NEW YORK, NY.- It was just days before Christmas, but Cathryn Mattson, executive director of the Orlando Museum of Art in Florida, sounded anything but festive. During a specially called meeting, she addressed several trustees and influential donors, confronting the fallout from the institution’s last 18 months.

“We are in a severe financial crisis,” she said, according to a recording of the internal meeting provided to The New York Times and confirmed by a meeting participant. The museum, known as OMA, was still reeling from its disastrous 2022 exhibition of paintings it had said were made by art world legend Jean-Michel Basquiat — paintings that were seized off the museum’s walls that June by members of the FBI’s Art Crime Team during a raid. A Los Angeles auctioneer subsequently admitted to the FBI that he and an associate had themselves forged the paintings, some in as little as five minutes.

In her December meeting, Mattson specified the hundreds of thousands of dollars it had cost the museum to hire “crisis communication professionals” and “a legal defense team” to deal with the consequences: intense media scrutiny, a continuing FBI investigation, and the museum’s current lawsuit for fraud, conspiracy and various breaches against both the owners of the purported Basquiats and its former executive director, Aaron De Groft, who had brought in the Basquiat show and was fired after the 2022 FBI raid.

“Within a year’s time, we had a 25% increase in unbudgeted expenses,” Mattson said. The museum’s reserve funds, she said, “are nearing exhaustion level, and that has been our cushion. We have also exhausted our lines of credit and have loans.”

OMA was now facing $500,000 of debt — half for legal bills, Mattson said on the recording. The outlook for the rest of the museum’s fiscal year, ending June 30, was even worse: She said at the time that the museum, which has an annual budget of about $4 million, was “projecting a shortfall this year of about $1 million.”

“We do not have the funds readily at hand to cover that,” she said. “I mean, that is the truth of the matter.”

Mattson also told the group that a recent meeting she had held with three of Orlando’s most prominent philanthropists, personally convened by the Orange County Mayor Jerry Demings, ended with “no dollar outcome” and no immediate financial bailout in sight.

Asked Friday about the museum’s financial straits, Mattson did not dispute any specific numbers in the Dec. 21 meeting and pointed to several positive developments going forward, including the return of attendance to pre-pandemic levels; hosting more than 9,000 local school children; and a $400,000 grant that provides free admission and special programming one day a month.

But she acknowledged the museum currently had a “significant cash shortfall” and said its projected deficit for the 2024 fiscal year was $835,000. She added in a statement that the museum “seeks to recover these costs from the defendants in its civil suit” and “has also sought monetary assistance from its government and charity partners.”

“Crucially, the museum’s trustees have stepped up by doubling or increasing their contributions to bridge this liquidity crunch,” she said. The museum declined to provide specific information about those trustee donations.

At a tense meeting with the museum’s staff on Monday, Mattson struck a reassuring tone. According to several attendees, who were granted anonymity because they had previously been threatened with termination if they spoke to the press, Mattson tried to rally her dispirited staff around OMA’s upcoming centennial events celebrating its role as one of the oldest cultural institutions in Central Florida.

Mattson, who was hired in April as the museum’s interim executive director and CEO and was quietly made permanent by the trustees in December, did not discuss finances with her staff at that meeting. Instead, she spoke of the museum’s lawsuit against De Groft and the Basquiat artworks owners. (For his part, De Groft has countersued OMA, insisting that the Basquiats are genuine and his termination was unjust.)

The museum has faced criticism from within. At the end of December, a public “Save OMA” campaign was set in motion by Fiorella Escalon, who was then a member of the museum’s Acquisition Trust board, which focuses on purchasing artwork for the museum. In an online petition that has gathered hundreds of signatures, Escalon criticized the museum’s leadership in the wake of the Basquiat exhibition and its “continued efforts to eliminate” anyone who tried to “root out corruption and incompetence.” The resulting lack of transparency, Escalon said, had caused the flight of donors, and she called for the resignation of Mattson and the entire board of trustees, as well as the reinstatement of the previous interim executive director, Luder Whitlock, who resigned in August 2022.

Escalon was told Wednesday that she had been removed from the museum’s acquisitions board and barred from holding any future museum position.

“The reason why I went public is if I don’t say anything, the museum is just going to go under,” Escalon said in an interview. “And everybody will say, ‘Oh, yeah, we should have done something.’ But nobody did.”

To assess the museum’s finances, the Times asked an independent expert, Maria Elena Gutierrez, the principal at Chora Creative, a Washington, D.C., consultancy that has worked closely with nonprofits including the Andy Warhol Museum and the Smithsonian Institution, to evaluate both publicly available federal tax documents as well as internal financial summaries that had been provided to OMA trustees and reviewed by the Times.

Gutierrez’s analysis found that the museum’s financial health had been sound before 2022, and was comparable to other museums of its size, but that it had seriously deteriorated since. The size of its projected shortfall — for an institution with roughly a $4 million annual budget and $4 million endowment — makes it “an outlier,” she said.

Gutierrez said the museum would need one or more key philanthropists — what she called “white knights” — to ride to its financial rescue. “If the board acts with urgency, they can turn this around,” she said, noting the serious dangers of facing a “crisis of confidence and crisis of liquidity.”

As previously reported in the Times, several of OMA’s high-level donors have either shifted their support to the Rollins Museum of Art at the nearby Rollins College, or were sitting on their checkbooks. Interviews with staff at OMA and former trustees show there is growing frustration with the museum’s legal and crisis management expenses.

Internal records provided to trustees and viewed by the Times showed that in 2022, after the Basquiat exhibition, the museum spent $444,590 on a law firm and $144,193 on a crisis communications firm. Its current budget, for their fiscal year ending in June, has allotted another $317,425 to pay both firms. And in a December court filing for the museum’s lawsuit against De Groft and the owners who claim the artworks are bona fide Basquiats, the museum said it anticipated another $500,000 in legal expenses to bring that case to trial, which is now set for October 2025.

The museum also has pressing capital needs. Its looming expenses include $6.8 million to repair the museum’s roof and its HVAC system, both judged as at or beyond their “useful life” by an outside contractor. Museum visitors have already seen post-rainstorm buckets in exhibition areas and inside the gift shop. As Mattson said on the December recording: “we’ve got too many leaks, and it puts the art at risk.” She added that “it’s not a nice to-do, it’s a must to-do.”

This article originally appeared in The New York Times.