By Katherine I. Goodall
From Dimensions
July/August 2011
There is no question that recent years have been extraordinarily challenging for those responsible for the financial well being of science centers and museums. Since the global economic downturn began in 2008, every revenue stream has been under threat. Some organizations have been forced to make huge cuts, while at the same time serving increasingly broad populations (AAM, 2011). Yet for many, the economic crisis has been a chance to think strategically, refocus, strengthen branding and core support, and explore new opportunities.
As ASTC’s director for institutional advancement, I’ve had the opportunity to talk about these challenges and opportunities with professionals in large and small science centers and museums worldwide. This article is by no means an exhaustive investigation of the recession’s impact on science centers, nor is it intended to suggest that every institution’s experience has been the same in the last three years. Rather, it provides a high-level overview of the complex subject of financial viability. For a deeper look at many of the topics touched on here, see the other articles in this issue.
Private funding trends
As developed economies struggled in 2008 and 2009, capital flow, tourism, and lending to the developing world dropped. According to the World Bank (Nabil, 2010), “The crisis led to a 6.5% fall in the median GDP growth rate of the Group of Seven (G7) countries between 2007 and 2009, and has had protracted effects in several low- and middle-income economies in the rest of the world.”
As seen in previous recessions, philanthropy was greatly affected, but portfolios began to rebound toward the end of 2009, and spending and donations strengthened throughout 2010 (Giving USA, 2010). There is still much debate as to whether we are truly emerging from the recession, and while signals have been mixed, there are positive trends to point to.
Corporations were quick to downsize in 2008, slashing marketing and philanthropic budgets. In the United States, many big banks received Troubled Asset Relief Program (TARP) funds from the government and lowered their philanthropic profiles. Most have now paid that money back and are re-entering the landscape. In fact, U.S. corporate giving rose nearly 6% in 2009, recouping almost all ground lost in 2007–08 (Giving USA, 2009).
In Europe, many corporations also received a form of bailout and responded similarly, but as corporate funding is the exception outside the United States and Canada, reductions did not impact science center budgets as heavily. The ideal vision for science centers, regardless of location, remains “establishing undesignated, multiyear corporate support based on the mission of the organization,” explains Andre Zandstra, vice president for development at Science World British Columbia, TELUS World of Science, Vancouver, Canada.
Meanwhile, private foundations have also seen their portfolios shrink. Many had the extra burden of multiyear commitments that they honored despite having to dip into principal, and many more slashed operating costs before reducing gifts (Miller, 2010).
Individual giving makes up the largest slice of private funding in the United States and Canada by far. While many loyal individual donors continued to give to science centers at the toughest of times, the general trend in 2008 was down (Sage North America, 2008). In the United States alone, individuals gave 10.6% less in 2008, and 14% less in 2009 than in the previous year, according to Internal Revenue Service data (Hall, 2011). However, many anticipate a resurgence in major individual gifts this year and are planning accordingly.
Chris Kramer, vice president of development, communications, and government relations at the Science Center of Iowa, Des Moines, verbalizes what many have experienced with individual giving: “Individuals are working to rebuild their wealth so they are better positioned to provide meaningful support, and we anticipate individual giving to strengthen this year.”
According to Sharon Ament, director of public engagement at the Natural History Museum, London, “Money remains tight for individual donors. We’re working to ensure that donors see us as a viable recipient and vital to societal health.”
Public funding trends
Public funding has seen threats the world over recently. In the United States and Europe, it appears that national government stimulus plans may have eased the pain somewhat at the start of the recession as private funders pulled back, but 2010 brought cuts in national funding that seem to be continuing into 2011 (BBC News, 2010, and New York Times, 2011). This year, due to declining tax revenue, local and state governments are also being forced to make difficult cuts (Johnson, Oliff, & Williams, 2011).
On average, ASTC members outside the United States derive 40% of their operating revenue from public funds (versus 23% in the United States). Decreases in public funding are likely to impact museums in those countries more deeply. As government-enacted austerity measures have taken hold, many cultural institutions in Europe (especially those outside major cities) have seen “their funding slashed, and now see their futures hanging in the balance” (Pilkington, Davies, & McDonald, 2010).
Asia is arguably the region least affected by the recession, and government funding there generally remains strong. For example, India’s ministry of culture allocated 17.5% of its total budget to museums in 2010–11. Still, many institutions in Asia are working to diversify and “reduce dependencies on government funding by increasing private and earned income,” according to May Pagsinohin, executive director of the Philippine Foundation for Science and Technology. Private funds remain hard to come by in India and across Asia, due to the recession and a lack of philanthropic tradition beyond religious donations, as reported in the Economic Times (2008). Like many museums across Asia and the Middle East, “science centers in India are concentrating on increasing attendance and finding well-trained staff,” says G.S. Rautela, director general of National Council of Science Museums, India.
Looking at earned income
The earned income sphere probably paints the rosiest picture of museum financial health. Science centers have always led museums generally in admissions revenue, with 96% of U.S. science centers charging admission, compared with 54% of art museums (AAM, 2009). In 2010, earned income increased for ASTC-member institutions in the United States and across the globe.
Worldwide, museums of every type saw increased attendance in 2010 (AAM, 2011), despite tougher competition for a smaller amount of money. This may be because museums offer an escape from stress, or perhaps because we now live in the technological age and, as William Harris, senior vice president of development and marketing at the California Science Center Foundation, Los Angeles, points out, “We’re social animals—and time with technology can isolate. Science centers bring people together in a physical space that touches on the essence of being human.” Cindy Ball, director of development at the Ontario Science Centre, Toronto, Canada, adds that centers “remain fun, safe, affordable places for people to go and connect with each other.”
However, some science centers rely too heavily on earned income (sometimes as much as 80% of their operating budgets). This segment could be in trouble should visitation drop precipitously due to factors such as rising gas prices or fear of terrorism. Increasing philanthropic support for this group is essential.
Increasing value for visitors
In these difficult times, many I spoke with have focused recently on improving their value proposition to retain members and encourage repeat visitation.
Some have surveyed their members and guests, and consequently adjusted their membership benefits. Many have enhanced programming and increased the number of floor staff, while ensuring that all staff members are welcoming and reflective of the community.
Ament reports that the Natural History Museum has been heavily focused on providing the highest quality visitor experience, through “excellent science, discovery packs for kids, films, live nature demonstrations with scientists, and public debates—all for free.”
This focus is not overlooked by smaller centers. Bob Herbert, executive director of the Lancaster Science Factory, Pennsylvania, explains their “emphasis on tailored visitor experiences, like providing for Cub Scout and Girl Scout science badges, summer camps, birthday parties, and sleepovers” is a critical part of their strategy to engage the community.
Walter Lukens, president of the Lukens Group, suggests, “In this environment, discounting strategies work particularly well for folks looking for value. Strategies that allow people to apply ticket prices to membership work, too.”
Learning in difficult times
One of the silver linings to the downturn is the opportunity for our own education—or re-education— when it comes to revenue sources. Three key lessons learned are:
- Diversification. Ensure you have a diverse portfolio, making sure not to rely too heavily on one type of revenue or funding.
- Branding. Create a strong and honest brand:
- Know your audience.
- Ensure that your mission and vision are clear and inspirational. What do you do that no one else does? Be able to articulate your top three organizational priorities in your messaging.
- Express the importance of supporting the museum’s mission in as many communications as possible.
- Know your competition.
- Have a great website (this is no longer optional) and stay current with trends in online and mobile giving.
- Collect data and use it to evaluate your programs, visitor experience, etc., and report meaningful metrics to funders.
- Investment. Finally, and perhaps most importantly, science centers have learned that they must invest in fundraising and marketing or risk irrelevance. Being financially viable is inextricably linked to achieving one’s mission, not separate from it. In order to be poised to take advantage of the eventual turnaround, institutions must make sure their relationships are strong—with funders, partners, members, and visitors. The most valuable investment (and seemingly the hottest commodity these days) is time. And the trick, it seems, is finding enough time to spend, truly listening and engaging, with existing and potential relationships.
Katherine I. Goodall is ASTC’s director for institutional advancement.
References
Center on Philanthropy, Indiana University. Giving USA. Glenview, Illinois: Giving USA Foundation, 2009, 2010.
“Compare Recovery Measures Across Europe.” BBC News, June 24, 2010.
“Credit Crisis: The Essentials.” New York Times, January 10, 2011.
Hall, H. “Americans Gave a Lot Less in the Recession than Experts Predicted.” Chronicle of Philanthropy, April 22, 2011.
“Indians are Charity Rich but Philanthropy Poor.” Economic Times, March 5, 2008.
Johnson, N., P. Oliff, and E. Williams. An Update on State Budget Cuts (pdf, 15 pp.) Washington, D.C.: Center on Budget and Policy Priorities, 2011.
Miller, P., ed. The Index of Global Philanthropy and Remittances (pdf, 74 pp.) Washington, D.C.: The Hudson Institute Center for Global Prosperity, 2010.
Museum Financial Information. Washington, D.C.: American Association of Museums, 2009.
Nabil, M.K., ed. The Great Recession and Developing Countries: Economic Impact and Growth Prospects. Washington, D.C.: World Bank, 2010.
Pilkington, E., L. Davies, and H. McDonald. “Hard Times: How the Recession is Affecting Arts Funding Around the Globe.” Guardian, February 19, 2010.
Special Report: Weathering the Economy: How Nonprofits are Feeling the Pain and Taking Action. A Survey of The Chronicle of Philanthropy Subscribers. Austin, Texas: Sage North America, 2008.
U.S. Museums Continue to Serve Despite Stress (pdf, 7 pp.) Washington, D.C.: American Association of Museums, 2011.