As the economic downturn continues, many mid-Atlantic cultural organizations have moved from short-term responses to long-term financial concerns. In the Fall 2009 issue of Cross Ties, directors of three historical organizations explained their early responses to these challenges. This month, Richard Burkert, president and chief executive officer of the Johnstown Area Historical Association, and Avi Decter, executive director of the Jewish Museum of Maryland, have responded to our invitation to provide updates on their situations. How did their organizations’ plans in 2009 work out? What new measures are their institutions taking to address more long-term financial concerns? Their candid reports reflect the ongoing challenges faced by public humanities programs throughout our region.
Johnstown Area Heritage Association
By Richard Burkert, President and CEO
(Link to Burkert’s previous report.)
Rereading my 2009 Cross Ties essay on coping with financial downturn, I am struck by my optimistic projections for sustaining the operations of the Johnstown Area Heritage Association (JAHA) by increasing earned income from tourism, facility rentals, and sales. While those of us who direct historical organizations have a responsibility to maximize revenue from our facilities and programs, I have returned to my earlier understanding of my institution as a charitable organization. Historical organizations and museums do create value for their communities; they can even have a significant impact on their local economies. Unfortunately, the economic benefits of tourism largely accrue to food and lodging providers, not the attractions. Ultimately, we are community-based organizations that need to rely on charitable support for our funding.
As noted in 2009, JAHA’s capital campaign fell short of its $9 million goal when the bottom fell out of the economy late in 2008. We were able to complete our capital investment through borrowing and have subsequently extended our lines of credit by borrowing against our museums properties. We are certainly grateful for the support of our local banking community, but borrowing has exacerbated our cash flow problems. Loan repayments total around $250,000 annually and we are struggling to manage this level of debt without reducing operations.
In 2009, we had just completed our Heritage Discovery Center, which is the centerpiece of a network of regional attractions and historic districts. We believed that this Johnstown Discovery Network could provide an integrated visitor experience that would attract far higher levels of visitation than we had previously experienced. While attendance at our sites has increased by more than fifty percent, visitation is less than what we had projected. We have come to realize that we need a far bigger tourism marketing initiative to achieve the level of visitation we had projected. Our dilemma is that we cannot afford to expand marketing based on what we earn from visitors. Our museums are the “loss leaders” in the local tourism economy, and an effective visitor marketing program will require us to try to create partnerships with local tourism interests.
One effort to increase visitation has paid off for us however – the development of a children’s museum that interprets local heritage, industry, and nature. The Johnstown Children’s Museum continues to attract residents and visitors throughout the year and has given Johnstown a family-friendly tourism experience.
The enthusiasm I expressed in 2009 for increasing earned income and creating more of a business-like culture at JAHA now seems brave but naive. We have continued to promote facility rentals and have successfully become a venue for meetings, dinners, wedding receptions, and special events. As in 2009, our Children’s Museum hosts birthday parties, and, making use of JAHA’s liquor license, we open our Ethnic Social Club, a room in JAHA’s Heritage Discovery Center featuring items collection from local ethnic societies, to the public a couple of times a month.
These rentals and events are a lot of fun, but don’t make the profit we had hoped for. In our most recently completed fiscal year, we ended up realizing only seventy-one percent of our goal for earned income from admissions, merchandise sales, rentals, and café and other operations. In our upcoming 2012 budget, we expect to receive about twenty-five percent of our total income from admissions, sales, rentals, and other earned income, based on actual numbers for 2011.
One initiative – hiring a Chief Operating Officer – was a failure. The person we hired possessed significant experience in business and was expected to bring a “bottom line” perspective to JAHA’s operations. But this move quickly resulted in a culture clash. Our employees often work very hard, but they are attracted to the non-profit sector because they don’t want to deal with the sort of regimentation typical of the corporate world that the COO attempted to implement. The COO was also very uncomfortable with the uncertain cash flow seen in non-profits. (We may budget private donations but cannot accurately predict when and if they will arrive.) The COO lasted less than six months. JAHA’s senior staff now directly oversees financial operations. Part of our routine is looking at daily cash and accounts payable reports.
After two years of exploring ways of augmenting the revenue side of our operation, we have returned to the notion that we will survive only if we can find adequate community support. Our projects have been competitive for support from regional and even national foundations, but local support has not been cultivated in a systematic manner. Earlier this year, JAHA upgraded its fundraising capacity by hiring a Vice President for Advancement following a national search. Despite the negative economic climate, we have begun a new capital campaign. In addition to several capital enhancements, this campaign, unlike previous ones, includes the goal of financial stabilization through increases in revenue from JAHA’s Annual Fund program. If we are successful, the campaign will also create reserve funds for building and exhibit maintenance and upgrades. While we hope to become more financially stable through this fundraising campaign, we have come to the sober realization that funding will remain a struggle.
Jewish Museum of Maryland
By Avi Decter, Executive Director
(Link to Decter’s previous report.)
In response to the 2008 market crisis, the leadership of the Jewish Museum of Maryland has continued to “make haste slowly,” determined to avoid lasting injury through preemptive layoffs and/or drastic reductions in services. In FY2009, we incurred substantial operating deficits ($200,000) which were funded out of unrestricted reserves, the proverbial “rainy-day fund.” In FY10 and FY11, we were able to operate essentially in balance, through a combination of judicious budget pruning involving mostly small operating costs and minimal cuts in program budgets together with major grants from the National Endowment for the Humanities and the Institute for Museum and Library Services. Fortunately, we were able to restore cuts in staff salaries made in 2009 and even to recruit for a new staff position, Community Outreach Coordinator, with the assistance of an IMLS Museums for America grant. We are one of the few museums of which I know personally that has not had to reduce staff since September 2008, though this remains a possibility we need to consider going forward.
The past three years, shadowed by the recession, have been among our most productive in terms of exhibitions and programs, publications, and community outreach. Institutional stability and continuity of staff have served us well, creating opportunities for new partnerships with organizations ranging from the Johns Hopkins University to Levindale, the local Jewish geriatric center. The Museum has long enjoyed a city-wide reputation as an organization that seeks and promotes partnerships with others. The recession has encouraged other agencies to consider partnerships, including with us, both for economy of effort and for their appeal to funders (who, like everyone, prefer to kill multiple birds with each stone!).
If anything, we have been able to intensify our engagements with our community, both on- and off-site. Installing A Blessing to One Another: Pope John Paul II and the Jewish People, a loan show from Xavier University, and curating a main gallery exhibition of work by local African American artist Loring Cornish created important new opportunities for cross-cultural discourse. Intensified outreach to the Baltimore Metro area has essentially doubled the number of people we were able to engage in outreach programming, including off-site exhibitions, presentations by our speakers bureau, educational programs, and public programs at other venues, over three fiscal years. Meanwhile, the Museum has been honored repeatedly for the excellence of our programs and publications.
We have not, however, gotten out of the fiscal dark woods. In the current year (FY12), we project another $200,000 operating deficit, and we are convinced that we are confronting the challenge of an ongoing structural deficit caused by the loss of public monies, in excess of $120,000 annually, coupled with a narrow base of private funding. Annual support from individual donors and family foundations has been important, but it has not been the driver of our growth over the past twenty years. Instead, grants from public agencies, federal, state, city and county, have been our engines for program development. In the current year are we beginning to achieve integration of our development efforts to include both private and public sectors, and to ramp up our private-sector fundraising, even though annual fundraising with local donors and foundations is conditioned by non-competitive agreements with the local Jewish Federation, of which we are a beneficiary agency.
Despite these concerns, our lay leadership remains convinced that the strength of our programs and services are the key to long-term financial stability. We have undertaken contingency planning, to be sure, but most of our emphasis has been on making a better case for our institution and developing a broader, more diversified base of support. Cutting staff and program is the most obvious and, for many institutions, the only way to reduce annual operating costs. But the opportunity cost—the loss of appeal to key funders—may be a hidden, but important downside of this approach. We have chosen to protect our staff and program for the past three years. Only the exhaustion of our unrestricted reserves, which have grown back to their 2009 level, is likely to force us to make staff and program reductions in FY13 and beyond. This thoughtful, deliberative approach has served us well for many years, despite changes in our environment, and we are likely to continue making haste slowly in a volatile economy and evolving philanthropic context.