American Association of Museums - 2009 Conference Session Chair: Ted Silberberg, Senior Principal, Market and Financial Planning, Lord Cultural ResourcesSpeakers: Laura Kleinman, Director of Shared Services, University Circle Inc., ClevelandVan Romans, President, Fort Worth Museum of Science and History Ted Silberberg

Innovative Ideas and Practices in Revenue Generation and Cost Control

Creating Cultural Capital

• Lower attendance levels • Reduced admissions, retail, membership,

and other visitor-generated revenue• Fewer functions have lowered rentals

income• Endowments tied to investments have lost

value• Diminished corporate and other donations• Governments have imposed grant

reductions • Lower revenues result in layoffs and

reductions of hours, programs and major exhibitions.

Many Museums Have Been Adversely Affected by the Current Economic Downturn

…Particularly Important Today but are Always Essential for Museums

First Case Study: Cleveland Cultural Collaborative

• Laura Kleinman, Director of Shared Services, University Circle Inc.

Revenue Generation and Cost Control Strategies…

Cleveland Cultural Collaborative

An experiment in creating sustainable collaborative initiatives

Presented by Laura Kleinman, Director of Shared

Services University Circle Inc.

Cleveland Cultural Collaborative

History and Background

CCC History and Background• 2004: A formal museum collaboration

– Cleveland Museum of Natural History– Cleveland Botanical Garden– The Western Reserve Historical Society

• 2005: Hire Lord Cultural Resources to investigate possible initiatives and make recommendations in Planning for the Implementation of the Cleveland Cultural Collaborative in early 2006.

CCC History and Background

• 2006: Consortium of 7 local funders provides 2 year grant to hire staff and move forward with Lord’s recommendations.

• University Circle Incorporated (UCI) becomes fiscal agent and home for CCC– Development– Service– Advocacy

CCC History and BackgroundThe “Lord Report”

– 44 Recommendations– 5 Categories:

• Build organizational capacity for improved effectiveness• Maximize savings in purchases and services• Increase earned income and attendance• Increase contributed income• Enhance the visitor experience• Other recommendations

– Phase I and II– Some recommendations required institutional investments

On your mark, get set, go!

On your mark, get set, go!

• Governance

• Meet the players, gain trust, understand their goals and objectives – how can you help meet them?

• Cultural differences, different fiscal years, changes in leadership

• Change is slow……

Accomplishments

Accomplishments

• Increase public awareness• Enhance visitor experience (Increase

earned revenue)• Increase organizational capacity• Decrease costs, increase efficiencies

Accomplishments Increase Public Awareness

Accomplishments Increase Public Awareness

Accomplishments Increase Public Awareness

• Reaching out to Life Long Learners

– Senior Circle Sampler to test interest

– Coffee with a Curator, a partnership with local community college

Senior Circle Sampler

AccomplishmentsEnhance the Visitor Experience

Almost 4,000 hoppers in 18 months

Spike in July/August 2008 from Cleveland Museum of Art opening

$23,500 in earned revenue

Accomplishments Increase Organizational Capacity

Raiser’s Edge Training– Raiser’s Edge 3-day local training – 16 individuals – 25% of the cost normally incurred for out

of state travel and housing, associated with most Blackbaud Raiser’s Edge training sessions.

– Approx. $2,000 per head savings, or $8,000 for the CCC members.

Accomplishments Decrease Costs, Increase Efficiencies

Shared HR Manager– Shared between 2 of 3 organizations– Cleveland Botanical Garden and The Western

Reserve Historical Society– Approximately 50% savings for each organization

Office Supplies– Align with large university – Overall savings of 27%– Rebate stream back to CCC

AccomplishmentsDecrease Costs, Increase Efficiencies

Telecommunications Service

• Baseline data revealed significant CCC spend with AT&T ($125,000+)

• Identify cost savings and up front payment to CCC with different vendor

• WRHS signs 3-year contract• Estimated Savings: 34%

Lessons Learned

• Understand stakeholder expectations, define success

• More time on change management• Governance structure with

appropriate roles and responsibilities• Develop a business case

(sustainability)• Importance of scale

Future

• University Circle Inc. is home to former CCC and new department of Shared Services

• Scale up to include all 42 member institutions and businesses

• Form shared services committee with appropriate roles and responsibilities

• Focus on sustainability

Second Case Study: Fort Worth Museum of Science and History

• Van Romans, President, Fort Worth Museum of Science and History

Extreme CollaborationInnovative Ideas in Revenue Generation and Cost Control

Van A. RomansApril 30, 2009

Cattle Raisers Museum

National Cowgirl Museum & Hall of Fame

Fort Worth Aviation Museum

Other Ideas and Examples

• Ted Silberberg, Senior Principal, Market and Financial Planning, Lord Cultural Resources

Creating Cultural Capital

Management Agreements Among Museums

• Does every new or small museum require its own Director or other senior positions?

• 5-10% of senior staff time to manage smaller or new museum in return for payment of percentage of staff costs + management fee= access to experienced staff at much

lower cost than own staff positions= revenue generator for the

managing museum= funders should love it

Museum Mergers

Dallas Museum of Natural HistoryDallas Children’s

MuseumThe Science Place

Dallas Museum of Nature and Science

Time-Shared Ownership/Operation of Museum Building with School District

• Spaceport Sheboygan to include science museum/center

• Sheboygan Area School District wants Magnet School with space science focus

• Share Building:= Magnet School 100% School

District= Science Museum time-shared

based on 22% of time by School District, pays 22% of capital and operating costs

Focus Even More on Resident Markets in a Recession• Fewer Longer Distance Vacations • Substitution of Things to Do Closer to Home

= Incentives for repeat visitation and membership among core audiences:–more rotation of permanent collection

with dynamic themes that “feel like” special exhibitions

– half-price for second visit within 60 days creates exposure to revenue centers

– weekday afternoon strategy– bad weather strategy

A challenge is getting the word out!

= Target non-traditional audiences:–distribution of free admission

tickets to entice lower income/education markets as alternative to free admission periods –communicating with teenagers–museum as community center

Focus Even More on Resident Markets in a Recession

Consider Museum / Non-Museum Collaborations

• “Value Added” Admissions Packaging as Alternative to Museum “Passports”

• Hilton “Manhattan Museum Package” all of 2009 and $20-30 more than regular price– Several Hotels - One Night– American Museum of Natural History –Two

Free Tickets– Skycraper Museum – 2 for 1 Deal– Ripleys Believe it Or Not - $4 Discount–Madame Tussaud’s - $5 Discount– 10% off two restaurants

Find the Right Balance in Admission Charges

• Adding Value Often Better Strategy than Lowering Admission Charges

• Balance to Take Into Account:– nature and quality of visitor experience– length of stay– charges at other museums

• What about Increasing Admission Charges Substantially?– implications to attendance and earned

income– implications to contributed and grant income

Recognize Importance of Contributed Income: Where the Money Comes From

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

Earned

Contributed/Private

Investment/Endowment

Government

Earned 30% 29% 30% 31%

Contributed/Private 19% 32% 35% 35%

Investment/Endowment 12% 11% 10% 10%

Government 39% 28% 25% 24%

1989 1999 2002 2005

What Do Funders Want?

• Focus on mission• Seek to widen access– guest passes from upper level members

provide access to visitors who can’t afford • Avoid unfair competition with the private

sector– prices for space rentals

• Meet wider community needs– admission as full-day pass to eat, shop,

return

BAD News / GOOD News

Bad News:• Worst economic downturn since 1930’s. Good News: • Museums have survived recessions. Some were

built in the Great Depression• Museums to emerge in best shape not those

cutting the most staff and public services • It will be those museums that maintained

existing audiences and grew new ones• And utilize revenue generation and cost control

strategies, including some discussed here today

Discussion