Is the cash-strapped Newseum facing a final deadline?
WASHINGTON — The Newseum has been on a death watch before, but Monday’s announcement that its parent foundation is considering selling the sprawling Washington museum devoted to journalism is a stunning acknowledgment of its long-standing struggles.
In a dramatic shake-up, the Freedom Forum replaced the Newseum’s chief executive and announced it would consider selling the 250,000-square-foot museum entirely. Its consultants also are looking into joint ventures and the partial sale of the property, which includes a parking garage, apartments, a conference center and an upscale restaurant on a coveted portion of Pennsylvania Avenue at Sixth Street NW.
The future of the institution dedicated to the First Amendment and a vibrant press is unclear, but officials said it would remain open during the review.
Over the past 20 years, the Freedom Forum, formerly the Gannett Foundation, has contributed about $500 million to the institution, according to officials.
“It has become obvious that the current model — where the Freedom Forum is the primary funder of the Newseum — cannot continue indefinitely at this level,” Freedom Forum chief executive Jan Neuharth said in a statement. “Left unchecked, this deficit spending rate would eventually drain the Freedom Forum’s entire endowment, and the annual cash drain prevents us from allocating any new capital to First Amendment programs that are at the heart of our educational mission.”
The Freedom Forum’s assets were $1.1 billion in 2006. By 2015, the foundation had $804 million in assets, according to tax filings.
Newseum chief executive Jeffrey Herbst stepped down Monday as the plans were announced. The museum will be led by Neuharth, Newseum Board Chairman Peter Prichard and Scott Williams, the museum’s chief operating officer.
For a museum dedicated to the importance of the press, the Newseum has remained silent. Prichard and Herbst did not respond to messages, and the spokesman for the museum declined to answer all questions.
The Newseum has considered monetizing its building before, although it publicly denied any such plans. According to internal memos obtained by The Washington Post, in 2014, the museum considered using its building — then appraised at $667 million — to leverage cash. The memos revealed that the institution was considering offering equity shares in the building that would be repaid after 10 to 15 years. Other strategies considered in 2014 were the leasing of the parking garage and the sale of a storage facility in Maryland.
The memos showed that museum officials were looking for cash while they prepared to launch a $250 million fundraising campaign.
“Who would give them money when they were losing $30 million a year?” said Wayne Reynolds, a former Newseum board member. “People typically don’t want to salvage a sinking ship.”
Financed with money from the Freedom Forum, the Newseum first opened in 1997 in a modest space in Arlington. Three years later, its executives announced that they would move the museum to a coveted spot on Pennsylvania Avenue. The modern glass building opened April 11, 2008, with interactive displays and exhibitions on 9/11, the FBI and the Unabomber, and the fall of the Berlin Wall. Newer exhibitions include one on the 50th anniversary of the civil rights movement and “First Dogs: American Presidents and Their Pets.”
The museum has suffered from continued turnover at its top levels. Neuharth is the fifth leader in seven years, which suggests problems between the staff and the board, said Martha Morris, a retired professor of museum studies and former museum director. Salaries, benefits and payroll taxes topped $19 million for its 263 employees in 2015, which was about one-third of the museum’s $61 million in total expenses.
Many former Gannett executives serve on the boards of related nonprofit groups, and several are paid, an unusual practice, Morris said. Prichard, a former top USA Today editor, was paid $313,231 in 2015 from organizations related to the Newseum, according to tax records, and Charles Overby, a former Gannett editor who was chief executive of the Freedom Forum, earned $129,219 from related companies that year.
Herbst, who was president of Colgate University before joining the museum in 2015, earned $259,108 for five months’ work in 2015. His predecessor, James Duff, earned $1.2 million in 2014.
The Freedom Forum subsidy is the Newseum’s most significant revenue stream. In 2015, the museum earned $242,371 in memberships and brought in $6.3 million in non-Gannett donations, according to tax filings. It is a popular space for parties, too. In 2015, it brought in $21.4 million in facility rentals and catering revenue, almost three times the $7.5 million it earned from admission fees, tax filings show.
The museum struggles with attendance. Washington’s most popular museum, the Smithsonian National Air and Space Museum, reported about 7 million visitors last year, while the Newseum attracted about 800,000. Adult admission is set at $24.95 and youth tickets cost $14.95, making it one of the costliest museums in a city with many world-class institutions — such as the National Gallery of Art across the street — that are free.