It is a pleasure to advise you that the Museum of Fine Arts, Boston, had favorable financial performance for the year ended June 30, 2018.
The Museum had a substantially better than budgeted operating surplus, driven in part by strong attendance; we further reduced debt and had positive endowment performance, which resulted in an overall increase in our net worth.
Last year we attracted 1,208,000 visitors to the Museum, achieving better results than the previous year and better than the budgeted attendance. This helped the Museum achieve an overall GAAP surplus of approximately $1.6 million, which exceeded our budgeted operating surplus of $100,000 and continues our long record of positive operating performance. Cash flow after straight line rent adjustments was negative $200,000. Our total net worth increased by $39 million during the year, driven by the return on the endowment as well as capital gifts.
The value of the endowment was $613.5 million at June 30, with a preliminary positive performance return of 7.9 percent for the fiscal year against our long-term planning assumption of 6 percent. We believe that our return will compare well to peers as final returns become known later in the fall. As discussed last year, we have also reduced the spend rate of the endowment to help ensure that the endowment continues to benefit this great Museum for years to come.
We reduced our debt further this year with plans to further reduce it over time. We have been rewarded for our overall strong financial performance over the years with strong bond ratings by Standard & Poor’s and Moody’s (AA and Aa2 respectively).
The Board of Trustees, upon the recommendation of the Budget and Finance Committee, adopted a budget for FY 2019 with a GAAP budget surplus of $100,000 for the Museum. This is a forecast cash deficit after non cash adjustments of $1.5 million. We will continue to monitor important issues such as Strategic Plan performance, cash flow, and special projects so as to manage to break even to positive GAAP results, as have been achieved in FY 2018.
As always, accounting standards do not permit us to record the value of the MFA collection, but it is our most important “asset.” I would be remiss if I did not note one particularly magnificent gift, gift of art with a significant endowment for the Center for Netherlandish Art. It was extraordinary and confirmed the MFA’s mission in terms of scholarly research, collaboration, and the overall enhancement of our collections.
Finally, I want to thank the dedicated members of the Budget and Finance Committee, and the very talented and hardworking MFA Finance team for their great help and support.
Respectfully submitted,