When the American Folk Art Museum sold its flagship building in Midtown Manhattan to the Museum of Modern Art in May that move did not save the cash-strapped institution from its woes.

The building's sale simply alleviated the Folk Art Museum from a $32 million debt in construction bonds.

Since then the staff has been downsized and part of the museum's 5,000-piece collection has taken up residence at its old, smaller space near Lincoln Center. This space is just 5,000 sq. ft.  while the former West 53rd. St. museum was 30,000 sq. ft.

Now there is talk of dissolving and transferring the museum's renowned collections to another institution.

The board of trustees is considering options. The Smithsonian may get its holdings in conjunction with the Brooklyn Museum of Art, after approval from the New York State attorney general’s office and the State Department of Education.