In a faltering economic environment where philanthropy often falls short, museums and galleries are turning to innovative bond structures and star-studded fundraising campaigns to finance their projects.

Cultural institutions like the D.C. Smithsonian Institution are finding ways to take advantage of historically low rates and raise capital for major projects without overleveraging. The deals, however, look much different than they would in a healthier economy. In one example, JP Morgan will lead a $100 million issue of taxable bonds for the Smithsonian this month, including $50 million of floating rate debt. With interest rates where they are and the need for financial maneuverability on ongoing projects, avoiding the oversight that comes with tax exemption was irresistible, according to Smithsonian and bank officials.

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