Though corporate America appears to have weathered the worst of the housing-market collapse, the nonprofit sector is continuing to suffer from the weak economy. The latest organization to face considerable danger is the Seattle Art Museum, which has filed a motion in county court asking for approval of a plan to borrow $10 million from its $96 million endowment in order to avoid having to default on a loan that financed its 2007 downtown expansion.

The museum’s lawyers argue that the SAM does not actually need the court’s permission to raid its endowment, but merely wants to proceed with an "abundance of caution," in the words of one of its attorneys, Gerry Johnson. Winning approval from the court could also curtail future legal actions. "Being very conservative about its stewardship of its endowment, the museum wanted to make sure it had done everything possible to confirm [the loan] was appropriate," Johnson told the Post-Intelligencer.

To delve into the back story: with the help of Seattle’s Museum Development Authority, the institution financed the construction of a 16-story tower in the mid-2000s, buying floors five through 12 in the hope of capitalizing on future growth, and leasing the first four floors from the MDA. The museum’s plan was to gradually expand upwards as money from renting the floors above it payed for the project. Unfortunately, the tenant they found for that extra space was the Washington Mutual bank, which went under in 2008, leading the museum to lose $5.8 million in annual rent.

While Chase Bank, which bought Washington Mutual in the wake of its collapse, gave SAM a $10 million donation, that has not proved to be enough to right the museum’s finances. Earlier this year the museum announced it would lay off 65 staffers and shutter its exhibition spaces in an effort to work toward balancing its budget. In a May report, the Alliance for the Arts advocacy group said that 18 percent of U.S. museums were also planning to reduce staff.

There is, at least, some good news. SAM reports that turnout for current shows about Andy Warhol and the art of Kurt Cobain — covered on ARTINFO by Andrew M. Goldstein, who interviewed SAM curator Michael Darling — have received twice as many visitors as had been expected. It has also been able to find a tenant for six of the eight rental floors, though that has not provided enough income to cover its debt obligations. In the court filing, SAM says that it plans to run a massive capital campaign that will repay the loan and, it hopes, expand the size of its endowment.