Academy of Natural Sciences Part 3: The Early 00s

A rock-solid balance sheet?

The Academy of Natural Sciences closed its public museum at the end of September, and most of the conversation since has been about Drexel as, after fourteen years of financial support, it closed the wallet and the doors.  Seeing how their partnership ended, I wanted to know what the Academy looked like before Drexel showed up, so I went back and read every tax return the Academy filed from 2001 through 2011.

When the affiliation was announced in May 2011, the Academy's president described a "rock-solid balance sheet" and a $51 million endowment. The filings for the decade before that tell a different story. The Academy was solvent. It had very little debt. It was still open and still doing science. But it shrank every year, and it was nearly out of money to spend when the partnership formed.

A decade of getting smaller

The first thing that jumped to me was how much the Academy shrank. Total expenses went from $18.3 million in 2001 to $14.8 million in 2011. That looks like a 19% cut. Adjust for inflation and it is much worse: in today's dollars, $33.5 million became $21.2 million. The Academy lost more than a third of its size in ten years.

Figure 1. Total revenue vs. total expenses, in June 2025 dollars.

Cutting costs isn't bad by itself. What matters is why the cuts. These don’t appear to be efficiency savings, rather spending fell because revenue fell and reserves were draining. I suspect they cut staff, research, and the care of the collections and buildings. Even after cutting by a third, the Academy still came up short every year from 2008 to 2011.

Figure 2.  Eight series indexed to 2001 = 100, in June 2025 dollars. Only admissions held flattish.

Salaries for everyone other than the officers fell from $8.3 million to $6.2 million, a 42% drop after inflation. Benefits and payroll taxes fell too. At the end of 2009, the board froze the defined benefit pension plan and the defined contribution plan, and replaced them with a 403(b) that carried only a discretionary employer match. Healthy institutions don't do that.

Figure 3. Payroll: officers vs. everyone else, in June 2025 dollars.

The Academy's cost base in 2011, about $21 million in today's dollars, is roughly where it stayed for the next fourteen years. The deep cuts happened before Drexel, which inherited an organization that had, ahem, cut to the bone.

Figure 4. The long view, 2001 to 2025, in June 2025 dollars. The dotted line marks the Drexel affiliation.

The surpluses weren't what they looked like

If you just read the bottom line on each return, the Academy looks fine in a lot of years. It reported surpluses in six of eleven. The biggest were 2002, at $6.2 million, and 2007, at $9.7 million.

Figure 5. Annual surplus or deficit as reported, in June 2025 dollars.

Those spikes were gift years and investment-sale years. In 2007 the Academy sold $27.5 million in securities and booked a $5.9 million gain, on top of $10.8 million in contributions. Remove the investment-sale gains and things flip: revenue fell short of expenses in seven of eleven years, and in every single year from 2008 to 2011.

Figure 6. Revenue without asset-sale gains vs. expenses, in June 2025 dollars. Every year from 2008 to 2011 falls short.

Figure 7. Running total since 2001: reported vs. without asset-sale gains, in June 2025 dollars.

Gifts carried the day, but they were "lumpy," to use a finance friend's term. Contributions were $11.6 million in 2001, spiked to $15.2 million in 2002, and fell every year from 2008 to 2010, bottoming at $5.4 million. A lot of the "spike" money went into endowment and capital funds, aka money that can't be used to "keep the lights on."

Figure 8. Contributions, grants and membership, and government support, 2001-2011, in June 2025 dollars.

Figure 9. Revenue mix by source, with total expenses, in June 2025 dollars.

Figure 10. Revenue mix, 2001 vs. 2011, excluding asset-sale gains. The mix barely changed while the whole pie shrank by a third.

Earned income didn't fill the gap:

• Museum admissions stayed between $0.89 million and $1.17 million every year. After inflation, that is flat for a decade.
• Environmental research contracts, once the biggest earned line, fell 65%, from $3.07 million to $1.08 million.
• Membership dues fell 25%, or 42% after inflation.
• Museum and education programs were the only line that grew, from $0.49 million to $0.84 million.

Figure 11. Earned income by activity, in June 2025 dollars.

All program revenue together covered 16-25% of expenses in any given year. The museum never came close to paying for itself, and that was true long before 2011.

Figure 12. Earned revenue and the share of costs it covered, in June 2025 dollars.

The money that ran out

A nonprofit's net assets come in three flavors. Permanently restricted money is the endowment body, and you can't touch it. Temporarily restricted money is tied to a donor's purpose or a timeline. Unrestricted money is the only money the board can spend on whatever needs paying. That number tells me how much cushion a venue has.

The Academy's cushion was $25.1 million in 2001. By 2011 it was $8.8 million. In today's dollars, that is a 73% drop, and most of it happened in the last four years before Drexel: $24.3 million in 2007 to $8.8 million in 2011.

Figure 13. Net assets by restriction class, in June 2025 dollars. Gold is the unrestricted cushion.

Figure 14. Total assets, liabilities and net assets, in June 2025 dollars.

The 2008 crash did the most damage as net assets fell $28.2 million in a single year, mostly from $24.1 million in unrealized investment losses. In 2009, the Academy sold $19.9 million in securities that had cost $28.8 million, locking in an $8.9 million loss. That is why the 2009 return shows total revenue of only $4.2 million.

Figure 15. Investment results: income, realized and unrealized, in June 2025 dollars.

Then the endowment draw went up. A common rule of thumb for a sustainable draw is 4-5% a year. The Academy drew 10.2% in 2009, 8.5% in 2010, and 10.1% in 2011. The board-designated part of the endowment, the part the board could spend without asking a donor, fell from about $6.6 million to $2.8 million. By 2011, endowment spending of $5.1 million covered roughly a third of the Academy's entire budget.

Figure 16. Endowment spending, 2008 to 2011, from Schedule D, in June 2025 dollars. The dotted line marks a 5% draw.

Thin cash, falling debt, and a revolving door

The Academy almost never had cash in the bank. Year-end cash ran from $154,000 to $935,000 on a budget of $14 million to $18 million. That is 4 to 23 days of expenses. In 2006 and 2007, it was 4 or 5 days. Day-to-day bills were paid by drawing on the investment accounts.

Figure 17. Cash on hand and days of operating cash, in June 2025 dollars.

Debt fell from $7.7 million in 2001 to $1.1 million in 2011, and interest expense fell from $336,000 to $42,000. Liabilities stayed under 15% of assets the whole decade, a bright spot!

Figure 18. Debt and interest expense, in June 2025 dollars.

Figure 19. Liabilities as a share of assets.

The pension liability grew and other liabilities went from $0.7 million to $6.7 million, with the biggest jump in 2008 when the market hit the plan's assets. The 2010 and 2011 returns put the pension minimum liability at $4.4 million and $6.2 million. The board froze the pension at the end of 2009, but it kept costing cash for years afterward, even during the Drexel days.

Figure 20. Other liabilities, driven by the pension plan, in June 2025 dollars.

In eleven years, the Academy had four chief executives and an acting president:

Years	Chief executive
2001	Seymour S. Preston III
2002 to 2005	D. James Baker
2006	Ian R. Davison (acting)
2007 to 2009	William Y. Brown
2010 to 2011	George W. Gephart Jr.

Chief executive pay was flat in nominal dollars, roughly $230,000 to $294,000 a year, which means it fell after inflation. The officer total jumps to $611,000 in 2011, but that is because more people were listed as officers, not because of any big raises.

Figure 21. Chief executive pay by year, in June 2025 dollars.

Figure 22. Officer pay vs. staff salaries, 2001 to 2025, in June 2025 dollars.

The minerals went first...

The Academy once had one of the great mineral and gem collections in the country, with a Department of Mineralogy built around the incredible William S. Vaux Collection, plus Pennsylvania minerals, fluorescent minerals, meteorites, and gemstones. Curator Samuel G. Gordon wrote up the mineral gallery in Nature in 1938. But there had been no mineral curator on staff since the 1950s.

In 2006, the trustees went to Philadelphia's Orphans' Court, which must approve when a nonprofit disposes of charitable assets, and asked to sell the off-display minerals and gems. Judge Joseph D. O'Keefe approved it that October. Somewhere between 15,000 and 19,000 specimens went to three dealers for about $1 million (one account says several million, the actual number I couldn't find), with the proceeds endowed to the library. Pennsylvania material went to the Carnegie Museum and Franklin, New Jersey material to museums in that area. The rest scattered through dealers and auctions. You still see pieces on the market labeled "Ex. Philadelphia Academy of Natural Sciences."

They then decided to sell the Vaux collection and headed back to court. Vaux left his collection in the 1880s with a restriction: it was never to be broken up or sold. In 2007, the Academy petitioned the court to break that trust. Vaux's heirs, led by his great-great-niece Trina Vaux, fought it. They argued decades of neglect and asked the court to give the collection to Bryn Mawr College or the Wagner Free Institute instead. The Academy, then under William Brown, withdrew the petition in June 2007 and told the court it was "prepared to keep and properly care for the collection."

The timing to me is fascinating. The 2006 sale went through in the Academy's acting-president year, when it ended the year with about five days of cash. The Vaux fight ended as a new president came in. The biggest lesson I took from all of this is one I hadn't seen so clear an example of before: donor restrictions work, but only when someone (Vaux heirs in this case) shows up in court to enforce them. I am surprised more museums don’t try selling minerals…

What ANSP looked like entering the Drexel deal

By the end of 2011, here is what the Academy brought to the table:

• Annual expenses of about $14.8 million, a third smaller in real terms than in 2001.
• An endowment of $45.8 million, about three times annual expenses. Peer museums generally want five to ten times.
• Unrestricted net assets of $8.8 million, and only about $2.8 million in board-designated endowment.
• Four straight years of operating shortfalls, covered by drawing the endowment at about twice a sustainable rate.
• Very little debt, a growing pension liability, and less than two weeks of cash.

It sure feels like the Academy went to Drexel (presuming they were the approachers) because it had spent a decade cutting everywhere it possibly could, that its flexible money was nearly gone, and every year started with most of the budget left to raise from scratch.

The deal itself seems to have had a flaw built in. The boards approved a letter of intent on May 18, 2011, and the affiliation took effect September 30. The Academy kept its legal identity, its own board, its collections, its building, and its endowment. Drexel paid nothing to acquire it, and committed operating support, a credit line, and shared services at cost. So Drexel took on the deficit without getting the power to fix it. A separate board still controlled programs, staffing, and spending, which works only as long as the “parent” can keep writing checks.

"Drexel killed the Academy" ignores a decade of decline shown by financials. "The Academy was fine until Drexel" ignores the same numbers. What the filings show is one problem in two phases. Before 2011, the Academy absorbed its gap by shrinking and spending its reserves. After 2011, Drexel absorbed it with subsidies.

All of this was sitting in public tax returns the whole time and has given me a side-hobby of examining other museums…

Sources and caveats

The financial figures come from the Academy's IRS Form 990 returns, EIN 23-1352000, for 2001 through 2011, via ProPublica Nonprofit Explorer. The 2001 to 2005 returns include the audited statements. Inflation adjustments use the CPI-U, restated to June 2025 dollars. The mineral history comes from contemporaneous coverage: the Academy's release on the Brown affidavit, JCK, the Chronicle of Philanthropy, and AP copy via Mindat.

A few things I'd still like to discern:

• The exact price of the 2006 mineral sale, and whether any Vaux specimens ended up in the sold lot.
• Why permanently restricted net assets fell from $56.8 million to $39.9 million in 2008: market losses on endowment funds, or a reclassification.
• How much of the 2002 and 2007 gift spikes was restricted money that could never pay operating bills?

Please Note

Please keep in mind I am a sauropod paleontologist, not a finance guru. Nor is any of this legal advice. Rather tis a result of examining public records. The possibility exists there are errors or misinterpretations, I strongly suggest double checking any areas that don’t feel “right.” I hope you enjoyed the deep dive and I hope I am done examining a museum I have never visited :-). I have a private list of predicted closings in the next 1,000 days. We are from out of the woods and some of these from what I can tell have yet to raise their hand for help.

10/30/2026 16 hours+