<p>My understanding is that Brandeis is in a different (i.e., worse) situation than many other institutions for a number of reasons: 1) Brandeis historically has depended on using all anticipated income from the endowment to pay current expenses (most more heavily endowed institutions use only some of the income and reinvest the rest back into the endowment); 2) Brandeis has depended much more heavily than most other institutions on current philanthropy–and many of those regular donors have been hard hit by Madoff. These two items have created a large current deficit as well as even larger projected deficits in the future; and 3) Massachusetts law puts severe limits on using either principal or interest on endowment funds which have depreciated in value below their original value at the time of gifting. While this last item applies to Harvard, MIT and all other non-profit institutions in the Commonwealth–Brandeis is particularly impacted because it is a young institution and many of the gifts to the endowment were made relatively recently and, as a result, the current economic crisis has caused many funds to be valued at less than what they were when they were donated. Many programs added in the last few years are funded through endowment monies which may be totally inaccessible as a result of this unusual law. </p>
<p>Hopefully, the Mass legislature will address this last problem but, in the meantime, the University must plan for the possibility that the law won’t be changed and that it’s endowment, which is still worth over 500 million, may be largely inaccessible to fight the problem. And since there will be few donors with the resources to help in the short term–the only options are to drastically cut the budget or sell some art. By closing the museum, the University frees itself from the deaccessioning rules adhered to by museums and Brandeis gains the flexibility to sell art as necessary to avoid draconian cuts in its core educational mission. </p>
<p>It seems to me that this action is unfortunate but necessary.</p>