Museum TrendsWatch 2020: Government Funding

This post is the fourth of six installments on the American Alliance of Museums’ TrendsWatch 2020: Financial Sustainability. Read previous posts: Museum TrendsWatch 2020: Financial Sustainability Introduction, Museum TrendsWatch 2020: Earned Income, and Museum TrendsWatch 2020: Charitable Income. This post will focus on “government income” for museums, an income stream that (on average) makes up 19% of revenue for most museums.

Summary

There are a variety of ways a museum can received government funding: distributed through grants, line item appropriations, millage (local tax dedicated to organizations), and fees-for-service. Just like every other income steam, the availability and level of government funding can vary dependent upon market factors, current events, and which political party is in power. But unlike other income streams, the variation is less volatile and is slow to impact the funds available. AAM reports government funding for museums has (as of their writing, pre-COVID-19) recovered from pre-2008 recession levels, but still lower than 2001 levels. The fact that government funding took 12 years to recover from the 2008 recession is depressing, and especially so as we face a second recession due to the coronavirus pandemic.

Challenges

When there is less money being made, there’s less money being taxed; which then means there’s less money available to give to museums. Over the last several years funding for the National Endowment for the Humanities and the National Endowment for the Arts have only experienced modest growth. Whereas the Institute for Museum and Library Services (a smaller peer organization) has received a 20% increase in the last three years. Notably, all three funders have been threatened by budget cuts and complete program elimination during the same amount of time. Funding for these programs is far from stable and is impacted by both the availability of tax funds and the priorities of whichever political party is in power—in both the White House and Congress. There’s also the secondary challenge of local governments attempting to increase taxation of museums. So, not only are there less tax funds available, museums are also at risk for being taxed more.

Opportunities

The main focus for opportunities in this area is related to advocacy. AAM recommends the following advocacy efforts for government income:

• Relationship building with local officials
• Invite local officials to have a role on the board
• Share stories with officials at all levels on how the museum helps to make their constituents’ lives better
• Monitor policy issues at the local, state, and national levels
• Educate policy makers on how a policy will impact the museum’s ability to carry out its mission (for better or worse)

In addition to advocacy work, there are several government funding options that can be utilized by museums: 

• Millages (dedicated funding to the museum from public taxes for public benefit)
• Government grants (26 federal grant-making agencies with more than 900 programs in addition to local and regional agencies)
• Levies
• Sales tax
• License plate fees

Innovations

While there are limits to how creative we can be when it comes to government funding, museums are finding ways to innovate on existing government funding options. For example:

• Providing education spaces and curriculum to schools and are included as a part of school district budgeting
• Petitions
• New Market Tax Credit
• Social impact bonds “pay for success financing” or “benefit bonds”*

*AAM notes they “have not yet identified any museums acting as service providers in SIB contracts. But given the ability of the museum sector to effect social change, this approach may be a potential source of both start-up capital and ongoing funding in the future.”

My Recommendation

I have three recommendations for this section:

1. Advocacy: If it isn’t already, advocacy should hold a prominent place among museum priorities. Even at the best of times (economically speaking) museum staff should be aware of the local and national policies, taxes, and funds that have the potential to impact museums. For each government action that impacts museums the staff should write, call, or email their representatives to advise them on how the action can help or hurt museums. This is particularly important now due to the current economic crisis and the subsequent congressional work on relief packages. Museums must advocate for their relief needs if they want help in surviving. You can read more on this subject in the Analysis of the US Stimulus Package and What’s in it for Museums post.

2. Grant Acquisition: Grants require strategy, good project framework, and clear writing in order to be competitive—and competition is steep. However, grants are also one of the easier ways to carve out government funding for your museum, and it’s a resource you can go back to continually as different projects or needs arise. Make sure you grab a free e-copy of my book A Survivor’s Guide to Museum Grant Writing and check out Lucidea’s suite of on-demand webinars to help you with this topic (both resources are free, courtesy of Lucidea).

3. Explore and Experiment:There are several ideas underneath the “Opportunities” and “Innovations” sections of this post. Work with your museum team to learn more about these options and determine which ones make sense to explore and experiment with.

Conclusion

It took us 12-years to recover from the 2008 recession. How long will it take us to recover from this one? Some of that is up to us. How much are we willing to do to advocate for museums? What grants will we seek? What government funding options will we explore? How effective are we at those activities or do we need help? There are options when it comes to government funding and we can (and likely should) increase how much of the museum’s budget is comprised of government income. With earned income and charitable income (which makes up 66% of the average museum budget) taking a hit for the foreseeable future, other income areas will need to be increased in order to avoid permanent museum closure.