Newseum in DC Makes Changes as Funding Falls Short In five years since moving to its new home overlooking the U.S. Capitol, the Newseum has become a major attraction with 4 million people visiting its exhibits about journalism and the First Amendment. Yet it's been struggling mightily to cover its costs. Public financial documents reviewed by The Associated Press show revenue fell short of expenses by millions of dollars in 2009, 2010 and 2011. Its parent organization, the Freedom Forum, has used its endowment to provide the bulk of the Newseum's operating revenue since its creation, and the endowment's principal value has steadily declined from $600 million to about $373 million at the end of 2011. Nonprofit management consultants say it's worrisome for a museum to be relying so heavily on a shrinking endowment, but the Newseum's top executive says it's not in financial trouble. To rein in costs, the Newseum imposed four rounds of staff layoffs since 2008, most recently in January, and slashed employee retirement contributions. The Newseum is also reorganizing its educational programs under a separate nonprofit organization. Meanwhile, compensation for its chief executives struck some experts as overly generous. We've certainly worked on tightening up on expenditures. We certainly are going to be working on additional fundraising initiatives," President and CEO James Duff said in an interview. I think we're making good progress. And certainly our numbers are very, very encouraging. The Newseum is Washington's most expensive museum, charging $22 for adults and $13 for youth, though many other attractions are able to offer free admission because they're taxpayer-funded. It has drawn more visitors each year since it moved to its current location, including 817,000 in 2012. A spokesman said its visitor count is expected to grow again by 5 to 10 percent this year. Still, the museum's heavy reliance on the Freedom Forum's endowment concerned several museum management consultants interviewed about the situation. In 2011, the endowment provided nearly half the Newseum's $63.7 million revenue. In 2010, it was more than half. Museums with healthy balance sheets would generally draw 20 to 30 percent of their revenue from an endowment, said Barry Lord, co-president of the museum consultancy Lord Cultural Resources. Such revenue would usually come from interest on an endowment, not its principal. Another 35 percent of revenue would come from admissions, facility rentals and sales, and the remaining 35 percent would come from membership sales and additional fundraising. In 2011, the Newseum received about 8 percent of the Freedom Forum's net assets, and the endowment also spent millions on other programs. "That I would consider a red flag because they are basically using the principal of the endowment, to some degree, to pay for operations," said consultant David Ellis, a past president of the Museum of Science in Boston and of Lafayette College. To be sustainable, it's crucial that the draw on the endowment, the amount that is spent ... needs to be realistic in terms of the endowment maintaining its purchasing power. Most museums have been struggling in recent years since the Great Recession, Ellis said. Many are contending with rising expenses and must find ways to increase revenue.