9. Finances
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Intro Chapter 9: Finances
According to the definition of Museum (see chapter 2) , a Museum is a not-for-profit institution. But even though a Museum does not have to make a profit, it does need income. Income that will - at least - cover the costs. How do mainstream Museums do this? What can Deaf Museums learn from them?
Again: there is no magic bullet solution. Finances are a major problem for all Museums, both mainstream Museums and Deaf Museums. Especially now: the Covid-pandemic was a very bad time for Museums: no visitors. More recently the energy crisis has become a problem. Many Museums have trouble paying the rising costs of lighting and heating bills. A final problem for mainstream Museums: the rising personnel costs. That is one problem that most Deaf Museums do not have to worry about: most do not have any paid employees. They depend on volunteers for most activities. Volunteers are the 'human capital' of Deaf Museums. But unfortunately, finding and keeping volunteers is not easy either.
9.1. Costs vs. Income
All the topics of the previous chapters depend on the finances: the money. The location, the exhibits, the exhibition design, the marketing of the Museum: what is or is not possible depends on the budget, the money that is available. Even a private Museum in someone's garage that depends on volunteers will need some budget, even if only for heating, lighting and insurance. An article in the New York Times says it all: How to Put a Museum Exhibition Together (Hint: Start With Cash).
There are two streams of money in a Museum or any business. Money going out: the costs or expenses. And money coming in: income , revenue or benefits. When the income is higher than the costs, a Museum makes a profit. When the costs are higher than the income, more money is going out than coming in, the Museum makes a loss and is not sustainable.
Financially, times have been bad for Museums. First there was the Covid-19 pandemic with all its restrictions, now there is the energy crisis. Museums consume a lot of energy - even with no or few visitors. Heating, air-conditioning, lighting: all very expensive. Many Museums are struggling to survive, some have already had to close down.
"Museums across Europe have had to deal with two years with significant decreases in visitor numbers due to the pandemic, which has led to unprecedented revenue losses. Museums and other cultural organizations usually have fixed budgets related to operating expenses, which include energy costs. In previous years, energy costs have been relatively low and museums are clearly worried about the increase in prices in the current and subsequent years, as there is a forecast of a cost increase of up to 400% on the energy bills of museums this winter."
source: Network of European Museum Organisations, 16 September 2022
We looked at some of the business plans of Museums that are available online to find out more about the costs and sources of income of Museums. In the table below you can see the fixed costs: the costs that are predictable and that will have to be paid every day, month or year. In the second column you can see sources of revenue or income.
Both lists are not complete, there can be additional costs and possibly additional sources of income. How important each item is will depend on the size of the Museum, the building, the collection, the staff and the Museum's mission.
Costs, Expenses |
Revenue Streams (Sources of Income) |
Rent | Admission Fees |
Staff | Membership |
Administrative Overhead | Museum Shop |
Consultants, temporary personnel | Workshops, Conferences, Symposia |
Cleaning and maintenance of the building | Special Events |
Internet, telephone | Facility Rentals (renting out rooms, services to external parties) |
Energy (heating, lighting) | Travelling Exhibits |
Water | Gifts, donations |
Insurance (building, exhibits, staff) | Sponsors |
Taxes | Funding, grants |
Exhibits (buying, leasing, insuring, restoring, maintenance) | |
Storage | |
Exhibition Design, Creative Services | |
Media Production (audio-tours, video) | |
Website Development, Maintenance | |
Clip and Image Licensing | |
Equipment rent and maintenance | |
Marketing and Advertising, Social Media | |
Print Advertising, Photocopies, Catalogues | |
Visitor Services and Security | |
Volunteers (recruitment, costs, insurance) | |
Fundraising | |
Research |
Further Reading:
- The Costs and Funding of Exhibitions, Smithsonian Institution 2002
9.2. Human Capital: Volunteers
The official definition of "human capital" is: the value that people bring to a business or a Museum. It includes the education, technical training, and problem-solving skills of a person.
Here, we use "human capital" to describe the value and skills that volunteers bring to a Museum. The "human capital" of volunteers is usually not included in a business plan or a budget. Yet many Museums depend on volunteers for specific tasks, and some museums, including most Deaf Museums, could not function at all without volunteers.
Most Museums invest in volunteers: recruiting, training and retaining them. This is usually called volunteer management:
"Volunteer management is the process that a nonprofit organization uses to recruit, track, engage, and retain volunteers. Simply put, it encompasses all that an organization does to manage its volunteers. By developing a strong volunteer management strategy, a nonprofit's team can build a positive and immersive volunteer experience that will help cultivate lasting, mutually-beneficial supporter relationships."
The British Museum for example has a team of more than 500 volunteers who support the Museum throughout the year, in a variety of roles:
"Volunteers share their knowledge and enthusiasm by delivering daily eye-opener tours, they help the public enjoy the collection in numerous other ways and support behind-the-scenes activities in almost every department. And that's just the start. Every volunteer offers invaluable support to the Museum, and they get something back from it too."
Further Reading:
9.3. A Business Plan
"A goal without a plan is just a wish." Antoine de Saint-Exupéry
"A business plan is a road map showing potential funders, trustees, stakeholders and most of all you, where you are starting from now, where you aim to go, and how and when you are going to get there. It will also show them your plan for sustainability and how you will attract and generate the funds you need to pay for what's necessary. "
source: Successful Business Planning By A Different View
A Museum will need a business plan when it is applying for funding, looking for sponsors, and probably: always. There are many guidelines and templates for business plans, below are some examples.
A more general text about business plans: How To Write a Perfect Business Plan in 9 Steps (2022) has useful advice:
"Keep it short and to the point. No matter who you’re writing for, your business plan should be short and readable—generally no longer than 15 to 20 pages. If you do have additional documents you think may be valuable to your audience and your goals, consider adding them as appendices."
Topics that are often included in a business plan are a financial plan , a SWOT analysis (SWOT: Strengths, Weaknesses, Opportunities, and Threats), and the 4 Ps of marketing :
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- Price. How much do your products cost, and why have you made that decision?
- Product. What are you selling and how do you differentiate it in the market?
- Promotion. How will you get your products in front of your ideal customer?
- Place. Where will you sell your products?
source: PERFECTING YOUR FUNDING APPLICATION: 6 DOS AND DON’TS!
See below for more tips and guidelines.
Further Reading:
- NEMO_Toolkit Cross-Border Cooperation for Museums: From a Project Idea to a Successful Proposal: A Toolkit
- Successful Business Planning By A Different View, 2017, Association of independent Museums
- Cultural Heritage Tourism – Business Plan Template
9.4. Fundraising
Fundraising can be done in a number of ways. It always takes a lot of time and effort, and there is usually no guarantee of success.
Fundraising can be done by direct mail (print or email), by using social media, by advertising on your website, or by writing an application for funding by some funding organisation.
Donors
A donation is a gift of money, goods, or services.
Sponsors
A sponsor gives money for an event or person. Usually in return for advertising: the sponsor's name is mentioned on a website, in a catalogue, in print materials.
The British Museum about sponsoring:
"We offer unique sponsorship opportunities based around exhibitions, galleries, temporary displays, curatorial positions and education programmes. The Museum works in close partnership with you to maximise the sponsorship, raising and enhancing your brand profile across key target demographics through a creative, targeted and integrated marketing and communications strategy, in addition to a tailored benefits package."
source: British Museum
Membership, Friends of the Museum
The Museum of London offers Friends Membership with "exclusive benefits including free entry to our paid for exhibition Executions, discounts, priority booking for museum events (not including Mudlarks children's gallery), and more. See: Friends Membership .
Crowdfunding
Crowdfunding means that you set up a website or you use a crowdfunding platform to ask a large group of people to contribute financially to your project. Each crowdfunding platform has its own rules and regulations; usually, the platform keeps a percentage of the funds that you raise.
Kickstarter releases funds only after the campaign has reached its funding goal; Indiegogo (see below) allows the campaigner to receive funding pro-rata, or wait until their target is hit.
For an overview of crowdfunding platforms, see: Crowdfunding: What It Is, How It Works, Popular Websites.
The 6 Best Crowdfunding Platforms of 2022
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- Best Overall: Indiegogo
- Best for Startups: SeedInvest Technology
- Best for Nonprofits: Mightycause
- Best for Investing: StartEngine
- Best for Individuals: GoFundMe
- Best for Creative Professionals: Patreon
Source: Indiegogo
Applying for funding (grants)
An application for funding is a business plan with a twist: the objective is to convince a person or a group of persons that your project is viable, sustainable, and worthy of their funding.
Some advice to make your application more successful:
source: PERFECTING YOUR FUNDING APPLICATION: 6 DOS AND DON’TS!
A successful application for funding is often a compromise between your original plans and wishes, and what a funding organisation is willing to pay for.
Often, a person or organisation will only fund part of your project; they will require that you pay part of the project yourself (own contribution), or that the project is paid for by several organisations - to minimise the risks.
Usually, it is easier to apply for funds for start-up costs or for one time events. It is much harder to get funding for operational costs - because these have to be paid every year.
Most funding organisations will expect a concrete output and a clear timepath with regular milestones and a clear endpoint. And of course: a realistic budget.
Below, you will find more information about funding by EU funding programmes.
In the UK, the National Lottery has recently funded an application by the Deaf Heritage Centre in Manchester, and the Solar Flares: Deaf Heritage project.
Further Reading:
- What does the future of Museum fundraising look like?
- The Fundraising Cycle- Resource Guide
- Emails/Letter Templates
- How to Develop a Project Budget: A Complete Guide 2022
- How Can Museums Make Money Online
- Institute of Fundraising: GDPR: The Essentials for Fundraising Organisations
- Arts Council England: A practical guide to lawful fundraising for arts and cultural organisations
- Fundraising Regulator: The Code of Fundraising Practice
- Fundraising Regulator: Personal Information and Fundraising: Consent, Purpose and Transparency (includes a checklist and toolkit)
- NEMO_Toolkit Cross-Border Cooperation for Museums: From a Project Idea to a Successful Proposal: A Toolkit