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Cash points – thoughts on a healthier future for museum fundraising

26 June 2020

At the start of this year, the dominant debate in the world of arts fundraising was about the ethical standards of organisations accepting sponsorship and donations from private sources. This debate had peaked in 2019 with no clear resolution and, for a while, it masked the reefs and shoals ever present below the surface: the underlying issues facing museums and other not-for-profit arts organisations.

Appearances might give the impression that museums do not struggle for funding. Glitzy buildings, often-packed galleries and gift shops, and busy exhibition programmes have often supported this idea. In the UK and US, high-profile, big-budget museum expansions are a regular occurrence. In recent years, there have been major expansions of MoMA in 2019 ($450m), the Royal Academy of Arts in 2018 (£50m), the V&A in 2017 (£55m) and Tate Modern in 2016 (£260m), to name just a handful.

Since the pandemic struck, the reefs and shoals have resurfaced. Museums are bereft of revenue from ticketing, cafes and shops. Spring and summer fundraisers have been cancelled and patrons’ programmes moved online with inevitable drops of retention rates; blockbuster summer exhibitions have been postponed, and capital projects delayed indefinitely. There have been mass redundancies across many institutions, particularly in the United States where there is minimal state funding for job retention schemes. Even as lockdown is eased in many parts of the world, museums and other arts organisations find themselves mired in uncertainty, unsure of when best to open, how many visitors will come, and whether the current funding models will hold.

Most European countries have announced generous financial support for their arts in recent weeks, filling the revenue gaps or promoting incentives to improve the current situation. This contrasts with the US, where only $150m of federal funding has been set aside for the arts and humanities, a far cry from the $4bn estimated to keep their arts sector afloat. As a consequence, hope for the arts in the United States is in the hands of private money, with its philanthropic environment promoted by tax breaks.

The UK sits in between Europe and the US, with less state aid than in Europe and a less developed culture of individual philanthropy than the US. Only two to four per cent of charitable donors in the UK give to the arts, and existing high-level support is stagnant, with the same group of donors’ names appearing time and again. In a recent interview with the Art Newspaper, Deborah Loeb Brice, a descendant of the Lehman family and a major museum benefactor, has pointed out that too many requests are put forward to the same people in the UK, and that these donors alone cannot stop all the funding gaps.

Institutions that had taken the decision years ago to diversify revenue and increase their self-generated income in order to become less dependent on state funding are now suffering. In 2019, Tate’s government funding was 30 per cent lower than it was a decade previously, yet income from admissions, trading, and fundraising was 30 per cent higher. In 2018, the Metropolitan Museum of Art, one of the wealthiest museums, began to charge entry fees for the first time in 50 years to generate extra revenue. It now faces expected losses of between $100­m–$150m, that will only partially be mitigated by its large, but rather illiquid, $3.6bn endowment.

What is increasingly clear is the necessity for new hybrid models in arts funding, based on broadening the donor base, more imaginative financial planning, and development strategies for the long-term survival of the arts institutions.

First, museums must remember that reserves are reserves. In July 2019, three years after opening its extension, Tate announced in its financial statements that it would reduce its cash reserves from 16 weeks’ worth of expenditure (approximately £20m) to half that, due to ‘a number of projects set to be undertaken during 2019–20’. No doubt Tate and others should be looking differently at the nature of their emergency cash reserves, and be more cautious about reducing them, aware that a rainy day – or many rainy days, like the ones we are currently weathering – is likely to be around the corner.

Often, museums large and small have pursued money for extension projects, but then find themselves with serious cash shortages during hard times. Charleston, the country home of the Bloomsbury Group artists Vanessa Bell and Duncan Grant – now a house museum and gallery – undertook a successful £9.7m fundraising campaign for an expansion completed in 2018. Now, however, with no reserves and no endowment, and the forced cancellation of its flagship Charleston Festival, the organisation has launched an emergency appeal to stay afloat.

The continual stream of brick-and-mortar projects has no doubt contributed to current donor fatigue in the UK. Similarly, economic damage is being felt across all businesses, and a drop in corporate support and corporate memberships seems inevitable. Instead, institutions could entice donors with bespoke single-project or micro-funding opportunities and requests for in-kind support and expertise. This strategy – rather than the one-size-fits-all model that is commonly offered to companies looking to support the arts – would be particularly beneficial for smaller institutions and regional spaces, which have a higher risk of closure, and where smaller pots of funding can go a lot further.

Arts organisations will always be in need of unrestricted funding in addition to any project-based appeals. In the past, unrestricted or core funding has not been as easy to obtain from donors, who are sometimes wary of where their money is going, and often prefer to link their names to more visible assets, such as a new wing or a building. Treating donors as partners and not just as open wallets will help them to be more understanding of the current challenges. While paying salaries and fixing the heating may not sound as attractive, donor awareness must be fostered concerning the real, everyday issues museums face – and in return, institutions need to find more creative ways to promote donor recognition related to core funding.

If this hybrid model of arts funding in the UK were to become normal, we could expect both more donors and more generous gifts: surely a welcome future.

Leslie Ramos is a fundraising and development consultant and founder of ArtEater, an independent philanthropy agency for the arts.