William Vernon Jackson

 Abstract

The following article focuses on the finances of the Center for Research Libraries from its inception in 1949 until 2004 (the year of the last published report). The data, tables, and analyses in this article are all drawn from CRL’s Annual Reports. A financial perspective provides a useful backdrop when examining the history and development of CRL.

 Introduction

All too often we know little about the cost of projects of non–profit organizations and about their financial operations. Such information is usually presented in the final pages of their annual reports — pages which most readers skip. Yet examination and study of, for example, income and expenditures reveal a lot about an organization’s “financial health.” (When the latter continually exceed the former even a non–profit organization will go bankrupt!)

This is as true of independent research libraries (and of organizations for library cooperation as well as other not–for–profits) as of other non–profits. A study by Jed I. Bergman [1], published in 1995, looks at five such institutions, but it does not mention the Center for Research Libraries in Chicago. A survey of CRL described it “ ... with the possible exception of the Farmington Plan, the Midwest Inter–Library Center [i.e., the Center for Research Libraries] has been the most ambitious, imaginative and successful venture yet undertaken by American Research libraries.” [2] Two general articles on the Center, appearing in the first and second editions of the Encyclopedia of Library and Information Science [3] make almost no mention of financial matters.

The present article deals with financing the Center from its beginnings in 1949 until 2004 (year of the last published annual report). It is based entirely on study and review of the entire run of the reports (except for the years 1974–79, for which there are no published documents). [4] The data in these documents permitted the construction of the tables included in this article. There are, however, two drawbacks to this methodology: (1) the CRL archives may contain additional and perhaps more detailed information; and, (2) as administrators, board members and auditors have changed over this period, some inconsistencies in presentation of data do occur. Nevertheless, these “facts and figures” may be useful as one attempts to understand the history and development of CRL.

There are two parts to this paper, the first dealing with income and expenditures for capital (i.e., land, building and equipment) and the second with financial operations over the years. Although preliminary review of the documentation did suggest a number of possible approaches (e.g., grants, staff), space limitations led to the selection of only three:

• The overall results of operations;
• The use of assessments of member libraries for income; and,
• expenditures for books, periodicals and other forms of material.

It was impractical to attempt year–by–year discussion. Consequently, the entire period was studied in a search for trends and for major accomplishments.

 CRL’s buildings

It may come as a surprise to those who know the CRL building on South Kenwood Avenue (very close to the University of Chicago) to learn that several decades earlier a different facility had housed the collection and staff. Although this article does not go into the reasons leading to the second building (they are probably related to the expansion of the University of Chicago Hospitals), it does tell how both were financed.

When the Center for Research Libraries (originally named the Midwest Inter–Library Center) was created in 1949, clearly an immediate need was to secure a building to house its staff, as well as the thousands of publications that would soon arrive from its members. Several offers of land on which to build a library were received; CRL accept one from the University of Chicago on Cottage Grove Avenue. The search for funds for the building itself was apparently accomplished in a short period of time, because two major foundations made large gifts: US$750,000 from the Carnegie Corporation of New York and US$250,000 from the Rockefeller Foundation. The former was “to be applied toward the cost of establishing a cooperative inter–library center of Midwest libraries,” while the latter was “toward the general expenses of a central depository library during the period ending December 31, 1953.” Although the building was completed in April 1951, several years passed before the balance remaining after construction (only a few thousand dollars) was spent. For a number of years, CRL’s balance sheet carried Plant Funds (land, building, equipment) on the books at about US$1 million.

In 1982 the Center purchased for US$128,000 land from the University of Chicago on which it planned to erect a new building for administration (retaining the original facility for storage). This time grants from foundations for the total cost were not available, although the Ford Foundation supplied US$1 million. The remainder came from CRL’s Reserve for Building Fund (US$500,000) and a first mortgage note to the Illinois Educational Facility Authority for US$1,500,000 payable on February 1, 1985 and bearing interest at 11 percent, payable semi–annually. At maturity the Center could repay the entire principal, seek to reissue the bonds, or repay the entire principal in 20 equal installments plus interest at a variable rate equal to 70 percent of the prime rate with a note at The First National Bank of Chicago [now J.P. Morgan Chase]. The Center’s governing body (the Council) approved a special assessment of the members for payment of principal and interest. This loan was repaid on schedule and replaced by a loan from a commercial bank at 10.75 percent and repayment of principal at US$22,000 per year.

During the 1992/93 fiscal year, CRL began construction of a four–story addition to this administration building at an approximate cost of US$7.5 million, To obtain the necessary funding it entered into an agreement with the University of Chicago Hospitals (UCH); this agreement contained several unusual features:

• CRL would sell its Cottage Grove property to UCH for US$1.9 million
• UCH would lend up to US$5 million through December 1, 1993 with interest at 5.5 percent per annum and a final maturity of July 1, 2001
• CRL would use “diligent efforts” through 2001 to secure contributions with which to repay UCH. If, on July 1, 2001, CRL were unable to repay the loan, UCH would forgive any remaining amount up to US$3 million.

For the next four years the loan was carried on CRL’s books at US$4,993,683. In June 2000 The Center repaid US$1,993,683, and UCH forgave US$3,000,000. This was accomplished because CRL had secured a loan of US$2,400,000 from the Illinois Educational Facilities (to be repaid at a rate of US$94,740 per annum) plus interest at a variable rate, with final maturity in 2025.

The Center has continued to make the required payments; by June 2004 the loan balance had been reduced to US$2,021,343.

 CRL’s financial operations

Table 1 presents CRL’s income, expenditures, and financial results at 10 year intervals. Starting in 1949/50 with a tiny income of US$14,000 operations grew year after year, reaching nearly US$800,000 at the end of 20 years. From that point, growth was more impressive, reaching US$5.6 million in 2003/04. Expenses also rose, but final results (profit or loss in business terms) have varied greatly (confirmed by additional figures not presented here) depending on grants, special projects, terms of loans, changes in accounting rules, etc.).

Against this background let us examine CRL’s chief source of income: member assessments. In 1949, planners of the new venture felt that it should be member–supported, but also that it should take into account differences among the 10 founding universities; they devised a formula for sharing proportionately the expenditures anticipated in each year’s budget; it took three factors into account: the institution’s book budget, its Ph. D, program, and its nearness to Chicago. Table 2 shows total assessments for each of the 55 years.

Membership grew, slowly at first, but more rapidly after 1965, when the Center “went national,” by removing the geographic limitation on membership. (It also changed its name to the Center for Research Libraries.) Membership went in the following 50 years from 10 to over 200.

One of the most important results was a much larger inflow from member assessments; it reached US$1 million by 1980, US$2 million three years later and US$4 million by the end of the twentieth century. This gave the Center a much sounder financial footing, as these funds represent “bread and butter” income, that is, unrestricted income available to pay salaries and staff benefits, building maintenance, interest on debt, etc. Most of the remaining income consists of gifts and grants whose expenditures are restricted to specific purposes. It should be noted that in some years CRL reports small investment earnings which come mainly as interest on cash invested temporarily in U.S. government bonds or Treasury bills. On some grants where CRL received overhead, the total revenue is increased.

Finally it should be noted that the Center has no endowment, thus making the assessments even more useful. New members thus bring additional revenue.

CRL’s first annual report (1949/1950) states one of its objectives to be “the development of a program for filling out and enriching the resources of the region.” In its first few years of operation, the Center gave highest priority to receiving and organizing the deposits of “little used” material donated by members. To facilitate rapid execution, CRL purchased a truck, which went to the individual campuses, picked up these items and brought them back to the Cottage Grove building. (On completion of the bulk of this activity the truck was sold.)

Even in the early period, some purchases were made, as evidenced in the 1953–54 report by an expenditure of US$7,426. From the outset CRL has paid for individual foreign dissertations for addition to what soon became the country’s largest collection of such material. One of the first grants received came from the National Science Foundation to purchase journals abstracted in Chemical Abstracts but apparently not found in any American library.

Two later years indicate the expansion in expenditures for “Books and Periodicals”:

CRL’s books and other resources are not carried as assets on the balance sheet (a practice common to many research libraries). This is generally explained by one of the notes to the financial statements. Because the values of historical acquisition costs of the existing “inexhaustible collections, including research books, are not readily determinable, the Center has elected not to capitalize them.”

As the years passed, acquisitions increased, some as part of the Center’s own collection development policy (e.g., international dissertations and repository collections), while others had outside funders. The statement of activities was changed to reflect this, with a heading entitled [program] expenses. This included the following: Global Newspapers, Serials, International Dissertations, Repository Collections, CRL Area Studies, and Grant Projects. This presentation continues; however, it is not clear whether the amounts reported include any administrative or overhead in addition to the prices paid for materials. See Table 3.

 Conclusions

From the data studied in a half century of annual reports of the Center for Research Libraries one can conclude that CRL has been successful in finding funds which have permitted it to execute a number of programs — more perhaps than its founders envisioned. Of course one cannot calculate the value to scholarship of having, for example, a huge collection of foreign dissertations, nor avoiding duplicate purchases of little used books and journals.

Making this brief study has suggested that other aspects of CRL’s finances deserve analysis. One hopes that someday we’ll have a complete history (covering both programs and finances) of this unique institution.

 Notes

[1] Jed I. Bergman, Managing Change in the Nonprofit Sector: Lessons from the Evolution of Five Independent Research Libraries. San Francisco: Jossey–Bass, 1995.

[2] Stephen McCarthy and Raynard Swank, quoted in Ray Boylan, “The Center for Research Libraries,” In: Encyclopedia of Library and Information Science. New York: Dekker, 1984, volume 36, pp. 156–167.

[3] Boylan, op.cit. and Mary I. Wilke, “Center for Research Libraries,” In: Encyclopedia of Library and Information Science. New York: Dekker, 2003, volume 1, pp. 484–489.

[4] Center for Research Libraries, Annual Report. Chicago [The Center], 1951–2005. [Note: No reports were published for 1974-1979.]

About the Author

William V. Jackson is Professor Emeritus, School of Information, University of Texas at Austin, and also Senior Fellow at the Graduate School of Library and Information Science, Dominican University. He regularly teaches a seminar on Great Libraries and Their Collections.

© 2007 William V. Jackson.

Top of Page | Table of Contents