NY arts could suffer in possible CIT bankruptcy

NEW YORK, July 16 (Reuters) - Cultural institutions could take a financial hit, should leading arts lender CIT Group (CIT.N) be forced to file for bankruptcy, experts said on Thursday.

CIT has been a major donor to The Metropolitan Museum of Art, the American Museum of Natural History and The New York Public Library, and it was the lead corporate sponsor to help conserve an historic portrait collection of more than 100 paintings at New York's City Hall.

Fears of its potential bankruptcy, which grew after the company said on late Wednesday bailout talks with the government had ended, raised the specter of diminished grants and donations, said Will Maitland Weiss, head of the Arts and Business Council of New York.

"If it does come to pass, it will have a negative affect across the nonprofit sector and specifically the arts sector," he said.

CIT, a 101-year-old company that lends to hundreds of thousands of small and mid-sized U.S. businesses, was one of the ten largest corporate supporters of the arts in New York, Weiss said.

It was a supporter of the Cosmic Collisions space show at the American Museum of Natural History and helped fund the renovation of a children's reading room at a public library in the city's Bronx borough.

CIT does not have a foundation designated for corporate donations, meaning money used for such funding would not be protected in a bankruptcy proceeding.

"The ripple effect of what is going on with CIT is going to be felt in literally hundreds of arts organizations in New York City," said Weiss.

While the fall of CIT would hurt, its demise would not shut the doors of any large-scale organizations, said Carolyn Cavicchio, a senior research associate of global corporate citizenship at The Conference Board, a management and markets research group.

"They support very large institutions and, while any loss of funding is painful, given the size and stature of the organizations that they consider partners at the moment, it is not going to be a devastating loss," she said.

However, CIT's precarious position is a reminder of the other large corporate givers either gone or in financial strife, the experts said.

"What is unfortunate is that it is part of a larger picture," said Weiss, noting the loss of such funding giants as former investment bank Bear Stearns and Merrill Lynch financial services company.