Getty endowment declines 25%; Getty chief announces hiring freeze

Even the wealthy Getty Trust is hurting in today's bleak economy.

In an in-house memo addressed to "All Getty Staff,"  Getty Trust Chief Executive James N. Wood warns that the Getty is facing "a difficult period ahead" because the value of the Getty endowment, which ended the 2008 fiscal year at $5.98 billion, has since that time declined "roughly 25%."

Wood writes that the decline calls for the Getty to "significantly reduce spending in its fiscal year 2010 budget, "which will have an impact on staffing, programming and operations. ... I have asked our management to freeze all hiring. Any requests to replace positions will be subject to my review. I have also asked that promotions and salary adjustments be halted so that we are not adding costs at a time when we need to take steps to ensure the Getty's future budgets are in line with our income."

Read the full memo, obtained by The Times, after the jump:

-- Diane Haithman

Photo: James N. Wood. Credit: Ricardo DeAratanha / Los Angeles Times

All Getty Staff:

I want to provide you with an update on the Gettys current financial situation and set expectations for what is likely to be a difficult period ahead, particularly given current economic conditions and uncertainty over when we may start to see a turnaround.

Let me begin by stressing that the Gettys endowment is managed prudently, with careful oversight. But the Getty has not been immune to the steep decline in financial markets which has affected so many of our peers even more seriously. Our endowment ended the 2008 fiscal year at $5.980 billion and, since that time, with financial markets deteriorating further, the value of the endowment has declined roughly 25%.

Looking ahead to fiscal year 2010 we can see that the losses our endowment has suffered will be reflected in declining budgets. In the New Year, as we prepare the Gettys FY10 budget, it is essential that we significantly reduce spending, which will have an impact on staffing, programming, and operations.

I realize that when we met last May to communicate the changes that resulted from our strategic planning process I said we had made difficult decisions that I hoped would preclude taking further action in the future. However, no one could have foreseen then the severe downturn in the economy that began to manifest itself in late summer, and no one can accurately predict when a recovery will begin, or how long it may take to regain the losses our endowment has suffered.

Therefore I have asked our management team to freeze all hiring. Any requests to replace positions will be subject to my review. I have also asked that promotions and salary adjustments be halted so that we are not adding costs at a time when we need to take steps to ensure the Gettys future budgets are in line with our income.

The Getty is a strong institution. With prudent planning and decisive action we will weather these challenging times, but unfortunately not without some hardship. I regret that this is the news I must share with you in this holiday season, and particularly at the conclusion of a year of such accomplishment for which I owe each of you so much. However, I believe that it is essential to share the facts as they are. As we move through the 2010 fiscal year budget planning process, I will promptly share with you the decisions we make.

Comments

[A Scanner Darkly]

Non-profits are required by law to spend 5% of their endowment. Ergo, they have to spend nearly $300 million. Apparently, they are more interested in aquisitions rather than people.

[Donald Frazell]

That would mean about 225 million, and shrinking. As they went from about 6 billion to about 4.5 with a 25% drop, and no end in sight. Though the stock market probably has bottomed out, and a good time to buy, the recession/depression has just begun, and at the end, inflation will kick in big tiime. This is not your parents recession, its your great grandparents depression.

They will have to cut costs, including people, but have such a huge infrastructure of buildings and overseas conservation projects, much will have to be here as well. Money is in short supply people, and will be for the next two years at least. It doesnt grow on trees, unlike what art and business schools have been teaching, time to go take economics. Things are tottally twisted. As is our culture.

[Jean]

The Getty board of directors needs to be looked into - again.

[A Scanner Darkly]

With my father having retired several years back after having been the Executive Director of a small city Art Museum with a annual budget of around 100K and no endowment ( money obtained through donations, fund-raisers and memberships) I have little sympathy for these gigantic Trusts. Mona Lisa's and Mad Hatters

[Robert Laughing]

What is art? Something no one but the 'appraiser' understands (or claims to) and is grossly over-priced. With the investigations into tax dodging 'Art Donations' to all those allegedly REPUTABLE institutions, this will be the opportunity of a lifetime, to obtain real 'bargains,' like the NEA jar of urine with crucifix, among many others. Yes, antiquities are precious, but let's NOT forget, if we WON'T save TODAY's world, what's the point of 5,000 years ago? The Getty probably NEEDED this dose of reality....buying a former 'notable' a Porsche SUV (!!!)......this is really a breathe of fresh air.

[Paos]

"Non-profits are required by law to spend 5% of their endowment. Ergo, they have to spend nearly $300 million. Apparently, they are more interested in aquisitions rather than people."

Which would make sense, considering that they're a museum. No?

[Susan]

My mother was private secretary to J Paul Getty, back in the first depression. I wonder what both of them would think of all this.

[ari middles]

if the new president was SERIOUS about cutting costs at the getty, he'd take a reduction in his $700,000 salary, eliminate redundant departments, face down the board, generate free energy on site with solar, and cut nonsense luxuries like shuttle service up and down the hill from the budget.

but that won't happen because jim wood doesn't appear to have a spine. what he has is a leash. and that leash is held by the board.

if jim woods and the getty want to survive, they'll need to adapt and adapt quickly. and a giant trust like the getty can't move quickly and efficient to adapt to change unless leadership MANDATES it.

firing staff & reducing wages isn't leadership mandating change, mr. wood: it's running scared while keeping the bigger problems in place to be solved by others at another time.

[dr.x]

ari, please tell- what departments are redundant? shuttle service has been cut- would you like it eliminated completely?

[Donald Frazell]

He said nothing about pay cuts or firings, he said no new positions and no raises for the foreseeable future. That would include him i hope. I am no fan of the ovepaid managerial cult that resulted in our busted economy, paying people who are easily replaceable far more than our competition, which is leaner and better built, overseas. However, its thier money, and if they want to pay him, 700k is hardly exorbitant considering thats almost base salary in the NBA.

Who says there are redundant departments? Its a fairly new organization, as far as the new Getty and teh fund, about 20 years, times havent changed taht much. Get rid of some of the silly installations and pseudo hip crap would be better, silly films about self involved performance artistes and such. Waste of money, no one cares. rather see films aobut their conservation works overseas.

And how is he going to face down the board? They are HIS boss, and can fire him at will. He is President, the CEO, not Chariman of the Board. Thats how corporations work son. And the Getty isnt going anyway, they have so much money god is jealous. thye will be fine, jsut have to cut back and adapt. They are irrlevant and irresposnbile children like MoCA and Contemporary artistes.

[barbiedollspimp]

the getty foundation continues to crumble like the pillers and villas inside the paintings that hang on the walls. the getty is no longer a community but a commodity. cuts are understood, but administration departments (i.e. those at the top) still have benefits that they've cut for lower departments, like security. they've cut out security's christmas bonus (which was 4 days of double time pay, now down to 1), but upper departments still get it. how is that fair? if you're gonna cut stuff, it should affect everyone. managers, directors, and CEO's shouldn't be exempt. that's not getty leadership, that's bush leadership.

james woods, GO BACK TO ACTING!

[michael]

if the trust is doing so poorly then why doesen't management at the top take a 25% cut in salary to show the "working class" members of the Getty that they too are willing to siffer in these economic difficult times.

if the executives of the automotive industry including the Japanese can cut their salaries down to $1.00 a year certainly the Getty management team can do like wise.

[Don Covay]

The security staff got 4 days pay as a Christmas bonus?!?!? I worked at the Getty for 5 years and never got a single "bonus." I was lucky to get a 1 or 2% raise each year, as they "discontinued" real raises the year I began working there. (This was with outstanding performance reveiws every year.)

A 1% raise on a 30K a year job works out to be about an extra $6 per paycheck after taxes... nice.