The Metropolitan Museum of Art in New York spent $11 million on insurance in a recent year, representing a significant increase from earlier periods. The Art Institute of Chicago has seen its climate control costs climb substantially. Across the country, museums are grappling with expenses that are rising faster than their revenues, forcing difficult choices about exhibitions, acquisitions, and operations.
These mounting costs reflect a convergence of pressures that threaten the financial stability of cultural institutions. Insurance premiums have climbed as the value of artworks has soared and extreme weather events have become more frequent. Energy expenses have increased as museums struggle to maintain the precise temperature and humidity levels required to preserve collections. The result is a squeeze that affects institutions of all sizes, from major metropolitan museums to small regional galleries.
The financial strain comes at a time when museums are already navigating challenges including declining membership, increased competition for donor dollars, and pressure to expand access and programming. Many institutions are now reassessing their fundamental operations, questioning whether traditional models of collecting, preserving, and displaying art remain sustainable in an era of constrained resources.
The Insurance Crisis Reshapes Exhibition Planning
The cost of insuring artworks has become one of the fastest-growing line items in museum budgets. According to the Association of Art Museum Directors, insurance expenses for traveling exhibitions have increased substantially in recent years. The organization, which represents more than 240 art museums in North America, has documented the trend in its financial surveys of member institutions.
The spike reflects multiple factors. Auction prices for contemporary and modern art have reached record levels, pushing up the insured values of works. A painting by Jean-Michel Basquiat that might have been valued at $20 million a decade ago could now carry a $100 million price tag. When museums borrow such works for exhibitions, they must insure them at current market values.
Climate-related disasters have also driven up premiums. Hurricanes, floods, and wildfires have damaged cultural institutions and their collections with increasing frequency. Hurricane Harvey flooded storage areas at several Houston museums. Wildfires have threatened California institutions including the Getty Center in Los Angeles. Hurricane Ida caused water damage at the New Orleans Museum of Art. Each incident has made insurers more cautious and more expensive.
Major loan exhibitions now carry insurance costs that can reach hundreds of thousands of dollars for individual works. Museums have described insurance expenses for traveling shows as increasingly burdensome, with some institutions reporting that costs for major exhibitions have become nearly prohibitive.
Museums have responded by reducing the number of borrowed works in exhibitions, focusing on their permanent collections, or seeking government indemnity programs that can substitute for commercial insurance. The Federal Council on the Arts and the Humanities administers an indemnity program that covers eligible exhibitions, but the application process is lengthy and not all shows qualify. The program requires at least a year of advance planning and limits coverage to exhibitions that meet specific educational criteria.
Some institutions have begun self-insuring portions of their collections, setting aside reserves rather than paying premiums. The Museum of Modern Art in New York self-insures works valued below a certain threshold, typically several million dollars. This approach works for large, well-endowed museums but remains out of reach for smaller institutions operating on tight margins.
The insurance challenge has altered curatorial ambitions. Blockbuster exhibitions that once featured dozens of masterworks borrowed from collections around the world have become rarer. Museums now design shows around smaller groups of high-value loans, supplemented by works from their own holdings or pieces borrowed from nearby institutions where transportation costs and insurance premiums are lower.
Climate Control Costs Escalate With Energy Prices
Maintaining stable environmental conditions represents another major expense for museums. The American Alliance of Museums, which has more than 35,000 individual members and represents institutions serving 850 million visitors annually, reports that energy costs account for 10 to 15 percent of operating budgets at most museums. For institutions with older buildings or extensive collections requiring strict climate control, the percentage can be higher.
Art conservation standards call for maintaining temperatures between 68 and 72 degrees Fahrenheit and relative humidity between 45 and 55 percent, with minimal fluctuation. These narrow parameters require sophisticated HVAC systems that run continuously. A single degree of temperature variation or a five-point swing in humidity can damage sensitive works on paper, cause paint to crack, or promote mold growth.
The Isabella Stewart Gardner Museum in Boston, housed in a century-old building designed to resemble a Venetian palace, spends approximately $1.2 million annually on climate control. The museum's central courtyard, filled with plants and open to the elements in Isabella Gardner's time, is now enclosed with a climate-controlled glass roof to protect the collection. Museum leadership has described the ongoing challenge of balancing preservation needs with operational costs.
Energy price volatility has compounded the problem. Natural gas and electricity costs have fluctuated significantly in recent years, according to the Energy Information Administration. Museums that locked in favorable utility contracts years ago have faced sticker shock upon renewal.
Some institutions have invested in energy-efficient systems that promise long-term savings but require substantial upfront capital. The Walters Art Museum in Baltimore completed a major renovation that included upgrading its HVAC system. The new equipment reduced energy consumption substantially, but the museum needed to raise funds specifically for the project through a capital campaign.
Other museums have explored whether conservation standards can be relaxed without harming collections. Research by the Image Permanence Institute at Rochester Institute of Technology has suggested that allowing slightly wider temperature and humidity ranges might be acceptable for many types of objects. The approach, known as "precision conservation," could reduce energy use significantly.
Implementation remains controversial. Conservators worry that loosening standards could cause gradual, irreversible damage that might not become apparent for decades. Lenders are often reluctant to allow their works to be displayed under conditions that deviate from established guidelines. Insurance policies may require adherence to specific environmental parameters.
The debate reflects a larger tension between preservation and access. Museums exist to care for collections in perpetuity, but they also have missions to serve the public. Spending millions on climate control leaves less money for education programs, community outreach, and free admission days. Some directors argue that museums must find ways to reduce operational costs if they want to remain relevant and financially viable.
Smaller Institutions Face Existential Threats
The financial pressures affecting major museums pose existential threats to smaller institutions. Regional museums and university galleries typically operate with smaller endowments, fewer revenue streams, and less capacity to absorb cost increases. Many have already cut staff, reduced hours, or postponed maintenance.
The Berkshire Museum in Pittsfield, Massachusetts, became a cautionary tale when it announced plans to sell works from its collection, including paintings by Norman Rockwell and Alexander Calder, to raise money for operating expenses and building improvements. The decision sparked fierce opposition from the local community, other museums, and professional organizations. Critics argued that deaccessioning to fund operations violated ethical standards and betrayed the museum's mission.
The controversy highlighted the precarious position of small museums. The Berkshire Museum had an annual budget of approximately $1.5 million and a modest endowment that left little cushion for unexpected expenses or revenue shortfalls. After legal challenges and negotiations, the museum proceeded with a modified sale that raised funds to establish a larger endowment intended to ensure long-term sustainability.
Other institutions have closed entirely or undergone major restructuring. The Corcoran Gallery of Art in Washington, D.C., one of the oldest and largest private art museums in the United States, dissolved after years of financial struggles. Its collection was transferred to the National Gallery of Art, and its building was taken over by George Washington University. The Corcoran's demise shocked the museum world and raised questions about whether mid-sized institutions could survive in an increasingly difficult economic environment.
University museums face particular challenges. They often receive limited support from their parent institutions, which have their own budget pressures. Some university museums have lost facilities to disasters or operated without permanent homes for extended periods, illustrating how museums can become low priorities when universities face competing demands.
Smaller museums have fewer options for managing rising costs. They cannot easily self-insure collections or invest in expensive energy-efficient infrastructure. They rely more heavily on admission fees and membership dues, revenue sources that have proven volatile. The COVID-19 pandemic demonstrated how quickly financial positions can deteriorate when visitor income disappears.
Some institutions have merged or formed partnerships to share resources. The Frick Collection in New York has collaborated with other museums on joint acquisitions and shared conservation projects. Regional consortiums have emerged to coordinate exhibition schedules, share traveling shows, and negotiate group rates for insurance and services.
Others have reconsidered their missions. Rather than trying to maintain comprehensive collections and offer a full range of programming, some museums have focused on specific niches or strengthened ties to their local communities. The approach can reduce costs while creating distinctive identities that attract support.
Adapting Business Models and Revenue Streams
Museums are exploring new approaches to generate revenue and control expenses. Traditional funding sources—endowment income, membership dues, admission fees, and major donations—no longer suffice for many institutions. Directors are diversifying their financial portfolios and experimenting with alternative models.
Corporate sponsorships have become increasingly important. Museums partner with businesses to fund exhibitions, educational programs, and facility improvements. These relationships can be lucrative but require careful management to avoid conflicts of interest or the appearance that commercial considerations influence curatorial decisions.
Licensing and merchandising represent growing revenue streams. Museums license images from their collections for use in publications, advertisements, and consumer products. Museum shops have evolved from small gift counters to sophisticated retail operations that generate millions in annual revenue. Online stores extend reach beyond physical visitors.
Special events and venue rentals provide additional income. Museums rent their spaces for corporate functions, weddings, and private parties. These events can be profitable but also create wear and tear on facilities and potential security concerns. Institutions must balance revenue opportunities against their primary missions of preservation and public service.
Some museums have implemented or increased admission fees. The Metropolitan Museum of Art, which had maintained a pay-what-you-wish admission policy for decades, began requiring a fixed admission fee for out-of-state visitors. The change generated controversy but provided needed revenue. Other institutions have introduced tiered pricing, charging more for special exhibitions while keeping permanent collection galleries free or low-cost.
Membership programs are being redesigned to appeal to younger, more diverse audiences. Traditional models that emphasized unlimited free admission and exhibition previews are giving way to programs offering unique experiences, behind-the-scenes access, and social events. Museums recognize that younger generations value experiences over material benefits and are adjusting their offerings accordingly.
Digital Transformation and New Audiences
The COVID-19 pandemic accelerated museums' digital initiatives, forcing institutions to develop online programming when physical locations closed. Virtual tours, online exhibitions, and digital education programs reached audiences who might never visit in person. Museums discovered that digital offerings could engage people across geographic, economic, and physical barriers.
High-quality digital collections databases allow researchers, students, and art enthusiasts to explore holdings remotely. Museums have invested in photographing and cataloging their collections, making images and information freely available online. These databases serve scholarly research while also introducing collections to potential visitors and donors.
Social media has become essential for museum marketing and engagement. Institutions use platforms like Instagram, TikTok, and Twitter to share images, announce exhibitions, and connect with followers. Viral posts can dramatically increase awareness and attendance. Museums have hired social media specialists and developed strategies to maximize their digital presence.
Whether digital initiatives can generate significant revenue remains uncertain. Some museums charge for premium digital content or virtual events, but most online offerings are free. The value may lie more in building awareness and engagement than in direct income. Digital programming also requires investment in technology, staff, and content creation.
Virtual reality and augmented reality technologies offer new possibilities for experiencing art. Museums are experimenting with VR exhibitions that allow users to explore galleries from home or view objects in three dimensions. AR applications can overlay information and images onto physical spaces, enhancing in-person visits. These technologies are expensive to develop but could differentiate museums in an increasingly competitive attention economy.
Rethinking Collections and Deaccessioning
Professional standards have traditionally restricted museums' ability to sell collection objects, allowing proceeds to be used only for acquiring new works. This policy aims to prevent institutions from treating collections as financial assets to be liquidated during difficult times. However, some museum leaders now argue that these rules are too rigid and prevent institutions from addressing urgent needs.
The Association of Art Museum Directors has examined its guidelines on deaccessioning. During the pandemic, the organization temporarily relaxed restrictions, allowing museums to use proceeds from art sales for direct care of collections, including conservation and storage. The change acknowledged that preserving existing collections might sometimes require financial flexibility.
Debates continue about appropriate uses of deaccessioning proceeds. Advocates for reform argue that selling works that don't fit a museum's mission or are rarely displayed can provide resources for better care of remaining collections or for critical operational needs. Critics worry that loosening restrictions could lead to short-sighted decisions that diminish collections and betray donor intent.
Some institutions have deaccessioned works to refine their collections and acquire pieces that better serve their missions. Museums are also reconsidering what they collect and how much they acquire. Storage costs money, and maintaining large collections requires significant resources. More selective acquisition strategies can reduce long-term expenses while allowing institutions to focus on areas of strength.
Sharing collections through long-term loans offers another approach. Museums with extensive holdings can lend works to smaller institutions that lack resources to build comprehensive collections. These arrangements increase public access while reducing storage and maintenance costs for lending institutions.
The Role of Government and Public Support
American museums have historically relied on private philanthropy rather than government funding, unlike their European counterparts that receive substantial public support. As financial pressures mount, some advocates argue that museums provide public goods that justify taxpayer investment.
The Federal Council on the Arts and the Humanities administers programs that support museums, including the arts and artifacts indemnity program that provides insurance alternatives for exhibitions. The National Endowment for the Arts and the Institute of Museum and Library Services offer grants for specific projects and general operations. However, federal arts funding remains modest compared to other developed nations.
State and local governments provide varying levels of support. Some cities and states fund museums directly or provide operating subsidies. Others offer tax incentives for donations or capital improvements. Public funding can be politically contentious, particularly when controversial exhibitions or acquisitions generate criticism.
Museums receiving government support may face restrictions on content, programming, or operations. Concerns about political interference and censorship make some institutions wary of public funding. Balancing financial need against curatorial independence remains a delicate challenge.
The economic impact of museums strengthens arguments for public investment. Cultural institutions attract tourists, support local businesses, and enhance property values. Studies have documented the economic benefits museums provide to their communities. Framing museums as economic engines rather than elite cultural institutions may build broader political support for funding.
What This Means for the Future of Museums
The financial pressures confronting museums are not temporary aberrations but symptoms of structural challenges that will likely intensify. Climate change will continue to drive up insurance costs and potentially damage collections. Energy expenses will remain volatile. Competition for philanthropic dollars will increase as wealth inequality grows and donor priorities shift.
Museums must adapt or risk becoming unsustainable. The institutions that thrive will likely be those that make clear choices about their priorities, build diverse funding bases, and maintain flexibility to adapt as circumstances change. Some will focus on their permanent collections and local communities. Others will pursue ambitious exhibition programs and international partnerships. Different models can succeed if aligned with institutional strengths and market realities.
Collaboration and consolidation may increase. Museums could share back-office functions, coordinate conservation efforts, and pool resources for major projects. Some institutions might merge or transfer collections to larger, more stable organizations. Such moves would be painful, involving loss of independence and local identity, but they could preserve collections and ensure public access.
The fundamental question is what role museums should play in contemporary society. If they are primarily custodians of cultural heritage, preserving objects for future generations, then high costs for conservation and security are justified. If they are educational institutions meant to serve broad audiences, then accessibility and programming should take priority. If they are economic engines that attract tourists and enhance property values, then cities and states should invest in their success.
Most museums try to fulfill all these roles simultaneously, a balancing act that becomes harder as costs rise and resources remain constrained. Clear articulation of mission and priorities will be essential for institutions seeking to build sustainable futures.
The challenges facing museums reflect broader questions about how societies value culture and allocate resources. Art institutions have historically depended on the patronage of wealthy individuals and families. As wealth becomes more concentrated and philanthropic interests shift toward causes like education and health care, museums may struggle to maintain support. At the same time, public appetite for cultural experiences remains strong, as evidenced by attendance figures and social media engagement.
Museums have survived previous periods of financial stress. The Great Depression forced many institutions to cut staff and reduce hours, but most endured. Economic turmoil in the 1970s and early 1980s prompted soul-searching about museum missions and finances. Financial crises in recent decades have led to budget cuts and endowment losses, yet the sector has shown resilience.
The current moment feels different because the pressures are multiple and reinforcing. Insurance costs, energy expenses, and competition for funding are all increasing simultaneously. Climate change poses long-term threats that will require sustained investment and adaptation. The pandemic revealed vulnerabilities in business models dependent on in-person visits and special events.
Yet museums have proven remarkably resilient institutions. They have adapted to changing technologies, evolving social norms, and shifting aesthetic values. They have survived wars, economic depressions, and cultural upheavals. The coming years will test that resilience again, but the fundamental human desire to create, preserve, and share art suggests that museums, in some form, will endure. The question is not whether museums will exist but what forms they will take and how they will serve their communities in an era of constrained resources and competing demands.