Monday, March 17, 2008

CAM 2008 Session: New and Alternate Funding Streams for Museums, The Importance of Financial Planning for Museums

Mike Warren, President and CEO of Turtle Bay Exploration Park, drew upon his years as a City Manager to offer these three recommendations for how museums can succeed financially. A PDF of his presentation can be found here.

1. Have a Three-Year (Minimum) Financial Plan.
Nothing is more crucial to the stability and success of a museum than sound financial planning. Too often museums make the mistake of thinking that because they are nonprofits that means that they aren't supposed to make money or focus on finances. Nothing could be further from the truth. Strong museum leaders must be able to read basic financial statements and understand basic accounting principles in order to ensure that the museum is financially sound and has adequate funding to support its mission.

2. Focus on the Endowment.
Revenues brought in through contributions and donations should go into an endowment rather than into a general fund that supports operating costs. This may seem counter-intuitive to a lot of museums, but it is a recommendation based on taking the long-view approach to planning rather than the short-term approach of trying to put out financial fires. A strong endowment will ultimately enable the museum to increase revenue through dividends and interest.

3. Diversify Revenue Streams.
Turtle Bay has a number of sources of revenue, including a variety of annual fundraising events, renting blockbuster traveling exhibitions such as Titanic or Body Worlds and soon they will be developing some of their vast property, most likely adding a hotel or other visitor services-oriented elements.

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