Museum Studies at Tufts University

Exploring museums, ideas, and conversation

Tag: finances

The Pitfalls of Non-Profit Accounting

So sorry for going dark for a little while – it’s been an eventful few weeks for your industrious blogger. We’ll be back to regular posting this week. As always, if you have any suggestions for posts or would like to contribute by guest posting, please email me: amanda.gustin[at]tufts[dot]edu.
If you’ve seen the news lately, you know that author, mountaineer, and lecturer Greg Mortensen, famous for building schools in Afghanistan through his book Three Cups of Tea and its concomitant foundation, the Central Asia Institute, is in more than a bit of trouble. The accounting at his non-profit has gone awry, and it appears that he’s not doing everything he said he would.

Over at The Atlantic, economics blogger Megan McArdle has an interesting post about “instant development,” or, the perils of expecting one messianic genius to change the world. She cites John Krakauer’s initial expose into Mortensen’s business practices, as well as a very thoughtful post from Swarthmore professor Timothy Burke about exactly what projects make the most sense to fund.

There are more than a few parallels to start-up museums in this story. Don’t bite off more than you can chew. Keep your books straight. Beware of mission creep. Focus on the smaller, less-glamorous practical results.

Hancock Shaker Village Receives $1M Grant from Kresge Foundation

The AAM Facebook feed just congratulated Hancock Shaker Village on receiving a $1 million grant from the Kresge Foundation.

Read the original article. There are some really, really interesting things going on in there amidst all the business-speak.

“[The grant] recognizes the living history museum’s work as a visionary organization pursuing transformational projects designed to shift its business model and to serve as a field-wide example of leadership.”

Here’s what I see when I read that: grantmakers, and those who are interested in helping museums with money and resources, don’t want to see museums rest on their laurels. The museum is “visionary,” “transformational,” and a “field-wide example,” and that’s why it just got a check for a  million dollars.

“Appropriate levels of capitalization that allow an organization to grow or reinvent itself is standard in the for-profit sector, but has not routinely been considered best practice in the nonprofit sector. Kresge wishes to reverse this trend by supporting cultural organizations that have completed the thoughtful, exploratory process to reinvent their business models. ” – Alice Carle, program director at the Kresge Foundation

Venture capital firms exist to throw cash at good ideas that need a push. (The hope is then that the good idea will take off and offer a substantial return on the initial investment.) I love that the Kresge Foundation is looking at nonprofit funding in the same way. Too often really brilliant ideas – that may succeed or they may flop – are implemented on a shoestring budget that practically guarantees their failure. When a great idea fails, is it because it was a bad idea or because it wasn’t supported in the right way? Maybe one. Maybe the other. You never know unless you analyze its failure honestly.

“The Village will use half of the Kresge grant to seed its Building Reserve Fund and half to research and launch promising new business initiatives. “We are taking steps to move away from the outmoded museum business model of dependence upon admission and gift shop revenue,” said [Ellen] Spear, [President and CEO of Hancock Shaker Village].”

In this and other sections of the article, the museum’s programs, outreach, and education efforts are clearly outlined in business terms. They’re business models, initiatives, and product development. Is this a good thing or a bad thing? Maybe both. Depending on admission and gift shop revenue isn’t a long-term sustainable economic model for a museum. But does it somehow violate the spirit of a museum to engage directly in naked capitalism?

In the end, though, huge congratulations to Hancock Shaker Village. Receiving a grant of this magnitude is a big vote of confidence. They know what they want, they know how to get there, and now they have the resources to take that path.

Resources for Weathering the Financial Storm from AASLH

At a panel at NEMA focused on emerging museum directors and professionals, one of the topics that the audience felt they had trouble finding resources about was finances.

I’ve just discovered that the American Association for State & Local History has put together a really excellent guide for museums and other nonprofits during our current difficult economic times.

Check it out: Resources for Weathering the Financial Storm

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