Wednesday, June 2, 2010

For Love Nor Money

Clearly, the economy is still suffering.  And in some ways it seems that new shock waves from the initial crash continue to radiate out to impact non profits.  After two years of cutting back on programming and looking for creative ways to save operating dollars, I believe in the next two years non profits will have to reach for other, more structural, types of solutions to mounting fiscal pressures.  

My concern comes from the ways state and local governments are attempting to balance budgets.  Government spending on the arts, education, and on culture is down, meaning that fundamental changes - with big implications for how museums do business - are still coming.  Not to put too fine a point on it: Nevada has cut over $4MM from arts spending, NY is proposing a 40% decrease in spending on the arts, and a bill in the LA House tried to eliminate the culture and tourism department entirely.  This goes beyond the tragic loss of public libraries in places like Boston and Charlotte, NC.

Necessity is the mother of invention 

Or so we have been telling ourselves for ~2,357 years.  This year, arts organizations and non profits are in a position to innovate . . .or else.  With that in mind, here are some initiatives that are attempting to invent new ways of supporting non-profits, and new non-profit/government/private industry relationships, that might prove interesting and useful in the coming months:

  1. Starting this past January the New Brunswick Arts Foundation began offering the first ever city bonds for the arts.  There will be 5,000 bonds, at $250 apiece.  Their hope is that people who would otherwise not be able to contribute will see this as a way to participate, and to make their contribution count.  The program will run for 5 years.  Once the total $5M is raised, $1M will go into direct funding and the rest into an endowment. 
  2. In Columbus Ohio arts organizations have begun outsourcing PR to a centralized group that specializes in arts management.  This is entirely voluntary - groups like the symphony have cut back so far on operations that they can no longer effectively market, raise money, or handle direct advertising.  Their program is already cut to the bone so there is a need for back office help to rebuild. The balancing act here is to enable arts organizations to focus on their programs - which only they can design and produce - while not completely divorcing them from management functions that are less unique.  
  3. Two cities we know of are working on a new kind of donor circle to introduce new donors to the experience of giving to arts and culture.  Part of the issue in these communities is that the existing donor pool is tired.  At the same time, younger residents with money do not have a tradition of philanthropy.  Getting these folks together in a giving circle creates a social context for donations. The group can challenge one another, and others in the community (perhaps their parents?!) to support a cause they have adopted.  Working with peers is fun and motivates participation. 
  4. In some cases, corporate groups are stepping into the gap left by government, grants, and private giving.  For two years in a row, Daimler has hosted an evening to promote the arts.  They see arts education as driving "diversity, innovation and creativity" not just in business but for whole communities. The role Daimler has chosen to play goes beyond fundraising. They have established a partnership with Cranbrook to hang student art in their offices, Daimler employees volunteer in elementary schools on community art projects, they have an artist-in-residence program, and they are hosting panels to raise visibility for the importance of arts education.  

What does this have to do with museums?

How do these experiments in creating new economic models for supporting non-profits relate to how museums are thinking about financial sustainability?

In the survey we did of Children’s Museums two years ago, we heard that children’s museums were not generally engaged in major restructuring. With a few exceptions they were not merging in large numbers with other organizations. Unlike Young at Art they were not typically co-locating with other groups to share capital and operating expenses.  

When I originally read these results I was surprised.  In part because we have clients that are working on exactly these kinds of issues.  But these organizations are trying to solve a set of operational problems.  As I think more about the mounting need to invent new revenue streams I am seeing an emerging need for a different set of solutions: the problem has changed.  

I think we will see more museums looking at an expansion of services into new areas, and experimenting with hub-and-spoke strategies designed to reach into the community in new ways, or acting as an umbrella, a producer, and a curator of people, events, and opportunities rather than keeping all of those functions in-house, and the creation of new membership/rewards plans and other ways to raise money.  I suspect that going forward we will see more organizations innovating at a structural level.  

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