In the world of small museums, location and audience significantly influence expenses, rendering a one-size-fits-all approach ineffective. However, gaining insight into the various types of expenses museums incur can shed light on common challenges and their causes. The non-profit financial Form 990 categorizes expenses into five areas, providing a framework for understanding spending patterns. Our goal is to simplify the concept of museum spending and guide museums toward prudent budget management by exploring these key expense categories.
Continue readingCategory Archives: Museum
Untangling the “Other” Revenue Stream
In the colorful tapestry of history-focused organizations, every thread of revenue has a role to play in the success of the organization. Perhaps the most unique collection of these threads is the “Other” revenue category. This singular “Other” thread houses a miscellany of revenue sources that don’t fit into the categories of “Investment Income”, “Program Service Revenue”, and “Contributions and Grants”. At first glance, this classification may appear insignificant, yet it often proves to be a silent contributor that underpins the fiscal health of History-Focused Organizations [Museums (NTEE A50), History Museums (A54), History Organizations (A80), and Historical Societies & Historic Preservation (A82)].
Understanding this “Other” revenue can be like deciphering an ancient dialect. It is made no easier by the fact that IRS Form 990 at times uses the terms revenue and income interchangeably. While some categories of this revenue such as royalties and inventory sales may be familiar, “miscellaneous” often contains difficult to parse odds and ends such as third-party events, insurance proceeds, ATM fees, and revenue from hosting satellite towers. Most often this miscellaneous revenue is unspecified and simply named “miscellaneous” or “other” which can make it difficult to get the full picture of a particular institution’s revenue sources. We advise limiting the classification of your total revenue as “miscellaneous” to no more than 1%. While judicious use of this category can help define your other revenue streams more clearly, overuse could lead to a lack of clarity about a significant portion of your revenue. It is crucial to maintain a comprehensive understanding of your financial situation.
Continue readingImpact, Sustainability, and Non-Profit Programs
For small non-profit organizations operating on less than a million dollars annually, programs are often the beating heart of the operation. The best programs balance mission and financial sustainability to serve their audiences. Program revenue (admissions, events, and membership dues) can be a vital means of maintaining financial stability and growth. For History-Focused Organizations [Museums (NTEE A50), History Museums (A54), History Organizations (A80), and Historical Societies & Historic Preservation (A82)] as overall revenue grows, so does the share of program revenue. This means as your organization grows, so should the prominence of your programs as a true revenue driver (see figure 1 below).
As small history-focused organizations expand, it’s crucial to manage their programs wisely to increase income while keeping the mission in mind. For small groups, program decisions can be very personal, often influenced by board or staff interests. Taking a strategic approach to these decisions can boost the organization’s growth and success.
Continue readingWhat Drives Revenue at History-Focused Organizations?
If a well-managed museum has robust programming, a large endowment, and a profitable gift shop, should they still rely on contributions and grants? Often regarded as a fundraising burden to reduce or eliminate, instead we might want to consider these revenue sources as one of the best ways to sustain and expand an institution. Sixty-six percent of History-Focused Organizations [Museums (NTEE A50), History Museums (A54), History Organizations (A80), and Historical Societies & Historic Preservation (A82)] depend on contributions and grants for at least half of their annual revenue and nearly forty percent rely on contributions and grants for more than three-quarters of their revenue (see Figure 1 below).
To maximize revenue, museums must navigate fundraising in the present and future. Understanding the donor and engagement pyramids simplifies fundraising and ensures focus. Small history-focused organizations, in particular, must invest their limited bandwidth strategically to achieve success.
Continue readingHow can History-Focused Organizations Invest in Stability?
Over the past year, Engaging Places has been looking over individual segments of the museum field. While these segments are unique in specific ways, as demonstrated by the data, several of them do share a common theme and mission: an overall goal to promote history. These four segments are History Museums (A54), History Organizations (A80), Historical Societies & Historic Preservation (A82), as well as the broad Museums (A50) category. By combining these segments we can focus on the history-centric portion of the museum field that makes up close to half of its revenue and consists of a whopping 89% of its institutions (see Figure 1). This block of museums is incredibly dominant within the field and a major focus of Engaging Places’ work. For ease of reference, we will be referring to them as History-Focused Organizations.
It is important to remember that as an aggregate these History-Focused Organizations still trend small. Over 90% operate on less than $1 million in revenue annually, with contributions and grants bringing in over half of that vital revenue. For these smaller museums, financial security is a constant and essential priority. While many of these History-Focused Organizations are unable to achieve large pools of investment to stabilize operations, unlike some of their larger counterparts, they can develop practices to move them in this direction.
Continue readingShould Local History and Historic Preservation Dominate the Museum Field?
Of all the organizations in the United States devoted to arts, culture, and humanities, Historical Societies & Historic Preservation (NTEE A82) organizations have an outsized presence. More than a third of all organizations “sponsor activities which celebrate, memorialize and sometimes recreate important events in history such as battles, treaties, speeches, centennials, independence days, catastrophes that had an important impact or other similar occasions.” “Historical society,” “historical association,” “heritage society,” “preservation,” and “restoration” are in the name of nearly 80 percent of institutions in this category. They are also focused on local history—only one in twenty institutions appear to have a geographic scope larger than the county level.
While preserving and interpreting local history is their primary interest, these organizations are the smallest by revenue. More than 90 percent operate with less than $1 million in revenue annually and have a median revenue near $64,000 (yes, the median is $64,000 annually for all A82 organizations for 2011-2017—half of these organizations operate with less than this amount). Only Historical Organizations (A80) produce similar financials, albeit with slightly higher figures.
Continue readingNearly 50% of History Museums Operate on Less Than $100,000
A financial review of more than 1,300 History Museums in 2017 reveals that nearly 90 percent operate on less than $1 million annually, and nearly half on less than $100,000 (see Figures 1 and 2). History museums are financially fragile, but an annual increase in revenue of $5,000 to $10,000 could have a tremendous impact on their capacity and impact. How might this be achieved? Hints of potential solutions are revealed in the changing revenue patterns of larger museums.
A closer look shows that most History Museums derive about 60-70 percent of their revenue from “unearned” sources (i.e., contributions, grants, investments, fundraising events, membership dues), but the mix changes according to size. Museums with less than $10 million in revenue received 4 to 6 percent of their income from investments, which doubled or tripled in the largest museums to 11 percent. While asking for support from people and foundations (i.e., contributions and grants) remained steady, there seems to be increased attention on making money from money (e.g., interest, dividends, sale of securities, drawing funds from endowments).
Continue readingOn the Road: Chimney Rock National Historic Site
History Nebraska (formerly known as the Nebraska Historical Society) has six historic sites, including Chimney Rock near Bayard. Growing up in California, this natural landmark figures prominently in the schoolbook history of western settlement with images of slowly moving wagons crossing empty plains accompanied by men carrying rifles and women carrying children.
As my first experience in Nebraska, my road trip showed me the physical challenges of living in the mountains and plains of the western United States. That’s one of the big reasons I love to travel because it establishes the physical context for historical events and places that can’t be adequately captured in books or exhibitions. It’s one of the reasons I’m so committed to the preservation and interpretation of historic sites—it’s where history happened.
History Nebraska debuted a renovated Visitor Center at Chimney Rock in July 2020 and received a Rising Star Award as an outstanding tourism attraction from the NebraskaLand Foundation. My chance to see it last month showed that it was a terrific experience for tourists with families from the architecture to the exhibitions to the restrooms. It’s a significant improvement from a couple years ago, as described by Karrin Doll Tolliver at A Taste for Travel.
Continue readingA Mixed Prognosis for Regional Museum Associations
In the United States, museums are served by six regional museum associations that are associated (allied?) with the American Alliance of Museums (AAM):
- Association of Midwest Museums (AMM)
- Mid-Atlantic Association of Museums (MAAM)
- Mountain-Plains Museums Association (MPMA)
- New England Museum Association (NEMA)
- Southeastern Museums Conference (SEMC)
- Western Museums Association (WMA)
While AAM is doing well with about $10 million in annual revenues and net assets of $2 million, the regional museum associations are much much smaller by comparison. Their annual revenues range from $70,000 to $600,000, which is 1-7% of AAM’s annual revenues (see Figure 1).
Figure 1. Chart of revenues for regional museum associations in the US, FY 2014-16.
That might be acceptable given these associations serve a few states rather than all 50, but a further analysis of their financial condition in fiscal years 2014-2016 suggests that their health is decidedly mixed: Continue reading
Delaware Historical Society Cleverly Interprets One Object Two Way
Wall between two exhibitions at the Delaware Historical Society.
The Delaware Historical Society reopened their museum last fall with two new complementary exhibitions designed by the Gecko Group, one a comprehensive history of the state and the other on the history of African Americans in Delaware. I recently visited the museum with Scott Loehr, the CEO, who pointed out a clever interpretive technique. The two exhibitions share a common wall, which has a doorway that allows visitors to walk from one to the other and exhibit cases on either side. It’s not immediately obvious, but the objects on display are interpreted differently depending on which side of the wall you’re standing.
For example, a Crown Stone from the Pennsylvania-Maryland Border has a two-sided label. The side facing Continue reading
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