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Museums are not immune from the bad economy. Funding is being cut. Many museums are laying off staff and postponing exhibitions. Some are in life or death situations, and they are considering draconian measures to raise money. As part of our series on the challenges facing museums in the 21st century, NPR's Jim Zarroli reports.

Unidentified Man: That's the Bronx Zoo, I think, right down there.

Unidentified Child: You mean that big green patch?

Unidentified Man: Yeah.

JIM ZARROLI: Each year some 200,000 people come to the Queens Museum of Art. And the most popular exhibition, by far, is the "Panorama," a 9,300 square foot replica of the City of New York, containing every building in all five buroughs.

Unidentified Child: Dad, can you see Yankee Stadium?

Unidentified Man: Yeah.

ZARROLI: The museum is housed in an imposing art deco pavilion built for the 1939 World's Fair. In the '40s, it was used for the opening of the U.N. General Assembly. Then in 1972, it became the Queens Museum of Art. Tom Finkelpearl is the museum's director.

Mr. TOM FINKELPEARL (Director, Queens Museum of Art): At that time, there were no cultural institutions in Queens. You have to understand, even Staten Island had some august 19th century institutions, the Bronx, certainly Brooklyn and Manhattan, so there was a feeling of civic pride.

ZARROLI: At first, the museum was funded entirely by the city, but today it gets most of its money from corporate and private donors. And Finkelpearl says the recession has made raising money much harder. Many donors are worth a lot less today because of the turmoil in the stock market. Meanwhile, the hard-pressed city government has cut some $400,000 from the museum's budget.

Mr. FINKELPEARL: When I started at this museum six years ago, we had a $2.5 million budget. And this is what's so frustrating. You grow it one grant at a time, and you build up, and you do more programming, and you have more staff and more audience. And I wouldn't be surprised to see our budget cut down to $3 million, again, which is essentially wiping away almost all the work we've done in terms of growth in the last six years.

ZARROLI: The museum has laid off about 10 percent of its small staff. It's also looking for other ways to cut costs.

(Soundbite of Taiwanese art exhibition)

Unidentified Announcer: (Taiwanese spoken)

ZARROLI: It decided to extend this exhibition of contemporary Taiwanese art, rather than open a new show in the same gallery, as a way of saving money. What's happening here is happening at museums of all kinds. The recession has affected both public and private funding sources, and the pain is being felt by everyone from the large institutions with sizable endowments and hefty ticket prices to the small museums that scrape by on government funding. Bruce Altshuler heads the museum studies program at New York University.

Dr. BRUCE ALTSHULER (Director, Program in Museum Studies, Graduate School of Arts and Science, New York University): It's going to be a difficult time, because as I say, these operating costs are there, can be decreased in certain ways, but there's a limit if you want to keep the doors open.

ZARROLI: This funding crisis has led to some soul searching about how far a museum may go to stay open. The venerable National Academy Museum and School of Fine Arts sits on what's called museum row on Manhattan's Upper East Side, near the Guggenheim and the Met. It's a quiet, somewhat fusty place run by artists with a kind of academic bent. And with a tiny endowment and a low profile, it's been losing money for years. Carmine Branagan is the museum's new director.

Ms. CARMINE BRANAGAN (Director, National Academy Museum and School of Fine Arts): I think that they were in what could only be described as a monumental crisis. There wasn't money to pay the guards. There wasn't money to buy ink cartridges. I actually worked gratis for many months. They had absolutely no cash flow. All the budgets were frozen.

ZARROLI: To pay off its debts, it sold two paintings from its sizable permanent collection for $15 million. Museums sometimes sell works for certain reasons. They may want to buy a new work that fits in their collection better. But selling them to pay operating costs, as the National Academy did, is a cardinal sin in the museum world, says Graham Beal who directs the Detroit Institute of Arts.

Mr. GRAHAM BEAL (Director, Detroit Institute of Arts): What you're actually doing, of course, is not - you're not so much selling an asset, which is how it's viewed, you're really selling part of what you are. And, I mean, the institution is there to safeguard the art. The art is not there, in a way, to support the institution.

ZARROLI: Beal says that with art prices so high, museums facing funding crises are sometimes tempted to sell works, but he says they're usually able to find a better solution.

Mr. BEAL: The National Academy, as I understand it, voted not to sell their building, which is a very nice location on 5th Avenue. Well, you know, they - the kind of money they could have got for that sort of building would provide an enormous endowment, much more than a couple of paintings, probably.

ZARROLI: For its sins, the National Academy was blacklisted by the Association of Art Museum Directors. That means other museums won't lend it works for special shows or cooperate with it in any way. The move has dismayed Carmine Branagan. She says selling works may be a lamentable act, but it's also sometimes necessary to save an institution as a whole, and the museum world needs to come up with a way to tell the difference.

Ms. BRANAGAN: There are going to be a lot of institutions that are being brought to their knees by the current financial climate. And wouldn't it be better to really understand when a financial crisis is really a financial crisis, and then to really consider how an institution can actually right itself over time and do that in a collegial way rather than pit museums one against the other, which is a very, very, very unfortunate situation.

ZARROLI: If nothing else, the troubles at the National Academy underscore just how much is at stake for museums right now. As funding sources dry up, museums will have to look for new ways to get by. The question is how far they should go to survive and whether they can do it without compromising the trust the public has placed in them. Jim Zarroli, NPR News, New York.

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