What’s Going on at San Francisco’s Mexican Museum?

Last week, San Francisco’s city auditor released a bombshell report on San Francisco’s Mexican Museum, claiming the 49-year-old nonprofit has misused city grant funds and made little progress on fundraising to reopen.

The museum, meanwhile, says it “respectfully disagrees with much of the purported conclusions.”

To even an average observer, the Mexican Museum has had noticeable troubles. It has been without a director since 2015, and without a home since 2018, when it left Fort Mason Center after falling behind on rent. Its new building at the corner of Third and Mission, adjacent to the Contemporary Jewish Museum, SFMOMA and other cultural institutions, remains empty.

The audit’s findings, based on a yearlong investigation requested by Supervisor Aaron Peskin, raise questions about the museum’s ability to fundraise for or manage planned interior improvements at 706 Mission St., a city-owned space at the base of a luxury condo building.

Despite the findings, and a subsequent San Francisco Chronicle story, the museum, currently without dedicated fundraising staff, is determined to open the first phase of its space by the end of 2025. To do so, its board chair Andrew M. Kluger said in an interview with KQED, requires the cooperation of the city.

“Supporting and clearing a path for the museum is a no-brainer for the city,” board secretary Xochitl Casteñeda told KQED. “It’s going to be a win-win situation.”

The history of the Mexican Museum’s move downtown

The Mexican Museum was founded in 1975 at the corner of Folsom and 15th Streets by the late artist Peter Rodriguez. In 1982, it moved to Fort Mason Center, where it remained for 36 years, amassing a collection of over 16,500 objects, mostly through donations.

Museum holdings span 2,500 years of history, from pre-Hispanic objects to contemporary artworks. The museum is dedicated to “the complexity and richness of Latino art and culture throughout the Americas.”

The Mexican Museum has had periods of instability over the past three decades. A planned move to the Yerba Buena neighborhood to join the city’s other major cultural institutions has been in the works since 1993. In the mid-’90s, the museum was rocked by major staff turnover, accusations of misspent grant funds and lackluster fundraising for the planned move.

Then, in 2017, a report commissioned by the museum board found that only 83 of 2,000 artifacts from the museum’s pre-Hispanic collection could be authenticated. But those 80-some objects, the museum argued in a subsequent press release, are “significant and rare — one piece in the collection being so unique that nothing like it exists in Mexico.”

Since leaving Fort Mason in 2018, the collection has been in storage. The museum finally took possession of the first four floors of 706 Mission in July 2023.

Were grant funds misused?

The city audit, officially titled “The Mexican Museum Has Not Demonstrated That It Can Meet the City’s Contractual Obligations, and OCII Has Not Effectively Enforced the Museum’s Grant Agreement” has two main findings: misuse of city grant funds and fundraising shortfalls.

In 2010, the museum entered into a $10.6 million grant agreement with the city’s Office of Community Investment and Infrastructure (OCII) — funds meant to go towards “predevelopment and interior improvements” at the new location.

Only $4 million of that grant has been spent, but the grant agreement expires June 14, 2024, leaving the museum less than three months to spend the remaining $6.6 million. (During the period of the audit, which began in March 2022, the museum says OCII paused all grant reimbursements.)

The audit found that the museum has spent nearly $1 million of that grant on “ineligible and questionable activities,” including duplicate expenses, artwork storage and staff salaries. But a response from OCII tempers those findings, explaining that “some level of funding for [the museum’s] current operations was necessary to ‘benefit’ the proposed project in the former Yerba Buena Center Project Area.”

In other words, OCII argues, the grant should cover things like storage and some operational costs — so that there might still be a museum to move into 706 Mission.

For their part, the Mexican Museum says “all budgets and scope of work were not only approved by OCII staff, but also by the OCII commission.” Its representatives refute one duplicate expense and acknowledge the other as a clerical error “out of hundreds of submittals to OCII.”

Does the museum have adequate funds to reopen?

The audit found that the museum has raised only 2% of the nearly $49.8 million it’s estimated to need to reopen. But the museum says this is an old number, and that the new, lower estimate for construction is actually $38 million.

By their calculations, the museum says it still has $19.9 million left to raise. But it has made some progress in its search for new funding sources. “We’re the only museum outside of the Republic of Mexico that was granted a tax deductible status” by Mexico, says board chair Andrew Kluger. That means Mexican companies and individuals can donate up to 7% of the taxes they owe to the museum as a write-off.

The museum has employed a fundraising consultant through the end of 2024, and a representative says the museum has received over $200,000 in cash contributions in the past month.

Castañeda admits fundraising for the museum has an uphill journey to her dream goal of $100 million. “I need an army of people to help us,” she says. “You know, how many of the museums today — and I’m not just talking about construction, but operations — are in the red area? We need 10 pesos, $10, you know? Any contribution is welcome and will add to our dream of $100 million.”

Why hasn’t the museum started construction?

The Mexican Museum has a 66-year-lease with the city on the first four floors of 706 Mission (with the option to extend another 33 years), for what breaks down to about ¢.02 a year. But all interior improvements on the 48,000 square-foot space — turning the shell of the building into a climate-controlled art institution — are on the museum. So far, it has made no material progress on those improvements.

The museum received keys to the space in July 2023. That was after a lawsuit over a missing staircase was dismissed, with the museum and the city agreeing to work out their differences. The space was built without a public staircase connecting two floors of the museum, as originally planned.

As the San Francisco Business Times reported last year, the city acknowledged that it had intentionally not built the staircase, saying it “planned to sublease only half the space to the Mexican Museum due to growing concerns that the museum’s financial health would not allow it to build out the entire 48,000 square feet as envisioned.”

What also hindered interior improvements, the museum says, was the audit itself. “We are all prepared to construct,” says Castañeda. “This audit was impeding us from doing a lot of things … and now we are being blamed for not doing that.”

While museum representatives say the OCII’s pause on grant reimbursement did not prevent them from approaching donors over the past year, the audit did cast a shadow over fundraising efforts, causing some donors to put certain time and milestone requirements on their pledges.

What happens now?

The museum says it now needs the support of OCII. In order for their contractors to submit permit applications, it needs to know that OCII will reimburse those expenses.

The Controller’s Office will continue to monitor the museum’s progress, following up every six months on the implementation of their recommendations for record-keeping and grant disbursal.

Meanwhile, the Mexican Museum’s representatives affirm that its rightful place is downtown, alongside institutions like the Yerba Buena Center for the Arts and the Museum of the African Diaspora. “We want to decolonize this idea of a museum, traditionally, that is for the elite,” Castañeda says. “This museum is for everybody.”