -- focused for years on raising money to build the new museum, but with little experience operating one the Taubman's size -- found itself in unfamiliar territory.

On top of that, a calculated gamble based on overly optimistic income and expense projections became a problem still unresolved today.

Plans to build a $20 million endowment that would have brought in $1 million annually in earnings were pushed back when the building's construction price rose from $46 million to $66 million, museum officials said. As a result, the museum launched with a $2.7 million endowment that shrank to $2.2 million once the economy crashed.

After Executive Director Georganne Bingham retired earlier than expected in May 2009, board members weren't even certain if they would hire a new executive director.

"We were struggling from a leadership standpoint," current museum board President Paul Frantz said. He said he's delighted the board hired David Mickenberg as director in September.

"Picking David, that has really been a major win for us," he said. "The first thing he did was get his arms around the budget, which we desperately, desperately needed."

The museum now has a staff of 23 and Mickenberg is working to whittle operating expenses down to $3 million a year as he crafts a new budget.

And crucially -- thanks largely to the board's efforts -- the building that houses the museum, assessed at $46 million, is paid for and the $66 million capital campaign is complete.

Mickenberg says that from now on, any revenue the museum earns will go toward operating expenses.

He said he and his staff are still in the process of understanding how to best run the building, which costs about $900,000 annually to maintain. And based on visitor feedback, he has an ambitious to-do list aimed at keeping people coming through the doors, including lowering the $10.50 admission, enhancing visitors' interaction with exhibits and improving the offerings in ArtVenture, the museum's area for children.

The bulk of the museum's income comes from donations -- $9 million in the 2008-09 fiscal year, according to the tax filing -- and the key to the museum's survival is to make sure the giving doesn't stop.

Dawn Antigua, a recent visitor to the museum, compared it to a huge whale trying to stay alive in the sea that is the Roanoke Valley. She asked whimsically, "Do we have enough krill in Roanoke?"

A 'dispirited' board rallies

The museum opened with enormous fanfare, as 1,200 people paid $250 apiece to attend a gala and see the inside for the first time. About 14,000 visited during the opening weekend, which offered free Saturday admission.

At first, it looked like sunny consultant projections about attendance and donations -- which board members say formed the basis for the museum's staffing -- might be on the mark. But attendance eventually fell short of even the most conservative projection, ultimately totaling 130,000 instead of 177,000. Donations also fell while expenses proved much higher than expected.

The board responded with budget cuts, including two rounds of layoffs.

Soon after Bingham retired, admission was increased from $8.50 to $10.50. Officials explained it was to combine the fees for the galleries and ArtVenture.

Regarding the size of the museum's staff when it opened, Bingham said she had hired the best people she could to run the programs the museum intended to deliver. As for the consultant projections, she said that given when they were made -- during strong economic times -- they actually seemed cautious.

Not all the news was negative. The audit shows the museum actually earned about $1.4 million from admissions, memberships, rentals, store sales and cafe commissions -- exceeding Bingham's goal of earning one-third of the projected $3.75 million. Memberships were healthy -- increasing from 2,000 before the museum opened to 3,600.

It's not unusual to see attendance go up for a couple of years after a new attraction opens, but the impending recession squelched that chance for the Taubman, Bingham said.

Frantz said that once Mickenberg was on the job, his decades of museum experience proved invaluable.

Mickenberg, formerly the director of the Davis Museum and Cultural Center at Wellesley College in Massachusetts, brought enthusiasm that became a shot in the arm.

"He kind of rallied our board over the course of the last six months," Frantz said. "We were really dispirited."

He credits Mickenberg with galvanizing the board and getting it to both dig deeper into its own pockets and campaign for corporate donations. Because of that effort, the museum remains in the black.

Frantz declined to discuss the amount the board raised.

A 'financial realist'

Mickenberg is in the midst of not just creating a trimmer $3 million budget, but a five-year strategic plan that defines the museum's long-term missions.

He calls himself a "financial realist," and he sees the museum's role in the valley as more than the tourist attraction it was originally touted to be.

Mickenberg wants to create new ways to get the community invested in the museum's future and to make the residents feel that "this is their museum."

While he relentlessly insists he relishes that challenge, he states upfront it's foolish to claim those tasks will be easy.

"If I understand the statistics correctly, Roanoke is a city where 50 percent of the population earns under $40,000 a year," Mickenberg said, adding that a number of major corporations that once supported the arts in Roanoke are no longer here.

The museum can't rely solely on the income from admissions, cafe and store sales, rentals and program revenue to stay in the black. It also has to broaden its philanthropy base and expand its endowment.

The museum's audit shows that 62 percent of the Taubman's donations during the 2008-09 fiscal year -- about $10.6 million, according the audit -- came from two donors, who are not named.

The museum has in the past acknowledged significant donations from Ambassador Nick Taubman and his wife, Jenny, whom the museum is named after, and The Horace G. Fralin Charitable Trust, for whom the museum's research center is named.

The trust's most recent tax form available indicates a $3.2 million pledge in 2008. Heywood Fralin, who administers the trust, did not return a phone call seeking comment.

Mickenberg declined to identify the benefactors, and said though the museum hopes for their continued involvement, "the capital campaign is over, and we do not expect those donations to continue at that level."

But in large part because of that giving, Roanoke's museum has hurdled one major obstacle -- paying off the building.

Jenny Taubman declined to discuss specifics of her and her husband's giving.

"We did it because we love Roanoke, and we wanted Roanoke to have this institution," she said. "Now we just have to somehow or other stimulate the community to appreciate what it does.

"I think what we need to strive for now is endowment and operating costs and so on. That doesn't come from the sky either."

Seeking support

Interest earned from endowments is how many museums -- especially those with free or low admission -- are able to operate. The Virginia Museum of Fine Arts in Richmond, which charges only for special exhibits and programs, boasts a $141 million foundation and reported $2 million in investment income in fiscal year 2008-09.

The Taubman's $2.2 million endowment earned about $80,000 during its first year, according to the audit.

Under Mickenberg's direction, the museum has revived fundraising events used during the capital campaign and started creating new ones, including "Art and Appetites," "The Art of Golf" and "Designer Showhouse." The museum recently completed telephone and mass mail membership drives that it will hold twice a year from now on.

The museum is looking at new national sources for grants and courting new donors. "We are looking at almost every other possible income stream to complement what we do and to support what we do," Mickenberg said.

He's also listening to feedback from residents who responded to surveys and telephone calls with critical comments. For one thing, they've made it clear that the admission price is too high, he said.

Mickenberg says he's looking to reduce the price "sometime in the next six months." Though it's not clear yet where the money to cover the cost will come from, he said he wants to make it happen "because we really want the community in the building."

In April, he began opening the museum for free from 5 to 8 p.m. on Thursday nights. There are also more free admission days, including one this Saturday, with events tied into its main temporary exhibit, "Posing Beauty in African American Culture."

Other survey feedback the museum received shows a need to revamp ArtVenture, located on the museum's first floor.

"This was something we had already been concerned about, and have already been discussing," Mickenberg said. He added that about $65,000 to $75,000 has been raised to invest in ArtVenture.

The museum hasn't yet determined what changes it will make, though officials are collecting suggestions from focus groups.

The Taubman also has begun employing college interns as a way to strengthen its partnerships with higher education. "It enables us to engage students who are exceedingly well trained and thoughtful and enthusiastic and bright. It's like a breath of fresh air," Mickenberg said.

He also pledges to be more open about the museum's finances, in answer to some critics, such as Roanoke art collector Bill Jones.

Jones, a museum member who contributed to the recent "Unusual Suspects" folk art exhibit, said he's concerned the museum still hasn't been forthcoming about its predicament. "There are a lot of people in the community who want to see it succeed who just want to be told straight up what's going on," he said.

Mickenberg said he will make the new budget available to the public when it's ready, and museum officials say they intend to be better at communicating as it moves forward.

More space in the future?

On a quiet Wednesday afternoon recently, three couples explored the second-floor galleries, slowly taking in the Taubman's temporary exhibitions, "Posing Beauty" and "The Corrugated Fountain," and the paintings in the museum's permanent collection.

"I'm very impressed," said Christine Gorelick, a member of the Winston-Salem, N.C., arts council who was visiting for the first time.

"I think the building makes a great statement," said her friend, Bill Murat from Washington. The building's design made them want to visit, "and I'm glad we did."

Antigua, a 27-year-old Montessori school teacher from Buena Vista, was also impressed, but taken aback by the interior space: "I'm really surprised about how small the museum is on the inside."

Indeed, a large chunk of the museum's second floor, which houses the galleries, was originally intended to house an IMAX projector. Board members and staff insist that a close look at the annual fees the museum would have paid to IMAX indicate that it would have been a money loser for the institution.

Mickenberg said that he is looking into turning the space where the IMAX projector would have gone into a gallery that could also host dance and performance art. The museum's architect, Randall Stout, said Mickenberg has been in touch with him about what the additional construction would entail.

To do that, the museum's budget will have to grow -- but it likely won't ever have as many employees as it once had.

"This will always be a small staff," Mickenberg said. "This will always be a small museum. A big building, but a small museum in all of its spaces."

Mickenberg said he's heard the criticisms.

"We're keenly aware of the fact that there are a number of people in this community who think that this museum won't make it. That the building is too big, our expenses are too heavy, we shot too high. I mean, I've heard all of that.

"We're here to stay," he pledged, "and to provide the community with extraordinary, exciting arts experiences."