Nixon Library Lost Money, Tax Returns Show : Museum: Director says it spent aggressively on advertising in its first full year but is not in financial trouble.

The Richard Nixon Library & Birthplace, the only presidential library in the country run entirely without public funds, lost money during its first full year of operation in 1991, according to recently filed tax returns.

“We spent very aggressively on advertising and exhibitions,” said John Taylor, the museum’s director. “In order to spread the word about our main mission, we needed to spend a little more money in 1991 than we brought in.”

According to Internal Revenue Service tax forms filed last month, the museum ended its first year with a $577,301 deficit on an operating budget of $3.1 million.

The deficit, Taylor said, was covered by a loan.

“We could run the Nixon library on a much smaller budget,” he said, “but it would be a very sleepy, low-key place.” Indeed, Taylor said, the museum and library--which opened in July, 1990--attracted more paid visitors during its first year than any other presidential library in the country, although he would not say just how many visitors that was.

But the income from admissions, contributions and gift shop sales were outweighed by the huge amounts spent on advertising, promotions and special exhibits designed to help the nonprofit museum penetrate Southern California’s highly competitive tourist market.

The creation of one new exhibit alone--called “Pat Nixon: Ambassador of Goodwill”--cost $200,000, Taylor said. In addition, the museum played host to some expensive luncheons, including one featuring Lithuanian President Vytautas Landsbergis.

Despite its indebtedness, however, the presidential library is not in financial trouble, according to Taylor. In 1992--for which tax forms are not yet available--spending dropped to between $2.6 million and $2.7 million, he said, an amount he hopes will roughly equal the museum’s income. And in 1993 and future years, he said, he expects to spend even less: about $2.5 million a year.

The cost-cutting will be largely achieved, Taylor said, through selective advertising aimed at specific targeted markets such as religious, school and social groups instead of the mass marketing approach used in the past.

During the museum’s first year, Taylor said, “we were seeing what advertising worked, feeling our way, sort of going where no presidential library has gone before.”

Today, he said, museum staffers are much more effective in deciding where and when to advertise. In targeting specific groups, he said, “we have found that it makes most sense to advertise in August and around Christmas” instead of year-round as was done in the past. And not as much advertising is necessary now, he said, because “the word is out about what we do. This is a young institution and you always find less expensive ways to accomplish the same tasks.”

In addition to cost-cutting, Taylor said, the museum’s financial situation should be improved by a major boost in income from an ambitious endowment campaign to be announced early in 1993. “It will be a very dramatic announcement,” the director promised. “We already have an impressive number of pledges.”