Earned Income: Where's the Potential?
Money and Mission
By Sheila Grinell
When I cut my teeth in this field 30 years ago, government and philanthropy still practiced an enlightened form of noblesse oblige. Admission to the great American museums was free, underwritten by public grants and private donations, and many science centers adopted the same model.
But by 1987, when ASTC, with funding from the National Science Foundation, conducted a comprehensive survey of science centers and related institutions (Science Center Survey, 1989), the scene had changed. The survey confirmed what we in the field were already experiencing: Government cutbacks and a proliferation of competing philanthropic interests had resulted in a new funding model. In the mid-'80s, about one-third of museums' operating funds were supplied by government subsidies, generally local; another third were contributed as corporate or private donations; and the final third were "earned," in the form of fees paid for services, primarily admissions. Some of the older, formerly free institutions had passed through awkward transitional stages in moving to paid admission. But prices were generally modest, and the public accepting.
By 1992, when ASTC solicited funding and operating-cost information from new and developing science centers as part of a larger survey (Vision to Reality: Critical Dimensions in Science Center Development, 1992), the model had changed once more: Newer institutions were covering 66 percent of their costs with earned income, and some museums in the planning stage were projecting even higher earned-income figures, including admissions to giant-screen films.
Six years later, the worldwide industry average for earned income (including receipts from admissions, programs/classes, memberships, gift shop sales, parking, restaurant, and "other") was 52 percent of revenue (Yearbook, 1998). In the United States, the average was slightly higher, with medium and large centers reporting as much as 60 percent earned income. Today, some science centers-particularly the large, urban institutions-have taken that even further, reporting earned income of 70 or 80 percent of total revenues.
To my knowledge, no one has yet succeeded in running a sizable science center entirely on earned income-and several commercial outfits, such as Club Disney, have failed to realize a profit on operations similar to ours. I suspect that no science center will ever cover 100 percent of its costs with earned income, especially for capital improvements. Nor should it. Our mission-to further the public understanding of science-requires us to keep admission fees low enough for all segments of society. Government and philanthropy recognize our commitment to that mission and are willing to provide "R&D" money to help us improve and expand.
But all that doesn't mean we don't still need earned income. The trick is to earn that income cost-effectively, in ways that reinforce our mission, not dilute it.
Supporting the Mission
For most museums, earned income is the most reliable strand in the revenue stream. A well-managed admissions/membership effort can be far more predictable and controllable than public-sector support or foundation or corporate grants that might not arrive.
More important, earned income is a measure of a science center's fundamental purpose. We are in business to reach people effectively. To achieve that goal, we must exercise the real discipline of audience research, product development, and follow-through marketing. Living this discipline keeps us intellectually active and socially fresh.
For the last several years, staff at science centers and museums have been nervously discussing the proliferation of commercial "interactive" sources for information and entertainment, as well as increased competition for people's time. Many people in the field have been saying, "Let's stick to our guns, keep the mission and science foremost, and the public will respect us for our disinterested altruism." Independent research performed for the Arizona Science Center (WestGroup Research, 2000) persuades me that this approach is the right one-but only if the public knows about us.
If we want people to be able to distinguish our signal above the noise, we need satisfied-indeed, inspired-museum visitors, program patrons, clients for our various services, and collaborators in different arenas. An excited audience provides not just money to keep the doors open, but also moral authority in the community at large.
Many ASTC institutions are experimenting with ways to encourage repeat visitors and attract new ones. They are forming local and professional collaborations, mixing media, giving ideas from other fields a whirl. These experiments are most likely to succeed if done rigorously, with articulated assumptions, professional marketing, and careful measurement of results. We can learn a lot from each other's experiences.
Limits on Growth
Since our field does not practice uniform cost accounting, I have to speculate on what types of income-producing activities have been most productive for science centers. From my own experiences and those of others, I have come to feel that some ventures are more likely to be rewarding than others.
For example, in the long run I don't expect stores, facility rentals, and large-screen theaters or similar fixed attractions (all enterprises that have traditionally been seen as income boosters) to contribute more than they currently do.
Museum stores face direct competition from shopping malls and catalog services (mail and electronic). Most science center stores do not carry an extensive line of unique or proprietary products for which demand (and therefore shelf space) is likely to expand. Product sales associated with a new exhibition or giant-screen film often produce temporary gains, but these are better recognized as return on the (hefty) investment in the show or film than as inherent to the store.
Facility rentals do bring in income and, often, new faces the science center wants to meet. But every rental competes with other museum functions for space and staff attention, and there's usually barely enough staff time to go around. Rentals tend to be highly seasonal (Christmas parties in December, proms in May) and must be marketed within the local hospitality industry rather than as science center functions. Although science centers may have distinct competitive advantages here (AV capabilities, unique ambiance), expansion of net rental revenue is severely constrained: Rentals require scarce resources and are labor intensive.
As recently as five years ago, large-screen film theaters were considered terrific moneymakers. Informal conversations today lead to a different conclusion. Although attendance and revenue data are not shared in the industry, perhaps half the number of people see each film today compared to five years ago, although the number of films and number of theaters have increased. Last year, the overwhelming majority of new large-screen theaters opened in commercial settings. There are now many cities with multiple screens, competing for attention. And film producers are beginning to realize that "one size doesn't fit all"-that the so-called "cross-over" film, suitable for both cultural and commercial venues, doesn't work. Producers now make "institutional" films for museums and "commercial" films for giant screens at cineplexes.
But the real problem with the large-screen theaters is the product. Now that the novelty of the medium has worn off (at least in larger communities) and audiences have become more visually sophisticated and demanding, you would expect producers to be creating even more innovative and spectacular films. But, in fact, the quality of large-format films in general has not improved during the last two decades.
Barbara Flagg, a media researcher who has done audience studies for seven NSF-funded large-screen films, published an article for the Giant Screen Theater Association (Flagg, 1999) that catalogued visitor response to films. Flagg's research indicates that the well-educated adult visitors at science centers are generally disappointed by the lack of science content and storyline in a medium they nonetheless find visually compelling. Without better films, individual theaters won't earn more income.
Admissions aside, the place where I see potential for real growth in earned income is in the area of fees and contracts for specialized services. Science centers have many assets: talented people, a range of expertise, a reputation for neutrality, connections in the business community. At the same time, their communities have unmet needs, perhaps for distance learning or for programs that help young people, their parents, and teachers to understand workforce issues. By collaborating with local agencies that own a piece of the action, such as technical schools and economic development groups, science centers can strengthen their staff, enhance their local presence, and increase their revenue stream-all while contributing to the perceived public good.
This is not a new idea. The Pacific Science Center, in Seattle, Washington, and Discovery Place, in Charlotte, North Carolina, have had extensive relationships with state and county educational agencies, respectively. In 1998, the New Jersey legislature appropriated $6 million to fund an expansion of Liberty Science Center's informal science Partnership Program to 30 at-risk school districts in the state. Other projects are under way.
In the United States, and around the world, the obvious connection between "the new economy" and the role of science and technology education is opening the door for new ventures of many kinds. It's up to science centers to take a position at the forefront of this movement, making money through new programs and activities that benefit individuals and society.
Sheila Grinell is executive director of the Arizona Science Center in Phoenix.
The ASTC Science Center Survey: Administration and Finance Report. Washington, D.C.: Association of Science-Technology Centers, February 1989.
Vision to Reality: Critical Dimensions in Science Center Development. Vol. II, Survey and Profiles. Washington, D.C.: ASTC, 1992.
WestGroup Research study for Riester-Robb. Phoenix, Arizona: January 2000.
Yearbook of Science Center Statistics 1998. Washington, D.C.: ASTC.
Flagg, Barbara N. "Lessons Learned from Viewers of Giant-Screen Films," in Giant Screen Films and Lifelong Learning. St. Paul, Minnesota: Giant Screen Theater Association, 1999.