Winds of change are blowing through the Craft and Folk Art Museum, but you'll have listen sharply to detect them.

The clank of silverware and the buzz of contented diners still pervade the Egg and the Eye, the airy, upstairs restaurant bearing the name of the original eatery and art gallery that opened in 1965 on Wilshire Boulevard. The cash register still rings up sales of contemporary crafts, folk art, books, jewelry and other wearables in the street-level museum shop. And the jolting sounds of carpentry echo through the first- and third-floor galleries as yet another exhibition is installed for public viewing.

It's business as usual at CAFAM, so far as casual visitors can see. But if one peers into the minds of the human powers behind the charming brick edifice, it's evident that appearances are deceiving. While we've been busy eating omelets, fingering unique merchandise and observing exhibitions of everything from Chicano murals to black folk art and Amish quilts, the museum has quietly changed the guard, outlined a significant shift in programming and determined to expand into new and as yet unfound quarters.

People first: Founding Director Edith Wyle has retired, sort of. To put it more precisely, she has handed over the directorship to Patrick Ela, who has been a CAFAM administrator since 1975, but she isn't planning to fade into the storeroom or to step aside without inner turmoil. "The museum needs a change of direction. We have some very good people. It will go without me," she declares in one breath. And in the next: "My first love and interest in the world is this museum. I gave birth to it and I can't just throw it aside."

No one, least of all Ela, is suggesting that she vacate the distinctive museum that has become a fixture of the Los Angeles art scene. The two have worked out a plan for Wyle to serve on the executive board, do occasional curatorial work and serve as an ambassador at large to develop the museum's collection. She also will shepherd a project whose acronym matches her affection for it. Through Pet (Preservation of Ethnic Traditions in Southern California), Wyle will oversee research and publishing efforts and raise funds to hire an anthropologist.

"I've always thought of our exhibitions as punctuation points in continuous research," Wyle says. "I don't like the notion of getting all excited over something and then dropping it as soon as the show is over." Among other projects, she is working on a book about masks and she hopes to publish another on the museum's recent show of Chinese woodblock prints.

While Wyle has been reordering her priorities, Ela has embroiled himself in "two years of philosophical soul-searching" to determine his institution's current place in a city that has become a museum boom town and to map a strategy for the future. Since the Craft and Folk Art Museum came into being, the Japanese American Cultural and Community Center, the Korean Cultural Service, Plaza de la Raza, the Museum of African American Art and the California Museum of Afro-American History and Culture have all sprung up. Ela says this proliferation of ethnic institutions "pays tribute" to a need identified early by CAFAM but has a negative "impact on funding."

The museum will not drop its involvement in Los Angeles' ethnic mix, but it will shift some of its resources to "strengthen the program in contemporary crafts and give parity to design," according to Ela. One manifestation of this change is that the annual Mask Festival will become a biennial affair. Another is that the museum will become less active in its work as a coordinator for such far-flung cultural festivals as "Japan Today" and "Scandinavia Today."

"Acting as a coordinator does not inspire exposure in the press or attract money, though it's something we have done extremely well," Ela says. "Our role has been non-traditional and not well recognized because of the very nature of our service to the community. Because it's hard to get exposure and funding for that role, we have reconsidered the amount of resources we can dedicate to it.

"We've had some credibility problems, so we plan to do things in a more traditional way and work in a form better understood by the public," he continues. This "form" will concentrate on exhibitions and embrace the design community, "a natural constituency" that Ela believes has not been well served by museums in Los Angeles.

To that end, the Craft and Folk Art Museum this fall will host the only West Coast appearance of Alvar Aalto's work, in a exhibition organized by the Museum of Modern Art in Manhattan. "Puzzles of the World," a major organizational effort in process at CAFAM, will tour the country after its local premiere.

Since its inception, the museum has sat tight in its present quarters, but it has reached into schools, factories, streets and ethnic conclaves. The Mask Festival, for example, grew from a parade to a parade with a festival, then to a parade plus festival with lectures, symposia and auxiliary exhibitions. Initiation of the event is a point of pride for Wyle, who says: "We recognized the richness of ethnic diversity of Los Angeles and jumped on it long before anyone else. Instead of terror in the streets, we wanted joy."

Granted nonprofit status in 1975 (after a three-year struggle by Wyle), the museum has grown to an institution with 2,050 members and a current operating budget of $700,000. Funding sources and ratios vary but, according to Ela, they break down roughly as follows: corporate and foundation contributions, 25%; membership, 20%; special events, 20%; gifts from individuals, 15%; government support, 10%; earned income from shop sales and restaurant rental, 10%. A recent dinner in honor of Wyle exceeded expectations by raising $60,000.

Fund raising in an increasingly competitive arena is a perpetual problem, but the museum's need for space also preoccupies its leaders. Recent loss of an annex on Curson Street has intensified a search for space and fueled unresolved discussions about whether the museum should remain in its accustomed neighborhood or relocate downtown. One thing is sure, according to Ela: The museum needs to triple its square footage from the present 12,000 to 35,000 or 40,000.

CAFAM has not been known as a collecting institution, but part of the space is needed to accommodate a holding that already encompasses 2,300 objects and is certain to mushroom once the museum's acquisitive instincts are made public. The first step in a six-month process of education on that subject is now on view in an exhibition called "Objects of Our Affection: Selections From the Permanent Collection."

The first installment, through June 30, features Guatemalan textiles. That show is teamed with "Jewelry Today" (an exhibition organized by the American Craft Musum and the Society of North American Goldsmiths) and a selection of one-of-a-kind jewelry in the museum shop. July and August will bring a display of contemporary crafts from the collection, followed by a show of the museum's cache of Mexican wood objects and Japanese toys in September and October.

If any of these plans cause concern for fans of the comfy old CAFAM, Ela offers assurances: "Changes will not occur at the expense of folk art and crafts. We just intend to explore the whole spectrum of functional and non-functional art more thoroughly."

Both he and Wyle have an aversion to labels meant to separate high and low art and to denigrating the efforts of artists who work in craft media. (Wyle has always disliked the museum's name for that reason.) "We deal with material as art objects and provide background information in a context that's subordinate to aesthetics," Wyle explains.

"Starting with the art angle" and "taking the cultural view," as she puts it, is what distinguishes the museum from institutions that show similar objects as artifacts. And though CAFAM's attitude--shaped by Wyle's vision--is sometimes criticized by scholars of other persuasions, it's an approach that will continue.

As an artist whose "humanist, Expressionist" style of painting had gone out of fashion in the '60s, Wyle began looking for "something honest" and came up with folk art. "I thought there had to be a place for things made by hand in this industrial world," she recalls. That conviction, added to the belief that superior folk art and craft objects could be appreciated as art if only they were properly presented, led to the present museum. And if she can't leave it completely, she thinks it's time to pass her dream on to Ela.

"You don't have to write this down, but we're interested in the quality of life," Ela says to a reporter. "The museum is about values and the legitimacy of values that each culture has, whether contemporary or historical."

"I think you should write that down," Wyle interrupts. "The legitimacy of values that each culture has . . . I like that."

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