Johns Hopkins University has pledged approximately $3 million to the Peabody Institute's endowment campaign, allowing the financially troubled music conservatory to meet a state-mandated fund-raising deadline and qualify for $30 million in state aid over the next five years.
The pledge by Hopkins, with which Peabody affiliated in 1977, capped a five-month, $15 million do-or-die effort.
The completion of the campaign is a significant move toward ending Peabody's years of operating deficits that threatened its existence, officials said at a press conference yesterday.
"For the first time in modern history, the Peabody has taken a major step to financial self-sufficiency," said Jacques Schlenger, chairman of the Peabody Advisory Council.
"This is a day history will note is a turning point for Peabody," added Lt. Gov. Melvin A. Steinberg.
Under a plan crafted by Mr. Steinberg, the General Assembly approved last April $30 million in operating support and endowment funds for Peabody over the next five years but made the money contingent on the school raising $15 million in cash and irrevocable pledges by tomorrow.
A whirlwind effort that included personal appeals to virtually all the major Maryland-based corporations and foundations and several wealthy philanthropists netted $12.3 million as of last night, Peabody spokeswoman Anne Garside said.
The executive committee of the Hopkins board of trustees voted to pledge the remaining money -- now $2.7 million -- Monday night at its regularly scheduled monthly meeting, Hopkins President William C. Richardson said at the press conference. The committee's authorization, he added, came after discussion of "what would happen if we were not willing to make a pledge."
What would have happened, he noted, is that many of the large pledges would have been lost because they, like the state aid, were contingent on Peabody meeting its fund-raising deadline.
Mr. Richardson said Hopkins had the "full expectation" it would be able to raise the money from outside sources between now and 1995, when its pledge is due to be paid, and thus would not actually have to divert any of its own money. But he said Hopkins was "fully prepared" to make up any shortfall from its unrestricted endowment fund.
Sources said some Hopkins officials believed that the cost of the pledge would be less than the cost of closing the conservatory, a likely scenario if the deadline was not met.
"For a $3 million pledge, Hopkins gets $30 million in state aid for the Peabody. That's a return of 10-to-1 on its investment," said one source.
Mr. Richardson said there was "strong, strong support" on the executive committee for the pledge, but he refused to say whether the decision was unanimous.
He said later he didn't think the pledge would be opposed by faculty and staff of Hopkins School of Arts and Sciences, which has undergone a series of cost-cutting measures in an effort to trim operating deficits of $5 million.
"I've reviewed this plan with the leadership of all divisions, and support is unanimous and strong in favor of this," he said.
Lloyd Armstrong, dean of the Hopkins School of Arts and Sciences, said in an interview he was "delighted we've found a way to keep the Peabody going. ... All of us viewed the Peabody as an important cultural and educational institution."
Of the $30 million in state funds the Peabody will receive during the next five years, half will go to help offset the annual operating deficit. In fiscal 1991, for instance, the $5 million deficit will be cut to $1.9 million. Hopkins, which has contributed $20 million to the 133-year-old conservatory in the past several years, has agreed to cover the remaining operating costs through 1995. Peabody, for its part, has agreed to cost-cutting and revenue-enhancing measures that would amount to $1 million a year by 1993.
The other half of the state money will be given to the Peabody's endowment fund in a lump sum in January 1996 in return for title to the school's extensive art collection -- appraised for insurance purposes at $13 million. Along with the $15 million in private funds raised this summer, and the Peabody's existing $10 million endowment, this will give the conservatory an endowment of $40 million, which officials expect to generate $3 million a year that can be used to offset operating expenses.
By the year 2000, the Peabody hopes to have an endowment of $80 million, which would make it more competitive with other world-class conservatories, whose current endowments range between $80 million and $165 million.
Of the $12.3 million raised by Peabody since April, some $5.5 million came from 739 alumni and supporters, including $2 million from New York publisher Eric Friedheim. The remaining $6.8 million was contributed by 48 corporations and foundations, including a $3 million pledge from the Blaustein-Rosenberg-Thalheimer Family Group.
One of the gifts came late yesterday afternoon: $500,000 from a Baltimore woman whose name could not yet be disclosed, Ms. Garside said. Many of the other donations came in the last two weeks, including $500,000 each from the MNC Financial Foundation and USF&G; $300,000 each from the Abell Foundation and the Sidney Friedberg Charitable Trust; and $150,000 from the Rouse Co.
Mr. Steinberg said the deadline helped encourage contributions.