Tuesday, February 14, 2012

The Future of Funding

Everyone wants to know what the next business model for museums may be. Will they morph into hybrid nonprofit/for-profit social benefit corporations? Lose tax exempt status entirely? In today’s post Carl Hamm, immediate past chair of the AAM Development and Membership Committee, makes the case that the future of museum funding will continue to lie squarely in the hands of the 1% of Americans who control 42% of our country’s wealth.

First, I think it’s important to distinguish between the ideas of funding for museums vs. giving to museums.

As it relates to the idea of funding, I very much believe that the revenue mix supporting museums (in individual cases and collectively as a field) will evolve with societal patterns over the years to come.  I think that one direct response to the dramatic recent cutbacks in government funding may be that we will be forced into a greater reliance on earned revenue from creative, non-traditional sources. For example, in our increasingly digital, media-driven world, there could be boundless opportunities for museums to package and repackage existing content which can be licensed and sold to generate earned revenue—yet fulfilling mission-related objectives at the same time. 

Consider this as a crazy idea. Let’s say a museum decides to video its hands-on preschool classes, then works with an entertainment industry partner to wrap the concept around one of their already existing properties; they co-brand the program and distribute it online or through traditional means (such as DVDs) for a fee, then they create and distribute corresponding co-branded merchandise which is sold internationally, etc.—all simply using the basic intellectual content that the museum’s educators have been using for years, but relying on the megabrand, distribution channels and business opportunities presented through the partnership. 

Some might see this type of content-driven collaboration as an inappropriate contribution to the slow erosion of museums as trusted, respected, “safe” institutions of society. On the other hand, it could also be argued that taking existing, well-developed content and providing it to global audiences is actually a worthwhile, mission-related activity, even apart from the new earned revenue possibilities it might open up.

My point here is that I do believe the funding mix for museums will absolutely need to change in the years to come, and these changes will require that we consider revenue generating possibilities which are as innovative and entrepreneurial as the rest of the business world requires.

As a transition to the conversation about giving, I think that how we engage audiences may also fundamentally change the way our missions are delivered. If we are successful in our attempts at inclusion, the profile of those constituencies who care about museums will correspondingly change.  The age-related, financial and racial shifts in our country’s demographics will certainly change the profile of those who are attending and benefitting from our museums. And that will, of course, change the “look” of the broad base of those who support us through their giving as well. 

Technology will evolve, the young people of today (who will be the old people of tomorrow) will require that we all embrace new transactional media, we’ll all be connected through the latest craze in social media, and our donors will continue to demand the utmost transparency and accountability for every dollar we spend. Yes, yes, yes and yes.

But I do believe (with the passion I infused into this soliloquy!) that the long term, ultimate sustainability of our institutions, individually and as a field, from the largest mega-institutions to the tiniest of tinies, will continue to rely on the essence of major gift philanthropy, which will supersede changes in tax law, demographic shifts in society, ebbs and flows in partisan attitudes in government, and so on.

How we deliver our missions to, communicate with, connect and receive transactions from the broad base of those who support us financially (the 99%) will undoubtedly change. Absolutely. And these shifts will also have a profound effect on the way museums are funded, and possibly, on the way transactional giving by this group will be motivated in the future.

I’m not suggesting that we rush out and focus all of our energies on finding a couple of big transformational gifts. What I am trying to suggest, however, is that the stable future of our institutions relies on our ability to engage and work with our closest donors in a regenerative system of ongoing support which both challenges their capacity for giving and our own capacities for mission delivery, rather than focusing too exclusively on efforts aimed at producing many small, mostly transactional, gifts.

While they may not look or act like they do today, to the extent that we lose focus on that select group of philanthropists (the 1%) who care deeply about individual museums, and the idea of the role museums play in our society, I believe we will not be maximizing our potential for philanthropic engagement, both through current and deferred gifts, and we will continue to lose ground to the other institutions of society (health care, higher education, etc.) to whom this group of donors will choose to give.

If Carl is right, and the wealthiest Americans are crucial to the financial future of our museums, what are the consequences? How might a museum shaped by broad public funding differ from a museum dependent on a few deep-pocketed donors? Please use the comment section, below, to weigh in.

3 comments:

BenandBuffyinFrance said...

I just read this post and the next one of the 'Facilitator or Advocate?' question, the intesection of those two questions provokes some interesting questions, if an institution would adopt the advocacy of a deep pocketed donor? BE that overtly, or implicitly in decisions, or choices made. Whether to ask a devout christian, and wealthy, patron to fund a travelling exhibition on the subject of evolution. Would that question even be asked, or nixed before it even came up?

As wealthy patrons become even more important their influence on mission and day to day policy needs to be policed delicately, and clearly by the leadership and staff of the institution that takes the money of donors with agendas. Refusing or ejecting a donor would become a badge of 'trust' in the eyes of the 99% who consume the institutions services. One example, an Arts center in the Midwest has a public policy of not accepting funding for shows form art dealers, or individuals with commercial interests in buying or selling art. That sort of policy but in some much more tricky areas.

Michael Israel said...

I agree with Carl, I’ve witnessed his vision at work. Without question, time, effort and investment are better-spent developing relationships with a handful of affluent individuals over trying to engage the masses. Not just because they can provide the biggest funding but also because they can help attract and engage the masses. I’ve witnessed how one big benefactor can bring many and can mean the difference between growth and extinction for a charity. Society’s upper 1% are well educated and more apt to understand and empathize with the role museums play in our society. Especially, in context to other socially fashionable and politically correct charities whose missions are to rescue lives by fighting for the cure, ending hunger, building homes and stopping abuses. Many of humanity’s greatest achievements in science, art, architecture and more as they relate to those other causes can be seen, studied and perhaps inspire more such achievements thanks to museums. Where would we be without… just fill in the blank and you can see how invaluable museums are.

Secondly, Carl noted that museums will be forced into a greater reliance on revenue earned from creative, non-traditional sources. Having worked with over 100 charities and generated millions of dollars in support, I not only agree with his vision, I live it.

I also agree that social perceptions due to shifts in our country’s economy and demographics will certainly change the profile of those who are attending, benefiting from and also supporting our museums. Reinvent and re-imagination should be a mantra, without them; there would be nothing notable to put in museums.

Technology is here to stay and plays an important role in connecting us all, but that nothing – at least nothing yet – can compare to the visceral reality of a live experience. Good thing too, or Internet alone would suffice and no museums would be needed. Now museums need to take it to the next level, to engage people with the vision and more importantly the feeling for what the museum holds on a very personal and powerful level. So powerful it causes their hearts to pound and goose bumps to rise on their arms as they passionately cheer, or perhaps, shed a tear. If you are already thinking that’s impossible, then perhaps you need a bit of inspiration too! This type of connection creates passion and loyal patronage on a grand scale.

The pinnacle is to rally passion and emotion for your mission equal to that of discovering love or religion, a revelation, then you’ve created a relationship like no other. People give to people; inspired people give passionately.

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