The latest twist in the long and intertwined relationship between the Honolulu Academy of Arts and The Contemporary Museum could shut down the smaller facility but strengthen the finances and collection of the larger.

The 2008 market crash, a resulting decline in contributions at both museums, neighborhood opposition and the difficulty of finding a new site for the Contemporary Museum all played a part in the decision by Honolulu’s two major art museums to explore a merger.

But what hasn’t been stated explicitly since the possibility was announced in July is what the ramifications of a merger would be.

“After months of thoughtful consideration and negotiations, TCM and HAA have reached the milestone decision that the answer to building a strong financially stable museum rich in multi-cultural opportunities for the enjoyment and education for our community lies in the integration of these two outstanding fine arts institutions,” said a letter sent out by the Contemporary Museum on July 27.

A separate letter sent by the Academy of Arts used similar language in alluding to the creation of a “single financially stable fine-arts institution.”

Both museums confirmed to Civil Beat that the merger may result in a possible sale of at least some of the smaller organization’s property. It operates on three prime parcels of land above Honolulu that total a little more than five acres.

Thurston Twigg-Smith, a founder of the contemporary who sits on the boards of both museums, said the contemporary is debt free and could bring $6.8 million intended for expansion to the Academy of Arts. In 2009, the academy spent $4.1 million more than it brought in, and in 2008, the figure was $4.4 million.

The academy told Civil Beat that any proceeds from the sale of property in a merged operation would go to the contemporary art program of the combined museum and any other area that is agreed upon during due diligence.

Twigg-Smith said it is possible that two pieces of The Contemporary Museum property known as the Peterson and Johnson parcels could be sold off after a merger occurs. He said he hopes the academy would keep the main parcel known as the Cooke-Spalding property that totals 3.4 acres and is home to an award-winning garden overlooking Honolulu.

“We feel that’s an oasis that ought to be preserved,” he said, noting the property can also be kept as extra exhibition space.

Contemporary Museum Executive Director Allison Wong said the Cooke-Spalding property would be kept under a merged operation as long as it is not a financial drain.

Contemporary Move From Downtown Caused Problems

Twigg-Smith, former publisher of The Honolulu Advertiser, helped found the Contemporary Museum in the 1960’s and housed it for years in the historic Advertiser building. He had a hand in acquiring the Makiki Heights property in the 1980s from a developer who had purchased it from the Honolulu Academy of Arts.

In retrospect moving the museum to the property was not a good idea. Although the Peterson and Johnson properties were acquired to expand the facilities, the museum has faced some community opposition to enlarging the facility.

It also operates with what’s known as a conditional use permit that limits the hours of operation, number of evening functions it can have and number of people it can have at gallery openings.

Some area residents have fought the museum’s expansion plans, complaining they would degrade the residential neighborhood by adding to the traffic, noise and activity.

That and the zoning restrictions have plans to add roughly 5,000 square feet of gallery space on tennis courts on hold.

For now the museum can only display 1 percent to 2 percent of its collection because of space constraints. The conditional use permit restricts to 200 the number of people who can attend opening events that must end at 10 p.m.

Only a half dozen of the evening events can be scheduled annually, severely impacting the museum’s ability to host the kind of events that generate more donations, Twigg-Smith said.

“The main factor is what they are allowing us to do with the properties,” he said.

The space and growth constraints also may have a deleterious effect on potential donations of artworks from collectors who want to see their pieces go to a museum with a more certain long-term future. A merger would also give the academy a bigger presence in contemporary art, Twigg-Smith said.

Efforts to buy or build another facility for The Contemporary Museum have been unsuccessful, making the merger with the Academy of Arts an attractive option.

Consolidating the two operations would be financially attractive to the Academy, with the Contemporary Museum bringing its $6.8 million building fund, and $4.4 million endowment to the bigger museum.

Recession has Hammered Both Museums

A possible linking of the two museum’s operations has been discussed for years, but talks began in earnest as the worst economic downturn since the Great Depression hurt revenues and endowments. The slide in donations and other money collected by the Contemporary Museum caused it to cut 11 full-time and 14 part-time workers in 2008, or about half of its staff.

The Academy of Arts similarly cut staff, losing 19 positions to attrition, early retirement and layoffs. It represented about a 15 percent reduction, leaving the museum with about 120 workers.

“Things were down just like any other business in the economy,” said Aaron Kibota, Academy of Arts director of finance.

The academy’s endowment slid 34 percent as the stock market and other investments soured in 2008. Across the country other museums felt the pinch. Last year The New York Times reported the venerable Metropolitan Museum of Art let go dozens of workers, in part because its endowment lost an estimated 28 percent of its $2.9 billion value.

Moreover, the drop in investments has been accompanied by a decline in contributions from individual donors as the recession hit pocketbooks and jobs.

Locally the drop in giving has been felt broadly, not just at the Contemporary Museum and Academy of Arts.

“We’ve kept many of the same donors but they gave less than they have in years before,” said Susan Au Doyle, Aloha United Way president and chief professional officer.

“From our experience the contributions have declined over the course of this economic period.”

She said the United Way is fortunate in having a broad donor base. Someone who concentrated on government workers, for example, may have seen greater declines in their donations because of the layoffs and furloughs that occurred in state government.

“It really depends on who you’ve gone after and your affinity groups.”

Museums Seek Contributions from Same Donors

The Contemporary Museum and Academy of Arts seek contributions from some of the same donors, a group that includes some of the state’s best-known philanthropists, successful business people and wealthy residents.

The situation is such that the boards of both museums are tied through some family relationships.

For example, entrepreneur Ron Higgins serves on the board of the academy, while his wife, Sanne, is a trustee for the Contemporary Museum. Wendell Wo of C.S. Wo & Sons sits on the Contemporary board, while his mother, Betty, is on the academy’s.

The merger would have several financial benefits, including the museums not having to compete for contributions from the same individuals, families and corporations.

There would be some economies that occur from having one operation instead of two as well. There may be one executive director instead of two, a single accounting department and education department.

The Contemporary Museum is the only museum in Hawaii devoted to contemporary art and has about 3,000 pieces in its collection, including works by Andy Warhol, Jasper Johns and David Hockney.

The Academy of Arts has more than 60,000 works and has significant Asian art holdings along with works from around the world.

Lynne Johnson, Academy of Arts board chairman and interim director, said an important factor being considered in the potential merger is the collections.

“The Academy feels that a vibrant program in contemporary art within the context of an encyclopedic collection will make the museum more exciting and relevant, especially to the younger generation,” said Johnson in an e-mail.

“From the Contemporary Museum’s point of view, the idea of having contemporary art in a more accessible location is appealing.”