Tuesday, April 28, 2009
I’ve watched with sadness and morbid curiosity as many of central Indiana’s great cultural institutions have announced budget cuts and layoffs in recent months, as a means of dealing with 30 and 40 percent drops in the value of endowments that last year generated over half of their operating revenue.
For most of my career, the eight- and then nine-figure endowments accumulated by the Indianapolis Museum of Art, the Indianapolis Symphony Orchestra, The Children’s Museum, and the Indiana Historical Society, among others, were things to be envied. This year, they became traps.
No matter how many lines they add to the Form 990, I really think there are only four main categories of revenue for non-profits: earned income, contributed income from private sources, endowment interest, and government grants and contracts.
Most organizations I’ve worked with were aware of the need to achieve greater balance between the two, three, or four streams on which they were dependent. I think in most cases, a 50-50, or 33-33-33, or 25-25-25-25 split would be the ideal.
I’ve known of social service agencies so dependent on government contracts that they changed their missions and names. We’ve all seen performing arts organizations and cultural attractions so dependent on earned income that they invest in marketing and delivering programs unrelated to their mission. Even within the categories, things can get out of balance to the detriment of the organization: development departments that rely too heavily on grants from a few large foundations that give 12% of the charitable “pie” instead of cultivating the individuals who give 83%; institutions where facility rentals become such a big part of earned income that program spaces are converted to banquet halls.
But has anyone ever said, “Wait … our endowment has grown to the point that we’re too reliant on it”?
When a generation of good stewardship generates so many bequests that your endowment grows to more than ten times your operating budget; and the interest that it produces grows from 20% to 35% to 55% of your total income – how do you achieve balance?
How does a museum or symphony with a $20 million budget that (in a normal year) gets half of its income from earnings on a $200 million endowment, achieve greater balance? Does it have to become a $30 million organization, doubling its earned and contributed income to keep up with interest earnings?
It almost sounds like sarcasm or a parody, but I don’t mean it that way. I do think this economic environment is going to cause us, as an industry and a society, to reassess some very basic premises about wealth and income; maybe, in many cases, for the better.
I attend a church that is, in my opinion, out of balance in its reliance on an endowment (or benefaction, as we call it), and is therefore now facing the same kinds of challenges about dealing with a sudden decline in revenue. It has been very interesting to see how this congregation is responding – and the number of individuals who are suggesting, and volunteering, increased giving rather than scaling back on the church’s mission.
Maybe it won’t be an entirely bad outcome if, for the rest of our careers at least, it no longer is seen as desirable to have an endowment so large that we don’t have to sweat so much over our annual fund donors, members, subscribers, customers, and clients …
Monday, April 20, 2009
Two months ago, the professional publication Library Journal released the results of a year-long national study in which it identified “America’s Star Libraries.” Right off the top, I want to say congratulations to the eleven Indiana libraries that ranked among the top 30, top 20, or even top ten in the nation among libraries of similar size.
Library Journal based their rankings on four fairly straightforward criteria – all measures of per capita usage. Other ranking systems measure a combination of “inputs” as well as “outputs” – budget, depth of collection, etc. This ranking measured only visits, circulation, computer log-ons, and program attendance, divided by the number of residents in the district.
Library Journal analyzed the federal- and state-collected data for some 7100 libraries nationwide, and identified the top thirty libraries, according to these criteria, in each of nine different groups according to budget. Eleven of the top 256 libraries in the nation are in Indiana – more than all but four states, three of which (New York, California, and Ohio) have many, many more libraries in the “competition.”
So, the Indiana libraries that are most “relevant” to their audience, by these criteria, compared to all other libraries of similar size in the country, are as follows:
Spencer County Public Library, which serves 9300 people through a main library in Rockport and three branches, is a “five star library” – one of the top ten in the nation with budgets between $400K and $1M.
Bell Memorial Library in Mentone and Waterloo-Grant Township Library are in the top ten among libraries operating on budgets between $200K and $399K.
Indianapolis-Marion County Public Library ranked as a 4-star library among libraries in the $30M plus category – but that’s because there are so few libraries of that size, LJ only gave “five-star” ratings to the top five instead of top ten. So even though it only got four stars, IMCPL is still one of the top ten "really big" libraries in the nation, by these criteria.
Among the other “four star” libraries – in the top 20 in the nation among some 800 in their category – are Orleans Town and Township ($100-$199K), Butler ($200-$499K), St. Joseph County ($10-29 M), and Allen County Public Library ($10-29 M).
“Three star” libraries – in the top 30, nationwide – include Walton/Tipton Twp ($100-$199K), and Evansville-Vanderburgh County and Monroe County, both in the $5-$9.9 M category.
So – before any analysis or commentary – congratulations to the staffs and boards of these libraries. They’re doing something right.
But, I have to wonder – what does it say that Indiana’s highest ranking libraries – by these criteria, compared to their peers nationwide – include five of Indiana’s very largest libraries, and five of our smallest?
I’ve spent a lot of time preparing for and delivering programs in mid-sized libraries in LaPorte, Rochester, Warsaw, Columbia City, Bluffton, West Lafayette, Crawfordsville, Carmel, Greenfield, Batesville, Seymour, and Vincennes, among others, and I can say, those places rock. I don’t understand how none of them are in the top 30 among libraries of similar size.
So, part of it may be the methodology. This study measures quantity (divided by population), not quality. There’s no equation for the number, let alone the accuracy, of answers provided at reference desks; or whether the items in circulation include any literature, science, or classical music CDs in the mix along with best-sellers and DVDs.
I also suspect that part of what is coming into play is that the largest and smallest libraries are in communities with higher concentrations of people whose economic circumstances drive them to these free sources of enlightenment and entertainment.
And it may be a matter of proximity. The Marion County system has 22 branches, in addition to the Central Library. Bell Memorial, in my hometown of Mentone, serves 3600 people, none of whom live more than 5 miles away. In these communities, no one is more than a five-minute drive (or even walk) from a library.
Indiana’s librarians and their advocates have their hands full these days, dealing not only with recession-related budget cuts, but also changes from property tax restructuring and possible local government re-organization.
I wouldn’t suggest making policy around the results of one imperfect study. I would take a minute (okay, an hour or so!) to say congratulations to some libraries that, without question, are excelling at certain standards. And I would pose to everyone who is looking into library restructuring – whether voluntary or mandatory – that whatever solutions are considered, from consolidation to confederation to simple increased resource-sharing – it appears that there are certainly benefits to being physically close to your audience.
Sunday, April 12, 2009
Friday, April 3, 2009
I’ve been hearing museum people discuss this (phantom?) phenomenon every time the price of gas has risen for the last 25 years, but I wonder if this year it might be bearing fruit. I’m going to have to start asking people what their spring break experience has been this year – starting with the manager of the hotel I’m staying at today in
Yesterday, at on a perfect spring Thursday afternoon, we arrived at the Cincinnati Zoo and found the parking lot full of idling cars waiting for departing families to create one open parking space. The zoo was uncomfortably crowded until after .
Today at , on a blustery Friday, the serpentine outside the Newport Aquarium was hundreds of people long. (We opted to spend a day swimming, window-shopping, and playing arcade games, and try to beat the crowd tomorrow by being there when the gates open.)
Last weekend, I had promised my son a trip to our Children’s Museum in
I also couldn’t help but notice that this crowd skewed heavily toward the twenty-somethings. We only encountered a couple of other children; and probably 20% of the audience was my age or older. But there were hundreds of young adults, mostly couples. I had to wonder whether IMA’s emphasis on “Web 2.0” social media programming as well as marketing is paying off.
The downside of spending Saturday at IMA was that I still had to fulfill my promise to go to Children’s – and the only option was a miserable, sleeting Sunday, the kind of day in which no one opts for the park or the zoo. So I wasn’t surprised to find TCM packed to the rafters with multi-generational families, a third of which were pushing multi-child strollers. It was the kind of day that made my son say – as his sisters did at about the same age – “Okay, I’m ready to go home,” and begin to make noises that, at age eight, he’s outgrown The Children’s Museum.
He hasn’t really outgrown that museum; the staff there does a good job of creating age-appropriate experiences for juveniles, tweens, and teens; it’s just hard to tell when there are five thousand toddlers in the building, and adults directing their families away from the The Power of Children exhibit with “Oh, that there’s just educational stuff. There’s nothing to see in there.” (That’s an exact quote, because it was “seared, seared into my memory.” It’s also Children’s unique challenge; but that’s another blog.)
The real point of this blog is that, within seven days in peak “spring break” season, I visited four Midwestern cultural institutions/tourist attractions and encountered crowds ranging from impressive to oppressive. (But with attractions looking for earned income to replace dwindling endowment income and flat-at-best contributions, I doubt any of them were complaining!)
We probably don’t know yet how many families in the Indianapolis/Cincinnati region stayed at home this spring instead of traveling to
Will a similar dynamic define this summer? And if so, how can