By then, Leonardo's notebook had been gone for eight years -- yet it was still central to museum finances. Not yet ready to rely on fundraising and earned income to cover all of the museum's operating costs, the Hammer's leaders left the principal alone but continued to rely on interest from the codex sale, using it to cover expenses other than acquisitions, Philbin said.
But that changed in April 2006, Philbin said, when she and the museum's directors agreed to start spending half of the codex interest for acquisitions -- about $650,000 yearly -- and half or less on exhibitions and programs. The first purchase was a set of drawings by Raymond Pettibon.
The art-world discussion of the Hammer's strategy has been conducted mostly in whispers until now, but the new exhibition puts the museum's collection and acquisitions-policy center stage.
If the Hammer had been spending the codex interest on acquisitions all along, Philbin acknowledged, its collection would be far richer -- but "we would have been severely limited" and many of the museum's wellregarded exhibitions might never have been mounted.
The $30.8 million from the codex sale has now grown to about $37 million, Philbin said, and her goal is to build museum fundraising so that eventually all of the interest can be used for acquisitions.
"I would love it if we got there in three to five years," she said. "The fact that we've gotten halfway there is something I feel very good about."
Hopkins, now retired, said Friday, "I did not know that interest money was being spent" on anything before 2002 -- either on his watch or Philbin's -- and that the sooner Philbin can cover operating expenses with other income, the better. The steps Philbin has taken in the last year, he said, are clearly "a positive thing."
From the beginnings of his involvement with the Hammer, Hopkins added, one worry has been that "finding funds to come into an institution with a person's name on it -- particularly Armand Hammer's name on it -- was not going to be a particularly easy sell."
Though Hammer's grandson Michael Hammer has remained on the museum board of directors and many works acquired by Hammer remain in the museum -- including French 19th century masters, European old masters and thousands of works by French caricaturist Honore Daumier -- the museum has changed direction substantially in the last decade.
Under Philbin, the Hammer has focused on works made since 1960 and particularly works on paper, which typically cost less than paintings and sculptures and can reveal more of the artist's creative process. That contemporary strategy, Philbin noted, also complements the holdings of the UCLA Grunwald Center for the Graphic Arts, which has been joined with the Hammer since 1994.
In the museum's tax filing for the year ended June 30, 2005, the Hammer reported revenue of $8.2 million and operating expenses of $7.4 million. The income included $1.6 million in public donations, $2 million in indirect support (including memberships and admission fees) and $3.9 million in interest and dividend income on more than $90 million in investments. The museum gets about 100,000 visitors yearly.
Meanwhile, USC's Holo said she had begun to wonder about whether strict de-accession guidelines need rethinking, given the record high prices in the art market and the many museums that are rich in objects yet poor when it comes to protecting, interpreting and displaying those objects.
"We should, as an industry, be reconsidering how we can best use the moneys that come from de-accessioning," Holo said.
"This is going to be hard for us to do," Philbin said Friday of the museum's new acquisitions spending policy, "but this is what we're going to be doing."