Not so long ago, the financial future of America’s art museums looked grim.

Hard hit by the global recession, their war chests shrank as their investment portfolios tanked—along with those of many of their most generous sponsors. Now, however, with the stock market back from its lows, the country’s richest museums have had their coffers restored. The top art institutions in the country are collectively sitting on $23.1 billion in assets, almost back to where they were in 2008, but things have changed since the heady days before the crash. Museums have to find novel ways to tap wealthy donors in a more clear-eyed postrecession world.
 
First, our ranking. We commissioned Foundation Source, a service provider to family foundations, to give us financial snapshots of the wealthiest art museums in the country in 2008 and today. You can find our exclusive list on this page. The total assets of half the museums on our list are hovering at or close to their prerecession highs; the other half’s have soared past their previous high mark. But due to the turgidly slow reporting of nonprofits, with our analysis relying heavily on 2012 results, the picture is much better than even our list indicates. “It is fair to say that we are in a much better place than in 2008, when things literally came to a halt,” says Elizabeth Ellis, a principal at the arts and culture strategy firm AEA Consulting in New York.
 
Take the Philadelphia Museum of Art, ranked No. 10 on our list. During the recession, the grand old dame of Philadelphia saw its endowment—which covers some 25% of its operating expenses—plunge by nearly $100 million in just one year. According to data provided by Foundation Source, the museum’s revenue fell from $146 million in 2008 to just $60 million in 2009. In response, the museum cut staff and salaries and increased admission fees. It also postponed, for a year, a special exhibition on Spanish art, and cautiously put its plans for a Frank Gehry–designed expansion on an “as paid for” basis.
                          
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The Dallas Museum of Art’s Maxwell Anderson is overseeing a 279% increase in memberships. Photo: Dan Sellers for Barron’s
 
 
Today, the Philadelphia museum appears to have put its worst financial struggles behind it. Total assets are at $733 million, up 7.8% from where they were five years ago. And in July, the museum opened an exhibition of Gehry’s architectural models built for its $350 million project, signaling that its expansion plans were back on track.
 
Back in 2009, at the low point of the downturn, New York’s Metropolitan Museum of Art launched a slew of cost-cutting measures that included slashing 14% of its staff and shuttering more than a dozen of its satellite gift shops. Fast-forward, and the Met’s total reported assets clock in at $3.47 billion—2.1% below where they stood in 2008.
 
Things are rapidly improving. In September, the Met unveiled a new outdoor plaza and fountain financed with a $65 million gift from industrialist billionaire David Koch, one of its trustees. And in a move reminiscent of the far flusher days of a not-too-distant past, the museum is currently showcasing its new gift of 78 cubist paintings, drawings, and sculptures from the philanthropist Leonard A. Lauder. The group includes 14 works by Fernand Léger and 33 by Pablo Picasso. Valued at more than $1 billion, the bequest is considered one of the most significant in the museum’s history.
 
Among the strongest indicators of current financial optimism is the explosion of mammoth expansion projects, itself a harbinger of plans for greater programming, bigger crowds, and ever-more-epic shows. Last December, the Cleveland Museum of Art completed an extensive $320 million renovation and a new addition that saw its space increase by some 35%. A month later, the Museum of Modern Art in New York announced plans to erect a new structure on the site of the American Folk Art Museum.
 
A recovering stock market did a lot of the heavy lifting, but so did adroit sleights of hand. During the recession, several heavyweight museums quietly added seats to their boards as a way to shore up their sagging bottom lines. According to Foundation Source research, between 2008 and 2012, the Museum of Modern Art increased the number of its trustees from 53 to 60; the Art Institute of Chicago went from 44 to 53; Philadelphia added 19 to reach 75.
 
Todd Levin, the prominent art advisor and curator, and director of the New York–based Levin Art Group, says, “Adding to boards means that, to a certain extent, more money is going to be available to the institution and that these institutions are in a competitive field with one another.” In the case of the Museum of Modern Art, a seat reportedly requires as much as a $10 million check, suggesting the additional trustees brought in $70 million. Big museums will always lure major donors, drawn by the museums’ “strong brand, high-quality reputations, and locations in tourist markets,” says AEA Consulting’s Ellis.
                        
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The Museum of Fine Arts, Houston, ranked seventh in the nation, provides an interesting case study in this brave new world. A respected regional museum with a national reputation, the Houston’s encyclopedic collection holds 65,000 artworks stretching back to antiquity. During the recession, in one year, its revenue basically halved to $65 million. But cushioned by an oil-money community and a 79-member board of trustees—it added eight in the past five years—the museum navigated its way through the financial crisis. By June 2012, its total assets, at $1.12 billion, were just 3.8% shy of where they stood in 2008.
 
Behind the comeback stands Gary Tinterow, the Met’s former chairman of 19th century modern and contemporary art, who was made the Houston museum’s director in January 2012. A well-respected scholar, Tinterow is renowned for his wealth of art-world contacts and for having put on some of the Met’s most highly trafficked shows in recent years. Feeling rather optimistic about the Houston museum’s prospects, Tinterow shared with Barron’s Penta some impressive stats. Since 2009, admission attendance at the museum is up 30%. Last year, revenue from ticket sales, at $2.5 million, rose 56%, over 2012. Its slate of recent blockbuster shows included last year’s “Picasso: Black and White.” In the meantime, fund-raising efforts have landed two record-breaking years in a row for the museum. In 2013, it raised $16 million, up 23% from the previous year.
 
A major capital campaign is now under way for a new building to house its 20th and 21st century collections. The plans call for new outdoor and indoor theaters; a rooftop garden; a restaurant and study center that will host concerts; dance parties; book clubs; and, of course, art. Tinterow describes the eventual 14-acre campus as a place where “all aspects of culture and curiosity will be addressed.”
 
While he says the museum is not ready to publicly announce the campaign’s full monetary goals, he says the push has already garnered hundreds of millions of dollars in commitments. And yet, despite the large amounts of money pouring in, Tinterow cautions that his optimism is tempered: “I didn’t say it was easy. It’s never been easy.”
 
Tinterow’s concern is echoed across the marble columns and steps of America’s cultural landscape. Despite all the donor cash, “if you were to walk up to the typical U.S. museum director and ask, ‘How are American museums funded?’ ” wrote Ford W. Bell, director of the American Alliance of Museums, in a recent essay for the U.S. State Department Bureau of International Information Programs, “you would get a simple, straightforward answer: ‘Precariously.’ ”
 
Underwriting free admissions for the public: “It’s nice to put in money and see metrics,” says Erika Glazer, a trustee of UCLA’s Hammer Museum. Photo: Thomas Michael Alleman for Barron’s 
           
The arts have always had to compete with health, education, and a host of other social and political issues, but now the actual job of fund raising is an infinitely more complex one. While government support of the arts continues to be tiny and erratic, corporations have also pulled back. That leaves wealthy donors picking up the slack. A recently released research report by the Giving USA Foundation and the Indiana University Lilly Family School of Philanthropy found that overall charitable giving reached $335.17 billion in 2013, near its prerecession peak, but corporate giving declined by 1.9%. While individual and foundation giving increased by 4.2% and 5.7%, respectively, both entities have become more focused on quantifying results. At the same time, museums’ ambitions have grown in tandem with their budgets, as have the expectations of donors and even museum audiences.
 
While the recession exposed museums’ financial vulnerabilities, it also laid bare some fundamental realities that all institutions will now confront regardless of the stock market. Raising money from mercurial individuals with exacting expectations is a tough business. “Fund raising is still seen as difficult,” says William Eiland, director of the Georgia Museum of Art and a commissioner on the American Alliance of Museums’ accreditation committee. “We have fewer sources and less-predictable sources of income, and more and more museums are reporting this.”
 
Not that museums aren’t partly to blame for their own predicament. The fund-raising dilemma has a lot to do with the relentless drive—especially among the biggest museums—to bulk up and get ever bigger. As they compete for audiences, acquisitions, and money, their educational and cultural missions appear to collide with equally aggressive commercial interests.
 
It is, in short, a pattern similar to what we have seen at our steroid-pumped universities. “In some sense now, museums act like private corporations,” says Tom Eccles, the executive director of the Center for Curatorial Studies at Bard College in Annandale-on-Hudson, N.Y. “The large institutions have become rapacious in their need for financing. There is this constant need to expand the physical space and the programs that never end, and it has become the inner logic of these institutions today.”
 
Not infrequently, this can lead to conflicts of interest—or at least the appearance of them—particularly as the line between collectors, donors, and trustees becomes an increasingly porous one. This is especially so as museums vie for art in the market and dance with collectors for loans and gifts.
 
The New Museum’s “Skin Fruit” show of Greek Cypriot businessman Dakis Joannou’s contemporary collection, mounted in New York four years ago, is considered by insiders an egregious example of conflicts of interest. Curated by mega-artist Jeff Koons, the show featured over 100 of Joannou’s works (including Joannou’s first major Koons acquisition, One Ball Total Equilibrium Tank). Not only was Joannou a museum trustee, but he was also one of Koons’ principal patrons. Further, Joannou did not bequest any of the work to the New Museum. What the show undoubtedly did was increase the value of his collection. At the time, the New Museum’s director publicly defended the show by telling the New York press, “We’re confident that the initiative is artistically and intellectually important, and ethically legitimate.”
 
So, as funding sources shift and new conflicts and stresses arise, the traditional assumptions about philanthropy are also changing. Even before the recession, many philanthropists began looking at their giving in much the same way they viewed their investments—and expected some type of measurable result from their largess. “There is an expectation now of how money is going to generate an impact,” says Maureen Robinson, a member of the Museum Group, a consortium of senior museum professionals based in Bethesda, Md. Robinson says this is especially true among newer donors, who have markedly different philanthropic priorities than the old guard.
 
And, if that was not irritating enough for the museums, some of their biggest benefactors are turning into competitors. Two of the top museums in the country these days—the Getty and the Walton family’s Crystal Bridges—are not public art charities but privately built foundations that are, by comparison, relative start-ups. One of the most discernible power shifts between museums and philanthropists has been the rise of the single-collector museum. While not exactly a new phenomenon—think Henry Clay Frick in New York and Isabella Stewart Gardner in Boston—there has been, in recent years, a raft of collectors moved to showcase their works outside of traditional art institutions. “More and more people have major collections,” says Eli Broad, the billionaire philanthropist who is set to unveil the Broad Museum in Los Angeles next year. “And if you give to a museum, there is a fear that 90% or more of it will end up in the basement.”
 
Broad, a dominant force in the Los Angeles cultural scene (the New Yorker once called him the city’s Lorenzo de’ Medici), has over the years put together 2,000 works of art ranging from Jasper Johns to Andy Warhol, and the Broad Art Foundation, which manages the collection, is considered one of the world’s top private assemblies of contemporary art. In a testament to just how the dynamic between museum and donor has changed, in 2003, Broad pledged $50 million to the Los Angeles County Museum of Art toward the building of a contemporary-art wing that would bear his name. It was largely expected that Broad and his wife, Edythe, would gift a large portion of their personal collection to the Renzo Piano–designed building.
 
But, before it opened in 2008, Broad changed course and announced his intention to erect his own museum, contributing his collection and at least a $200 million endowment to maintain it.
                                  
The Houston art museum has had two record fund-raising years in a row. Photo: Robert Seale for Barron’s
 
           
Broad is hardly alone. In the fall of 2012, the former hedge fund manager Howard Rachofsky and oil-and-gas magnate Vernon Faulconer together transformed a former Dallas storage space into the Warehouse: 18,000 square feet of exhibition space showcasing their contemporary art collections. And in July 2013, the Paul and Maurice Marciano Art Foundation plunked down $8 million for the former Masonic Temple in Los Angeles to house the 1,000-plus contemporary-art collection of the Marciano brothers, co-founders of the Guess clothing empire.
 
Singular among these efforts is Wal-Mart heiress Alice Walton’s Crystal Bridges Museum of American Art, bursting with Georgia O’Keeffes, Norman Rockwells, and Marsden Hartleys, in Bentonville, Ark. Before it even opened in 2011, the Moshe Safdie–designed museum made headlines. First there was the reported jaw-dropping $1.2 billion Walton Family Foundation contribution, followed by major acquisitions, such as Asher B. Durand’s Kindred Spirits, purchased for $35 million from the New York Public Library. As of 2013, two years after its inauguration, Crystal Bridges had $1.16 billion in total assets, putting it just behind the Art Institute of Chicago—which opened in 1879.
 
Apart from the obvious vanity and control issues, a private museum offers other tangible benefits. Most are run by the collector’s personal foundation, which means the potential for sizable tax write-offs for operating costs and exemptions from sales taxes on acquisitions. But perhaps of more significance is that under one’s own shingle, a collector can acquire works without having to seek board approval first—buying, showing, and selling those works at will without any conflict-of-interest taint.
 
So, how are the big museums going to keep up their game? As in the broader economy, some of the most interesting ideas and innovations are always taking place much further down the wealth pyramid. Rather than hew to the established practices of tapping old money, many smaller art institutions are recasting old models and investing in their local communities to create long-term engagements that they hope will translate into new funding sources.
 
This past February, the Hammer Museum at UCLA in Los Angeles began offering free admission for all of its exhibitions. After discovering that paid tickets contributed on average only about 5% to their $18.8 million annual budget, the museum decided to use the idea of free tickets to attract a committed donor interested in supporting the region’s broader community.
 
According to Jennifer Wells Green, the museum’s deputy director of advancement, “It was not just writing a check to support bricks and mortar or an exhibition, but a larger impact of what this could mean to the city and all future audiences.”
 
Erika Glazer, a longtime Los Angeles philanthropist, art collector, and Hammer trustee, offered to donate $1 million as long as there was a matching donor. (Brenda R. Potter, another Hammer supporter, provided the additional $1 million.) The Glazer-Potter donations will support free admissions for four years. “It’s nice to put in money and see metrics,” says Glazer. It certainly is: In just eight months, museum attendance is up 25%.
 
The Dallas Museum of Art went a step further, offering both free tickets and membership. Maxwell Anderson, the museum’s director, also says that it was a great device to bring in donor money. The $1.2 million in ticket and basic memberships fees was more than made up for when an anonymous donor kicked in $4 million to replace the lost funds, and another $5 million to digitize its collections. “We had a mission-driven impulse to do this rather than a business plan,” he says. “And no question, it was easy to get philanthropists behind it.”
 
In exchange for a membership, the museum offers a kind of points program per visit that can be reimbursed for benefits like free parking or shop discounts. The museum intends to use the information, much in the way that retailers use shoppers’ rewards programs to better engage with them. That should in turn encourage foundations and others to increase their support. “It’s one thing to get more people in the door,” says Walter Elcock, president of the museum’s board of trustees. “For us, the next question is how to leverage this information over time.”
 
Since the Dallas museum’s membership program began, it has registered more than 82,000 new members—a 279% increase over the 21,600 paid members the museum had before launching the program.
Then there is the 215-year-old Peabody Essex Museum in Salem, Mass., which traces its roots back to the curio cabinets of sea captains. The Peabody Essex is not expanding with new buildings, but with the ideas displayed inside of them. Building on its local community support, rather than relying on tourist traffic, it’s creating more programming around global art and culture beyond its traditional focus on Asian art and maritime history. An exhibit on abstract artist Alexander Calder is the museum’s current headliner.
 
The case it made to local donors, openly rumored to include Edward Johnson III of Fidelity Investments, appears to be working. Since 2006, the museum has raised more than $570 million toward its $650 million goal, with $350 million going toward its endowment, financing 58% of its annual budget. The Peabody’s endowment efforts have eclipsed those of the Boston Museum of Fine Arts.
 
While smaller museums will never have the firepower of the big institutions, going forward, all arts organizations will have to find new avenues for funding. Although the challenges between them may come down to scale, the impact does not. As Frederick Janka, director of development at the Museum of Contemporary Art Santa Barbara, notes, “A $10,000 gift to a smaller museum can make a huge impact, and the donor will see a deeper engagement with the institution. To get to that level at one of the larger institutions, you have to give millions.”
 
That’s a fine final point. For all of the glory bestowed on a trustee at one of the august museums on our list, moderately wealthy benefactors would be wise to be contrarians. Their time, money, and collection are likely to be treated better, have more impact, and serve society better when put to work at a regional or local museum.