In February, Bellevue Arts Museum pulled the fire alarm. To survive a “dire” financial crisis caused by the pandemic, a lack of long-term funding and shifts in audience and philanthropic habits, the museum called for help. Leaders hoped the launch of an emergency fundraising campaign could stave off closure.
Five weeks later, the museum announced it had surpassed its $300,000 campaign goal, thanks in large part to a $145,000 donation from an anonymous Minnesota donor, a local donor who pitched in $50,000 and contributions by board members.
It sounds like a triumph. But $349,000 is a drop in the bucket for an organization whose problems started years before — and run much deeper than — the pandemic.
Interviews with 27 former and current employees, board members, artists and museum experts, coupled with internal documents and public records, paint a picture of a nonprofit that — like many other smaller art museums — has been caught in a near-constant scramble for cash and a recurring cycle of emergency fundraising.
Dogged by debt, over-optimistic financial forecasting, leadership turnover and overreliance on a small group of funders, the museum patched holes by creating new ones. It made payroll but left artists and businesses it contracted with for services unpaid for months. It borrowed against its building, its only significant asset. Plans to raise a multimillion-dollar endowment fund, a financial nest egg institutions can draw from, were never realized.
More often than not, BAM ended its fiscal year in a deficit. And when cash ran thin, the museum resorted to the same scenario. Step 1: Sound the alarm. Step 2: Call on donors and trustees or take on a loan. Step 3: Breathe a sigh of relief. Then, repeat: With no real endowment, the museum would eventually lapse into financial trouble again. A variation of this pattern has played out at least five times in the last 23 years, audited financial documents, public records, financial planning documents and news articles show.
This time, too, $349,000 is a Band-Aid. Financial forecasts provided to BAM’s 16-member board this year and viewed by The Seattle Times show BAM needs $650,000 to stay in business through 2024 and $1.5 million to end the year healthy.
BAM’s issues are a perfect storm and an example of, experts say, the precarious state of many small museums in America — which are more reliant on philanthropy given the lack of public support compared with Europe — and the difficulty of creating an art museum in a city of new wealth.
But while BAM officials point to the museum’s lack of infrastructure — an expensive business model and a building with costly upkeep, coupled with the lack of a sizable endowment — current and former board members and former employees say a chronic failure of leadership is also to blame.
“COVID was not the reason we need this money,” said a current board member, who requested anonymity because board members aren’t authorized to speak to media.
“It’s really just: We are in so much debt,” the board member said, blaming a lack of leadership and longer-term planning by the current board, former boards and previous executive directors. “I think we need to admit that we made operational mistakes.”
With the museum under financial stress, “how we managed the museum in the past hasn’t worked and brought the right outcomes,” said Mitch Smith, a longtime BAM board member and former president, pointing to structural underfunding and past “misalignment” between staff, the board and leadership.
Smith stresses that BAM now has the right people in leadership, on staff and on the board, which added five new members in 2023 and 2024, including Microsoft Vice President of Product Adam Harmetz and Martin Liang, a senior vice president at Cathay Bank. Board members can serve up to three terms of three years.
“We have some amazing people that are contributing to that path forward,” Smith said.
Enter new Executive Director Kate Casprowiak Scher. A former BAM board member, art history professor and art appraiser who’s new to nonprofit management, Scher became BAM’s interim executive director last September and was permanently appointed in February. Scher — who, staff members say, has lifted morale — positions herself as the harbinger of change ushering in a new era of transparency.
“We have been in survival mode for so long we have accepted it as status quo,” Scher said. “Yes, the pattern is troubling,” she added, “But so is losing an institution as valuable as BAM.”
Boosting the arts in Bellevue
Formed in the 1940s as an arts and crafts fair, BAM is the jewel in Bellevue’s art crown. As it grew into a permanent art space in ensuing decades, the museum settled in unusual locations, including a red schoolhouse, former funeral home and mall, before moving into a brand-new downtown building in 2001. Funded with $23 million in donations by a who’s who of local tech wealth — including Paul Allen, Bill Gates and former Microsoft executive Jon Shirley and his wife, Mary — BAM 2.0 was supposed to boost Bellevue’s downtown and increase art access for Eastside residents.
Enlisting famed Bremerton-born architect Steven Holl for the design, backers hoped, would boost fundraising. With its textured red facade, the building stood out from its gray and glass surroundings. Inside, the light-flooded, open design reflected BAM’s new, somewhat unusual model as an education-focused museum without a permanent collection — a 39,000-square-foot “art garage,” as Holl put it.
BAM is one of the few Eastside institutions where people can see both local artists and significant traveling exhibits and one of the few museums in the region where emerging local artists can get their first museum show, a crucial career step that can be hard to come by in the Pacific Northwest.
On the surface, BAM has a lot going for it: The museum owns its building in the heart of an affluent city and expensive real estate market. Plus, it’s long been financially supported by one of the Eastside’s wealthiest and most influential residents — real estate developer Kemper Freeman.
But those ingredients haven’t amounted to a recipe for success. BAM has ended its fiscal year in the black only five times since its 2001 reopening, according to tax records, and the museum has been living hand-to-mouth for at least the last five years, former employees and board members say. Many were not surprised by its February call for help.
Among them was Susan Blake, BAM’s former accounting manager. With fall fundraising in the rearview mirror but spring art fair funds not yet arrived, winter is “usually the most difficult time of year for BAM,” she wrote in an email to The Seattle Times.
Without steady income from an endowment, the museum relies on yearly fundraisers like the July Arts Fair (which usually yields more than $300,000 in booth fees and sponsorship) to pay for operational costs like building upkeep, exhibitions and payroll.
Living event-to-event meant the museum frequently got behind on bills, according to former employees and internal emails obtained by The Times. If there was a backlog, payroll and invoices that “could close the museum” were prioritized, Blake said — for instance, Puget Sound Energy “threatening to turn off the power,” she said. Next up: artists exhibiting at the museum, followed by other payments, including consignment fees to artists selling things in the museum store, Blake said.
In at least five instances before the pandemic, businesses BAM contracted with went unpaid for weeks, sometimes months, according to Blake and emails viewed by The Times. In 2003 and 2017, local companies claimed liens on the property for unpaid services, which were later released, according to public records.
Sometimes, the company credit card was declined and things got so tight that staff weren’t sure they’d get paid, multiple former BAM employees said. One former staffer, who requested anonymity for fear of professional repercussions, said her doctor advised her to quit for her physical and mental health: “I sat in her office crying because I had just gotten an email saying they didn’t know whether they’d make payroll. … The financial instability was a big piece of it.”
Still, BAM hung in there — until the pandemic. The museum received relief funding and kept most of the staff employed, but cash got extra tight.
By the time BAM had to cancel its 2020 Arts Fair, for which artists paid on average about $1,100 in booth fees, much of those funds had already been spent on operations. It took at least until mid-2022 for artists who didn’t roll over into the next two fairs to get reimbursed, according to spring 2022 board minutes reviewed by The Times.
The museum was in a tough spot when E. Michael Whittington took over as executive director in March 2022 — BAM’s sixth leader in 10 years. The institution had lost trust within the arts community after the previous executive director resigned in the wake of allegations of disrespectful behavior toward the museum’s first Black woman guest curator.
The pandemic slowed momentum and derailed plans to pay down debt and grow an endowment. By the end of 2021, as the pandemic dragged on and in-person fundraisers were a no-go, expenses outstripped revenue by roughly $425,000, audit documents show. That number ballooned to about $800,000 by the end of 2022.
Board and staff hoped Whittington would turn things around. But according to current and former board members and former employees, internal turbulence and turnover following his appointment made things worse.
Thirteen former and current employees and a board member, most of them women, said Whittington didn’t effectively communicate and collaborate with staff. Many said he micromanaged and at times created a difficult work environment. Twenty-nine out of about 35 workers left the museum between March 2022 and September 2023, according to numbers provided by Scher.
Two board members said they resigned in protest of the board’s refusal to acknowledge the issues, among other things.
Whittington did not respond to multiple requests for an interview.
Scher, on BAM’s board at the time, said she wasn’t made aware of the extent of the complaints until Whittington’s departure in September 2023.
“I really believed in what his vision was, and I wanted to support him because we all thought he was going to really change things here,” she said. “And he didn’t, and we thought that for too long.”
Whittington resigned for medical reasons, according to the museum. The board appointed Scher to replace him.
She inherited a museum in dire straits: Liquidity issues continued into 2023. The museum had about $350,000 in outstanding bills when it launched its February fundraising campaign. The “first thing” Scher did when funds came in, she said, was pay artists who were owed money for things they’d sold in the museum store, close the store to avoid further issues and start payment plans with various businesses.
Satpreet Kahlon, an artist who exhibited at BAM in 2023, said she waited seven months for a $1,500 reimbursement, which she received this spring.
“In my opinion, BAM has been playing catch-up for a long time,” said Blake, BAM’s former accounting manager.
How BAM got here
Many nonprofits are often cash-strapped or end some years in a deficit. But audited financial statements and public records show BAM’s issues run deeper — and have unfolded over more than a decade.
Individually, these problems may not be cause for concern, Seattle-based museum expert Susie Wilkening said, speaking generally, but “having them all happen at one museum is especially devastating.”
Scher and Smith trace these issues to a lack of infrastructure: Without a permanent collection, BAM has to organize expensive temporary exhibits year-round — which eats into revenue. Without an endowment, there’s no steady stream of cash buttressing the ups and downs.
BAM’s troubles began almost immediately after the building’s 2001 opening. In its first year, as the dot-com bubble burst and projected earnings from classes and attendance fell below expectations, the museum turned to a line of credit to cover operating expenses.
It wouldn’t be the last time. From 2013 to 2022, BAM took on at least four loans, audited financial statements show. In 2017, it gave a Kemper Freeman company — which owns the neighboring building — the view protection rights to its building in exchange for $5.5 million (with interest), meaning BAM can’t build upward. That year, the museum also entered into a right of first refusal agreement with Kemper Holdings, which gives the group first option to purchase the building should BAM sell it. (Freeman, the chair and CEO of Kemper Development, was not made available for an interview.)
“Taking on loans to cover operating expenses [is] pretty problematic for non-profits,” Wilkening said in an email, again speaking generally. “For an unusual year, it can be OK, but to address a systemic problem, [it] can create a pretty devastating spiral.”
The museum also staved off cash flow issues thanks to the city of Bellevue, which contributed $3 million to the building’s construction budget and floated two rounds of conditional funding between 2003 and 2008, totaling $2.25 million, records show. Each time, the funds came with caveats: The museum needed to remain a museum working in the public’s interest. And, per its 2003 agreement, it would start an endowment campaign.
Endowments, pools of money set aside and invested, are designed to help nonprofits breathe easier by providing a steady stream of revenue for day-to-day operations.
But BAM never established that endowment. Even though Freeman and others seeded an endowment fund for the museum in the late 1990s, a Seattle Times article from early 2004 said the museum — amid financial troubles so dire it closed for more than a year — had not fully established it. Money earmarked for it was spent on operations. (In the mid-2000s, a donor established a $314,000 education-focused endowment, but that income is negligible. According to BAM’s previous projections and a museum expert, the museum needs an endowment between $10 million and $12 million to cover its median operating gap of about $600,000.)
Financial statements indicate the museum also struggled with fundraising. In the 2010s, an anonymous donor offered to match a $2.5 million curatorial endowment fund. During a period of leadership changes, the museum wasn’t able to match the challenge, said board member Smith.
For years, independent auditors expressed concerns about BAM’s continued deficit, and BAM promised to expand its donor base or seek additional financing.
Between 2018 and 2019, a consultant commissioned by the city of Bellevue raised concerns about the museum’s liquidity, debt levels and over-optimistic income projections, suggesting “a fiscal crisis is looming,” the consultant wrote. By year-end 2017, BAM owed $470,000 to vendors, outstripping its cash assets by $385,000.
It’s unclear what kind of oversight Bellevue provided in the 2000s — the city has disposed of pre-2012 records as per standard retention policy. However, the city and its arts commission has only given about $300,000 in grants since 2009, and emails obtained through a records request show the city remained somewhat wary.
“BAM has long standing financial struggles not related to the COVID-19 pandemic,” Jesse Canedo, the city’s chief economic development officer wrote in a 2021 email, “and staff continue to have concerns about their long-term operational model and financial viability.” (In an interview, Lorie Hoffman, the city’s arts and creative economy manager called BAM a “pillar” and said she wants to see the museum succeed and continue serving the public.)
Upon learning of BAM’s financial situation late last year, city staff prepared a list of funding options for the City Council’s consideration. The council didn’t express interest in sending the museum one-time funding then, said Emily Inlow-Hood, the city’s deputy communications officer, and instead asked the city to accelerate the launch of the new cultural facilities grant program open to all organizations in Bellevue.
Daunting task
With debt to pay off, staff that has dwindled from about 30 in 2022 to 20 and a building in need of upgrades, BAM faces a long road of rebuilding ahead — all while ramping up programming to increase visitor numbers, which last year were about half of pre-pandemic levels.
Then, the most daunting task of all: raising an endowment. Plans have not been drawn up, but Smith — who declined to name a goal number — envisions a campaign starting in 2025.
The question now: Will it be different this time?
“I think that’s only revealed by working one step at a time,” Smith said, highlighting that previous efforts may have fizzled out because the museum didn’t have stable financial footing. “We have to have some near-term wins and successes … and then you just build on that.”
Scher, who is working on a strategic plan and an expansion of classes, public programming and Free First Fridays, said that what BAM needs to break out of its Catch-22 is money to stabilize and hire a development leader to oversee fundraising.
The latter presents one of BAM’s biggest challenges: Insiders say Bellevue, while wealthy, can be a challenging environment for arts philanthropy — younger tech entrepreneurs aren’t always interested in the arts, and other donors may be more swayed to fund Seattle institutions.
BAM’s financial instability likely created additional hesitation, Smith said. But relying on a handful of donors, he said, won’t cut it this time.
Neither will living from fundraiser to fundraiser, Scher said. “I don’t want to sink back into that model,” Scher said. “If we can’t change it, then we have to decide if we really are a viable museum. And I hate saying that.”
But Scher stressed BAM’s successes — and potential.
“We have such an opportunity here to be a huge cultural keystone of the Eastside,” Scher said. “We just need the right partnerships at the right time. And some consistency and leadership.”
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This coverage is partially underwritten by the M.J. Murdock Charitable Trust. The funder plays no role in editorial decision making and The Seattle Times maintains editorial control over this and all its coverage.
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