Public Library Finance
Running Head: PUBLIC LIBRARY FINANCE
Public Library Finance:
Diversified Funding Sources and What Can be Learned from Museums
Sandra Calkin
LIS 699
Professor DiMattia
Spring 2007
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Public Library Finance
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Introduction
In the most recent “State of America’s Libraries” report published annually by the
American Libraries Association (ALA), ALA is very optimistic about the current state of public
libraries. The report states that “public, school and university libraries are flourishing,” and that
Americans are highly supportive of libraries (2). Nevertheless, the issue of funding remains a
huge challenge as libraries look to grow and thrive in the 21st century. The importance of library
funding can not be overstated. The president of the ALA has even promised to prioritize funding
as one of her key goals for her 2006-2007 term. Indeed, as non revenue generating entities,
everything that libraries do is constrained by their ability to obtain outside funds. Traditionally,
libraries have relied on a single source, local government tax revenue, for essentially all of their
funding needs. Nevertheless, the recent failures of many libraries to obtain adequate local funds
highlight the downside of relying on just one source of funding. Library services and the very
existence of libraries remain under threat as long as libraries continue to operate with unstable
budgets. As a result, many libraries around the country have recently begun to consider
alternative funding sources much more seriously. In doing so, they are following the lead of
other cultural institutions, such as museums, which already tend to rely on a multitude of funding
sources. In this paper I look to consider the effectiveness of a more diversified funding model
for libraries. In doing so, I will analyze the success of another cultural institution, the museum,
in testing the waters of unique business relationships and innovative funding methods that may
be useful for libraries as well. I will begin my paper with an overview of the historical and
present role of the library itself. Next, I will introduce the issue of library funding, and highlight
the weaknesses of the current single source funding model. I will use the three New York City
library systems as examples. The following section of my paper will examine the ways in which
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libraries are already succeeding in developing alternative sources of funding. I will subsequently
introduce museums as examples of similar cultural institutions that have already been successful
at developing a truly diversified funding model. I will examine the ways in which libraries are
already following the lead of museums, and I will suggest other opportunities as well. Next, I
will highlight other potential innovative library funding methods that are not necessarily being
implemented by museums. Finally, I will examine all of these issues as they relate to the
Brooklyn Public Library system.
Historical Role of Public Library
To better understand public libraries and the recent trend of decreased funding, it helps to
understand their role and the history of their role in our society. In the early history of libraries
in the United States, public libraries took the form of social libraries whose mission was to assist
in the self-improvement and edification of the few select members (Rubin, 2000, pg. 222). The
early founders believed in the ideological vision of a library that improves society by way of
teaching and spreading the concept of democracy. During the 1760’s the first circulating
libraries arose to satisfy the popular demands of the public. “The distinguishing feature of
circulating libraries was their profit-making character” (Rubin, 2000, pg. 223). The social and
circulating library both contributed to the inception of the public library. The “public” refers to
the public’s monetary support of the library. “The passage of the Library Services Act in 1956,
authorizing direct federal support for public libraries, was regarded as the apogee of American
library development” (Nauratil, 1985, p.31). In creating a mission statement for public library
service, the Public Library Association claimed that “the specific role of the public library in
responding to the broad needs of society grows out of its existence as a public agency, with a
broad tax support and the responsibility to serve the total community rather than a specific
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clientele” (“A Mission Statement, 1977”). Tracy L. Bremer, writes that “library funds are
accumulated from a mixture of local, state, federal and other sources. According to the National
Center for Education Statistics (1997), 77.6% of public library income is acquired from local
funds, 12.1% from state funds, and 0.9% from federal funds” (Bremer, 2003). Rubin, in his
Foundations of Library and Information Science, lists the specific traits shared by all American
public libraries and they are; support by public tax, governed by a board, openness to all,
voluntary use by public, established by law and provide free services to user (231). Urban public
libraries share all these traits and additional distinction of being an extension of city services paid
for by citizen’s tax dollars. Today, the existence of public libraries is in danger because of the
widely held belief that the role of libraries has changed and that they are no longer a social
necessity therefore public monies should not be given to public libraries.
Current Role of Public Library
With the advent of technology, specifically computers, there has been a struggle to define
the position of libraries in the information age. The original role of public libraries has not
changed, only more roles have been added. They are still agencies of democracy and a resource
for information. Now they are also computer and community centers. “A 2002 poll
commissioned by the American Library Association found that 91% of people surveyed believe
that libraries will continue to be a needed service, despite the fact that the computer has emerged
as a centerpiece of the new information age. 40% of the people polled said that the library was
the most important tax-supported public service funded by local government” (Salazar, 2004).
From this poll, it’s obvious that the American public still view libraries as beneficial for society.
Despite this, public urban libraries still deem it necessary to justify their existence. One major
way they have done this is by realigning themselves as centers for their communities. In an
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Urban Libraries Council conference, Mayor Murphy of Pittsburgh calls “the Chicago model
unique with libraries as the center of the community” (Kniffel, 2001). “Libraries come to the
table with a wealth of assets: free community space, technology resources, connections to the
local economy, a sense of ownership by the community and, above all, a level of community
trust. With these assets, they can connect to all parts of a community, building those relationships
and networks that contribute to strong social infrastructure. They are important community
engagement catalysts” (Kretmann & Rans, 2005)
Decreased Pubic Funding
Despite the libraries’ increased role and value in the community, public funding dollars
continue to diminish. Often “during tough budgetary times, when libraries compete against
funding for services like police and fire protection,” public funds to libraries are the first to be
cut. This was the case in New York City following September 11, 2001. Furthermore, even
during good economic times and in the absence of extreme situations like 9/11, overall public
dollars to libraries continues to decline (Molyneux, 2006). “Starting in the late 1990s, strains began
to appear in library budgets…From FY2000 on, both the total income and operating expenditure figures
decline in inflation-adjusted terms, causing libraries to lose purchasing power. In 2001, purchasing power
for collection expenditures per capita began its decline” (Molyneux, 2006). Nationally, libraries are
under the threat of shut down or drastically reduced staff and hours from lack of public funding. These
threats happen so frequently that the American Libraries Association web page has a compilation of
news reports of library impacts nationwide. According to ALA, library funding cuts announced
in the media has reached at least $197 million in the past 4.4 years and are not stopping any time
soon. To further exacerbate library budgets, expenses are rising, especially for journal subscriptions and
technology with no related increase in revenue.
How to Increase Public Funding
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When public funding first started to decrease, the immediate reaction of libraries was to
figure out how to get back the amount that was lost. The most popular and obvious solution was
to advocate for increased library funds. In January of 2003, the ALA launched a campaign titled
"The Campaign to Save America’s Libraries" in response to budget shortfalls and coast-to-coast
funding cuts. In many cases, rallies and efforts by this campaign were able to advert completely,
or at least to alleviate funding cuts. Another form of advocacy is the dissemination of studies
which highlight the value and worth of public libraries. For example, every year the NCES
publishes a study about the household use of libraries in order to demonstrate that Americans
support the idea of libraries. Another example of this type of public advocacy comes from the
state of Maryland. The Maryland Public Library Administrators (MAPLA) and the Maryland
Library Association (MLA) conducted a statewide poll in which the outcome showed that “92
percent of those polled felt that public libraries were a good investment for their tax dollars.
And…more than 60 percent stated that more money should be invested in libraries by both local
and state government” (“Maryland’s Successful Campaign”). Using this poll as a powerful
political weapon, MAPLA and MLA were “successful in getting major funding legislation
through the Maryland General Assembly—not once, but twice.” (“Maryland’s Successful
Campaign”). However, situations like Maryland’s are far and few between.
Another strategy used by public libraries to raise funds is through creative legislation
ensuring earmarked amounts for libraries. Library bond acts are one of the more popular
approaches. In California, for example, there is the California Library Construction and
Renovation Bond Act of 1988 that was renewed in 2000 and is being submitted for approval
again for 2008 (“Bill Text CA S.B. 156”). In Albuquerque, NM, a $121 million bond package
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includes new library books for the city (“Bond Measures”, 2005). Most of these bonds are
backed by property tax and in some cases even sales tax.
Problems of Dependency on Public Funding
As mentioned earlier, approximately 79% of the average library budget comes from local
taxes, 12% is contributed by other levels of government, and a mere 3% comes from donations
and grants (Oder, 2006). Clearly, public libraries are highly dependent on public tax dollars.
Steve Coffman, in a presentation at the Internet Librarian Conference in 2004, listed five
problems of an overdependence on public tax money. The first is that it forces libraries to
compete with critical services like police and fire services. The second problems is that libraries
are forced to cut staff, hours etc during tough times because they have no other means of
monetary support. The third problem is evidence that local and state support may be ‘tapped
out’. Tax money coming with strings attached is a fourth problem with public dollars. The fifth
problem is that there is no guarantee that if a library grows, so will its budget. Tax revenues are
largely static, and library successes do not correlate to the library receiving more funds. Another
problem that I have observed in New York City is that local politicians and citizens demand
visible results of their funding. Therefore, money is often put into new high-profile projects,
rather than more important standing ones. For example, with many capital projects, politicians
want positive press for providing funding for new and positive capital projects rather than
something necessary like helping to make buildings ADA compliant, fixing hidden but important
branch building projects or even something simple like baby changing tables in the bathrooms.
Another dilemma of depending on public funding is that many libraries are reluctant to generate
additional income for the fear that they may lose public money if they are seen earning profits.
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Given all of these issues surrounding the overdependence on public funding, it is surprising that
libraries have been able to survive at all with such tenuous budgets.
Case in Point: New York City Libraries
Recently, I had the privilege of attending the March 15, 2007 hearing on the preliminary
2008 budget in front of the New York City Council Committee on Cultural Affairs, Libraries and
International Intergroup Relations. The three library systems of New York City each gave
testimonies requesting a citywide total increase of 40.5 million dollars in order to bring the
libraries’ hours closer to the national average of 59 hours per week. The importance of baseline
funding of this 40.5 million was also discussed during the hearing. With baseline funding,
libraries are able to plan with a high degree of certainty knowing the exact amount of money
they will have readily available. In asking for an additional 40.5 million for the next fiscal year,
the three systems expressed hope in recuperating the funding that they lost following September
11, 2001. Each system expressed hopes to get back to its 2000 funding level. On a more
positive note, Mayor Bloomberg did baseline library funding for the three library systems in the
City’s FY2006 budget. Also at the March 15th hearing the 3.5% increase in state funding was
also mentioned. This is the first year that the state legislation finally used the most recent census
figures, which account for inflation, to allocate funding.
Throughout this whole proceeding, the term “budget dance” was used repeatedly. Unlike
most “dances,” this one is not enjoyable, yet every year the process is repeated. It was disturbing
to watch the systems plead for funds when it seems obvious that as “public” institutions, libraries
should have adequate “public” dollars in order to ensure that they can provide their constituents
with a baseline level of service. Yet this complete dependency on public funding seriously
undermines libraries’ ability to do so. I am not declaring public money evil, but I am saying that
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there is something inherently wrong with current library funding models that depend heavily on
one source. As we are currently seeing, libraries do not have a safety blanket to fall back on, and
do not have a stable and consistent amount of money year-to-year.
Alternative Funds
Some libraries are attempting to attain funds from different and new sources in
innovative ways. Fundraising by Friend's Groups, applying for government or private grants,
and seeking corporate or individual donations are just a few new ideas for funding. Some
libraries are developing endowments and trusts. For example, the Cuyahoga County Public
Library in Cleveland has developed the Cuyahoga County Public Library Endowment, “a new
financing initiative centered on a board of trustees that will look to tap corporate coffers and
other donors” (Bennett, 2002). More and more, as people become wealthier and wealthier,
individuals are being approached for private donations. While all of the above ideas are
interesting, they too have many downsides. Though they may result in some money, the amount
is often negligible to the overall amounts needed for operations or any serious initiatives in the
libraries. While Friend's Groups do manage to raise money, they are not a stable source of
funding. Foundations are another source for funding; however, these funds are usually restricted
in how they may be used. “As a rule, foundations do not like to provide general institutional
support…Most foundations are hesitant to make grants for endowments or for buildings”
(Firstenberg, 1996, pg. 128). Often grants are program based and the money is only promised
for a limited amount of time. “Grants are given primarily to develop and test new ideas. Few
aim to invest in the broader capacities organizations need to sustain and improve the delivery of
effective programs” (Letts 1999a). Once the grant period ends, libraries are expected to look for
money elsewhere in order to keep the programs running. Corporate and individual donations are
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another source for temporary, inconstant and undependable funds. Furthermore, the donors often
expect the money to go towards acknowledging them in some tangible way, such as a plaque
bearing their name or facilities being name after them. Basically, these types of donations
usually include stipulations. Also, some have expressed concern that philanthropic sources will
soon be tapped out with so many asking for donations. In conclusion, while the may provide
some additional money, existing alternative funding methods do not provide enough.
Diversified Funding Model
In a November 2004 Internet Librarian Conference, Steve Coffman gave a very exciting
presentation titled “Saving Ourselves: Exploring Alternative or Adventuresome Funding
Strategies for Libraries” in which he discusses the funding model of cultural and educational
institutions.
Almost every other cultural and educational institution in our communities –
including museums, zoos, orchestras, historical societies, nature centers, public
universities, public television and radio, and many others – have long ago adopted a plural
funding model cultivating a variety of revenue sources that include memberships,
contributions, sponsorships, business ventures….and taxes. These sister institutions no
longer depend solely on the largesse of taxpayers, as most libraries do. Not only does the
plural funding model provide a more reliable funding base, cultivating new revenue
streams often results in dramatic funding increases (Coffman, 2004).
I wholeheartedly agree with Coffman that libraries should follow the example of other
cultural institutions, and museums in particular, by taking power into their own hands and
looking to comprehensively diversify their funding. Libraries should seriously consider
imitating the funding practices of museums. In a panel discussion at the Internet Librarian
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Conference in 2003, the panel suggested that like museums, libraries should not depend solely on
public monies, should implement a model in which monies grow in relation to library
achievement, look to increase support from business and user groups, explore sponsorship and
donations, align targets for funding with library services they care about, and finally get over the
notion that selling is selling out (Plosker, 2004). “Unless the nonprofit sector soon finds a
second, equally compelling pathway toward higher performance, it will have to find a balance
between being business-like and being non-profit-like on its own (Light, 2002, pg 24). Many in
the non-profit world oppose generating revenue because they feel it goes against the mission and
morals of the not-for-profit world. However, if libraries hope to survive they have to be willing
to compromise. Museums have taken a leap into the business world and thus far have been
successful.
The Parallel Between Libraries and Museums
That being said, it begs the question of why museums? and how are museums and
libraries comparable?
People are often under the mistaken impression that museums and
libraries are completely separate and different institutions when in reality they are very similar.
Robert Martin, former director of the Institute of Museum and Library Science identifies
museums and libraries as “primary social agenc[ies] in support of education, providing resources
and services that complement the structures of formal education and extend education into an
enterprise that lasts the length of a lifetime” (Dilevko & Gottlieb, 2004).
The American
Association of Museums’ Code of Ethics explains that “museums in the United States are
grounded in the tradition of public service. They are organized as public trusts, holding their
collections and information as a benefit for those they were established to serve. Members of
their governing authority, employees, and volunteers are committed to the interests of these
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beneficiaries” (“Code of Ethics”). All of this is completely relevant to libraries as well. The
establishment in 1996 of the Institute of Museum and Library Services within the National
Foundation on the Arts and Humanities attests to the fact that even the federal government views
museums and libraries as similar institutions.
More commonly known as the IMLS, this
institution was created to assist libraries and museums with their services usually by awarding
grants for special programs. Like libraries, museums are not for profit institutions, often backed
by public tax dollars, governed by a board, and open to the public. Museums and libraries are
both classified as charitable organizations eligible to be tax exempt under section 501(c)(3) of
the Internal Revenue Code. Finally, like libraries, museums also fight for their funds.
Museums Struggle for Funds
Over the years, many museums nationwide have struggled to find the funds necessary to
stay open. As more and more museums open, they all have to compete for the same pool of
money. Facing this challenge, museums have implemented strategies similar to libraries
mentioned earlier. For example, museums also turn to foundations for funds. However, “while
funding priorities remained generally consistent, areas that typically receive ‘mega-grants’ for
programs and for capital projects—such as health, higher education, and museums—experienced
some of the largest reductions in actual grant dollars between 2001 and 2002” (“Foundation
Giving Trends”, 2006). Furthermore, as they do for libraries, many states are creating
endowments and trust funds to support the arts. In Montana, the endowment fund is supported
by an interest in a coal tax, and in Connecticut, the arts endowment fund is funded principally
through the sale of state bonds (Reiss, 1999). In Chicago, alternatives to increasing property
taxes to support cultural institutions are being sought out. One idea was to increase the sales tax
by a quarter of a percentage point in order to generate 120 million dollars and to reduce the
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property tax levy (Shields, 2006). Some museums are seeking even more unusual strategies to
raise funds. One such method involved the selling of debt bonds to investors looking to diversify
portfolios (Wisneiwski, 1999). Some museums have even gone so far as to sell art works or
property. The Museum of Modern Art, for example, sold a vacant site for 125 million (Weiss,
2007).
Museums Succeed in Fund Raising
Museums have been quite successful in raising the money that they need. The chief
reason is the diversified funding model. Museums seek funds from everywhere and anywhere.
Also, they do not rely heavily on public dollars or funds from any one source. According to the
American Association of Museum’s Museum, “earned income” makes up an average 30% of
museum budgets. The Pacific Science Center in Seattle, one success model, supplements 89% of
its operating budget from earned income (Kotler & Kotler, 1998). This earned income includes
entrance fees, store retail, food services, membership fees etc. By earning income, museums are
taking a page out of the for-profit business model book. The only difference is that unlike forprofit businesses, museums are not taxed for any business related income. Business related
income refers to income from ventures that support or mirror the mission of the museum. “More
and more museums are entering into business arrangements with commercial interests wishing to
turn the museum’s intellectual property into dollars. Licensing a Van Gogh image for use on a
coffee mug or a photograph of a nineteenth-century cowgirl for use on a tee-shirt can be very
lucrative for a museum; besides, the products can also be sold in the gift shop, which leads to
more revenues” (Falk & Sheppard, 2006, pg 129). Another initiative taken up by museums is the
renting out of its facilities for huge events as well as smaller events such as children’s birthday
parties (Barnes, 2002).
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Also, museums, like businesses, are creating auxiliary revenue by selling their image.
One of the greatest assets a museum has in the Knowledge Age is this identity, which if
properly managed can bring great benefit to the organization….We suggest that the issue
of identity, which includes both internal matters of vision and values and issues of how
the institution presents itself to the outside world such as its mission, its products, and its
services, are fundamental importance to a museum. In the business world, this idea of
identity has come to be referred to as an institution’s brand. Your brand is what you
stand for. It is how you communicate that core essence to the rest of the world (Barnes,
2002, pg 130).
By forging a strong identity museums are better able to market themselves and bring in
audiences attracted by this image. Museums such as the Museum of Modern Art (MoMA), The
Metropolitan Museum of Art (Met) and the Museum of Natural History have strong images that
draw worldwide audiences. In many travel guides these museums are listed as a must-see
destination. The Met also uses its brand to sell products from its museum mall stores spread
throughout the nation. A strong identity also serves in bringing in donations from individuals
and corporations that want to align themselves with the positive museum brand. Donating to the
museum in turn reflects on the generous image of the individual or corporation.
Museum/Corporate Relationships
In the way that museums have begun to resemble businesses by generating income, so to
have they begun to mirror businesses by entering partnerships with other businesses. Recently,
the relationship between museums and corporations has begun to extend beyond simple
donations to mutually beneficial partnerships between the two. Museums will often benefit from
a company’s expertise or sponsorship. The question is what do corporations gain from such a
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partnership? Known as strategic philanthropy, firms seek to promote their image by developing
giving plans tied to their overall business mission (Kay, 2002). “Often, companies target causes
that can use their expertise, as well as their money, to help” (Kay, 2002). The Cincinnati
Museum, for example, under the guidance of a retail expert from Federated Department Stores
Inc, opened up an upscale museum shop that generates hundreds of thousands of dollars towards
its revenue (Hemmer, 2001). However, aid of this kind if often rare. A more common form of
partnership is corporate sponsorship. Corporations will give money to museums toward a project
in exchange for name recognition. “They want their name on a banner at a press event so that
people will know they are investing in their neighborhood” (Stone, 2002). In Chicago for
example, The Field Museum of Natural History entered a corporate consortium with
McDonald’s and Walt Disney World Resorts. McDonald’s financed a traveling exhibit teaching
schools about dinosaur evolution in exchange for a placard subtly displaying McDonald’s name
and brand. “Children’s museums, in particular, have been quick to embrace corporate branding”
(Halpert, 2001).
Museum/Individual Relationship
Even with the growth of corporate giving, it is still important to consider individual
donators. “In the 1994 issue of Fund Raising Management, Jerold Panas wrote of the future of
fundraising: ‘foundation giving may increase slightly, corporate gifts will decline, and
government funding will cease. But the most important will be the generation of large gifts from
the individual’” (Smith & Lehrer, 2000). According to the Foundation Center’s yearly research,
2 million people who have wealth have more than 1 million and distribute about 30 billion
annually. “The U.S. has the most dynamic, extensive, and expansive philanthropy system in
history” (“Foundation Giving Trends). Historically, the prime source of individual donations if
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not the only source of funds, was the board of trustee members. Today, museums look to
individuals outside of the board for additional monies. Like corporations, individuals also
donate to project a generous and cultured image. In many museums, rooms and facilities are
often named for the person that donated money towards it. Tax deductions are an additional
incentive for individuals to donate. Museums also look beyond the small circle of wealthy
donators to smaller individual contributions. Museums do this through museum memberships
and suggested door fees, or as some call it “suggested donations”. Through these mechanisms,
less wealthy individuals can feel like they are contributing to a public good. Memberships also
help to make individuals feel like they belong to an exclusive museum group. By embracing
technology, museums have been able to extend their reach by letting individuals and corporation
signup for memberships or even making donations online.
Other Financial Sources
There are other financial sources for museums that are worth mentioning to get a better
overview of museum finances. As mentioned earlier, museums do receive money from
foundations, be it individual, corporate or government foundations. In a study by the Foundation
Center, education received the highest percentage of grant dollars while arts and culture received
the third highest (“Foundation Giving Trends”, 2006). Rather than limit themselves, museums
will often play both the education and cultural facet to garner funds. Also mentioned earlier is
the topic of museum endowment. These endowments are usually established to act as a rainy
day fund. Usually 5-10% of the budget is set aside for reserve and often invested (Kotler &
Kotler, 1998). Usually museums invest conservatively, but in recent years museums have begun
to “maintain diversified portfolios weighted towards low-risk and fixed-income investments and
disciplined spending policies based on multiyear averages of income” (Kaufman, 2001). A
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typical portfolio is about 20% fixed income, 10% foreign equity, 50% domestic equity, 10%
private equity and 10% real assets (Shein, 2007). A great feature of investment income for
museums is that it is tax exempt. In regards to assets, museums have begun serious asset
development, especially of real estate. Recently, the Museum of Modern Art for example,
capitalized on New York City’s robust real estate market and sold a piece of its property for
$125 million (Weiss, 2007). One last strategy used by museums is the issuance of municipal
bonds usually to finance capital projects. These financial mechanisms are the remaining
strategies employed by museums to raise funds. Clearly, museums are financially better off than
libraries because they use many diverse methods and sources to attain their funds.
Museums and Internet
Another facet of museum funding worth discussing is the use of technology. Museums
have fully embraced the Internet and use it as both an advertising and income generating tool.
Museum websites give general background history and information such as mission statement,
facilities, any fees etc. Museums also advertise exhibits, programs and even corporate sponsors
on their websites. Some websites even include e-commerce in which visitors can buy from the
museum’s online store. Also included on museum websites is information about memberships.
Many museums offer different memberships with different benefits. No matter what the
membership, all are geared to make the members feel like they are part of an exclusive circle or
“family” as some websites advertise. Many of the websites allow people sign up for these
memberships online. Information for corporation membership and sponsorship is also included
on many museum websites. Finally, museums allow individuals to donate online with a simple
click of the mouse. By using the Internet, museums have made it incredibly easy and convenient
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for individuals and corporations to donate online. These are just some of the many ways in
which museums are using Internet for additional fundraising.
Some Libraries Imitate Museums
Perhaps the most significant way in which libraries are beginning to follow the lead of
museums is by generating auxiliary revenues. Income generation is always a weighty decision
with cultural institutions and especially with libraries. The main reason is that library’s fear the
loss of government funding, which as we know they rely very heavily on. Another reason is the
widely held belief that some of these income generating streams do not fit into the institution’s
higher mission. However, some libraries have made the big leap and opened cafes, cafeterias,
and refreshment kiosks to improve the ambiance and generate revenues. It should be noted that
food services generally earn less than 0.25% of a library’s operating budget and therefore alone
will not provide sufficient revenue (Craft, 1998). Some libraries have taken food services a step
further and created a partnership with corporations to assist in the development of a refreshment
area. For example, the Ferguson Library in Stamford, Connecticut and Starbucks has created
mutually beneficial partnership that also works to the benefit of the library patrons. The library
“adds $45,000 per year to its revenue by leasing space to Starbucks… (Coffman, 2006).
Starbucks’ reach has even spread into school libraries such as P.S. 91 in the Bronx where
Starbucks contributed $40,000 to renovate the second-floor library (Wisloski, 2007). Some
libraries have even begun to open retail stores. New York Public Library for example, has a
retail store in the Humanities library that sells products relating to New York City and literature.
NYPL however, is in a unique situation in that it draws many visitors and tourist that buy these
products whereas other libraries may not have this sort of patronage. NYPL is able to draw in
many visitors because of its strong image nationally and internationally. Many are familiar with
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the lions that represent the venerable public library system. Libraries are also beginning to offer
naming rights in exchange for donations. In Florida for example, the Ponte Verda Beach Library
is getting $100,000 to finance a new multimedia room in return for naming the room after the
PGA Tour (Pinkston, 1999). These are just a few illustrations of libraries across the country
following the lead of museums.
Other Library Innovation
Libraries have done more than just implement ideas that were developed by museums.
Libraries have begun to change their passive stance towards finances and, like museums, are
beginning to become actively involved in their own financial situations. In the past libraries
would try to solve their problems as they came along due to the constraints of the traditional
funding model. Now, however, libraries are beginning to project further to the future, and are
looking for new, innovative ways to solve their financial woes. One way is through the joint-use
library or library hybrids. The new King Library in San Jose is one such library in which an
academic and a public library have been combined in order to save money by the sharing of
resources and staff (Berry, 2004). Perhaps more interesting than the joint-use library, is the trend
of combining museums and libraries. In Denver, the museum and the library started with an
underground concourse connecting the building but were later formally combined to form a
museum-library hybrid institution. The Sahara West Library and Fine Arts Museum in Las
Vegas is another hybrid in which the institutions share one building but are given separate floors
(Dilevko & Gottlieb, 2004). In New York City, the Moran Library and Museum is another
example of the hybrid institution.
Libraries are also working to strengthen their place into the community in the hopes for
public and private support. To do this, many libraries are attempting to put themselves back into
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the center of their communities. One way to do this is by changing the library to attract more
diverse members of their surrounding community. Many libraries have dropped the bans on
food, drinks, and noise. Libraries are also establishing various programs to make the library
more than just a place to read and check-out books. Library shops, cafes, and wireless are also
an attempt to bring in new patrons. The Seattle Public Library has even gone as far as building a
roof garden to attract people outside of their normal patronage. Some libraries are sharing their
facilities with other community business to reach people out of their usual patron circle. The
Oconto Public Library in Nebraska shares a building with a community hall and a senior center,
the Seattle Public Library’s Capital Hill Branch features a neighborhood service center, the
Akron-Summit County Public Library in Ohio includes a community center, a walking track, and
athletic field, and the Stafford Library in New Mexico coexist with an indoor park (Flynn, 2004).
Libraries are also becoming involved in the commercial development of their communities by
becoming players in mixed use development. A great example is the San Luis Obispo CityCounty Public Library in California that partnered up with a private local developer for a new
building (“Making Cities Stronger”). The developer, unable to attract national bookstore chains
for long-term tenancy, approached the library. The library accepted and will get new facilities in
a more centralized location. Once this deal occurred, the developer was able to get retailers that
were excited to have the library because it would bring in foot traffic but not directly compete
with the local businesses.
One last creative and rather unusual measure was taken up by the Greenburgh and
Ossining libraries in Westchester, New York. These two libraries use an uncommon cost-saving
method for heating and cooling. Drilling into the earth, the libraries use fifty-five degree water
from the geothermal wells thousands of feet below the surface in order to regulate their building
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temperature (Kelly, 2007). These libraries save on construction cost as well as energy costs.
Although this example is a bit remarkable and perhaps unfeasible for some, the point is that these
libraries are taking matters into their own hands and thinking of imaginative and new ways to
boost their financial situations.
Brooklyn Public Library Background
The Brooklyn Public Library (BPL) is the fifth largest system in the country, and serves
just over 2.5 million people. “Originally envisioned as a small network of libraries throughout
the independent city of Brooklyn, the BPL system was approved by an Act of Legislature of the
State of New York on May 1, 1892, and later passed by resolution of the Brooklyn Common
Council on November 30, 1896” (“About the Library”). Between 1901 and 1923 the system was
able to add twenty-one more branches with a $1.6 million donation from Andrew Carnegie.
Today the library operates fifty-eight branches, and has received numerous awards and
recognition locally and nationally for its many programs.
BPL, like most public libraries, receives most of its funding from the local government.
81% of the budget comes from the City and 10% from the state. The remaining 9% comes from
individuals, corporate and foundation support, investments, fines and fees, government grants
etc. (“Plan for Public Service,” 2004, pg 4). Since FY 2002, the City has reduced operating
subsidy to BPL by 21% (pg 3). Since approximately 70% of the budget goes to staff, BPL had to
drastically reduce its operating hours and material purchases. During the BPL 3rd quarter System
Wide meeting held on January 25, 2007, the Board Finance Committee gave an overview of the
library’s financial situation. The outlook was far from optimistic. BPL has an operating budget
of $102 million but is operating on a $2.4 million deficit. The Board of Trustees wants the
budget balanced by fiscal year 2009. The Finance Committee also expressed concern about the
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continued erosion of city funding and incremental operating cost increases. When the City
configures its allocations to the three library systems, they often do not account for inflation. For
example, BPL is set to receive the same amount for FY 2008 as FY 2007, which with inflation
would result in decreased buying power for the library.
Also of concern to the Finance Committee is the surprising fact that the capital budget is
running a surplus and is unfortunately is not being spent fast enough. In fact, $275 million of the
capital budget had to be deferred to the next fiscal year. It is exasperating to know that despite
this surplus, the restricted funds ensure that many of the branches will go without necessary
renovations and maintenance. Had the library had funds for regular building maintenance, the
Canarsie branch may still be open today instead of being closed for emergency repairs estimated
at $9.8 million in order to fix the collapsed ceiling1. Furthermore, not all of the branch buildings
are ADA compliant. It would take an estimated $250 million that the library does not have to
put all of the buildings up to ADA standards2. Also on the Finance Committee agenda is the
purchase of eight of the eleven building leases. The library spends about 1.7 million per year
paying for the rental of eleven of its branches. In the past their have been several attempts by
property owners to the raise the library’s rent or even to evict them. Recently, the Ulmer Park
branch was issued an eviction notice by the owners who want to take advantage of the
burgeoning Brooklyn real estate market to sell it for market value. This is not the first time that
the library has had to deal with issues like this from property owners. Fortunately, each time
these threats happen, the city has stepped in to assist the library. However, the library has made
it their mission to buy up these leases and prevent instances such as these from happening again.
The only issue that remains is where is the library going to get the funds to buy these leases?
1
2
Estimate from April 17, 2007 Board of Trustees meeting.
Estimate from January 24, 2007 PULSE Knowledge Seminar with Brooklyn Public Library Foundation
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At the system wide meeting, the Finance Committee discussed their future goals for the
operating and capital budgets. Their immediate goal is to balance the budget. For the operating
budget they hope to develop a different city funding model that is base lined and includes
inflationary support. The committee is also deliberating on some new ways to earn unrestricted
and non-governmental revenue. Finally, they are attempting to develop a contingency plan for
sudden expense decreases. As far as the capital budget, the committee would like to reduce the
size of any future request, find funds for technology and maintenance projects, outsource project
management of capital projects, repurpose funds, and figure out what to do with the visual
performance center once it is completed.
BPL Imitate Museums
Wittingly or unwittingly, BPL has joined the progressive movement of cultural
institutions taking matters into their own hands in order to become more active than reactive
when it comes to their state of finances. BPL acknowledges that their local government support
is eroding, and that they must seek alternatives elsewhere. They are beginning to build a more
diverse funding model to supplement their local support. In 1997, BPL established the Brooklyn
Public Library Foundation whose purpose is to raise private support for cultural and educational
programs, books and other library materials, new technology and capital projects, and to build an
endowment for the Library’s future. The Foundation pursues two types of money; competitive
grant money and private dollars. Since its founding, the Foundation went from gaining less than
$1 million in FY 1997 to almost $5 million in FY 2005 in support for the library3.
BPL also participates in several income-generating activities and takes advantage of the
fact that revenue from these activities is tax exempt. For example, BPL generates income
through fees and fines, the cafeteria and café at the main library, and through charging for
3
Amounts from January 24, 2007 PULSE Knowledge Seminar
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duplicate and guest cards. BPL also gains profit from an agreement with Better World Books, in
which BWB, as the Library’s exclusive agent, manages, transports, sells and resells surplus
materials through Internet book vendors. Through this deal, BPL earns 34% of the gross sales of
the materials4. Another deal worth mentioning is between BPL and the New York Times. In
this deal, BPL will sell eight photographs of the Brooklyn Eagle Collection via the newspapers’
advertisements, catalogs, online store and other affiliated websites and earn 25% of the gross
sales5. Finally, BPL also gains income through investments. In 2006, by mostly investing in
mutual funds and securities, BPL was able to earn a little over $2 million6.
BPL has also so joined the many organizations making use of the Internet. BPL’s
webpage serves as a source for general information and also as a marketing tool displaying
services offered. Like museums, the website also includes a section about financial support and
the BPL Foundation. The site lists the various ways to give and a section about becoming a
donor and the types of donor memberships and benefits. There is also a small section about
corporate donors and the various ways they can donate. Also included is a section about the
Friends Group; what they do and how to join. The website also allows viewers to donate online
with a simple click of the mouse. Not matter the type of support, BPL accentuates the
exclusivity of becoming a supporter and joining the “circle” of BPL supporters.
Improving Income Generating Strategies
With regard to the afore mentioned initiatives taken by BPL, there are definitely ways in
which they can be improved upon. The Foundation, for example, needs to pursue monies that
build up the organizational capabilities that nonprofit groups need for delivering and sustaining
4
From June 30, 2006 and 2005 Brooklyn Public Library and Brooklyn Public Library Foundation Consolidated
Financial Statement: see references
5
From same source as 4
6
From same source as 4
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quality” (Letts et al., 1999b). As mentioned earlier, most foundations use a program-centered
approach for giving money which is great for creating incentives for non-profits to devise
innovative programs, but does not encourage the assessment and improvement of the internal and
long-term needs of the organization. One such source for aid in organizational improvement is
the Grantmakers for Effective Organization which is a coalition committed to the building of
strong and effective nonprofit organizations.
BPL also needs improvement in its investment strategies. BPLF should follow the
example of museums in investing endowment funds in a somewhat more aggressive manner.
The J. Paul Getty Museum in Los Angeles, for example, operates solely on investment income.
Bradley, W. Wells, the vice president for finance, notes “that around 65%-70% of the
endowment is in equities and 25-30% in fixed income” (Kaufman, 2001). BPL should also
diversify its investment portfolio as many museums do. MoMa’s investment committee
allocates “about 30% in domestic equity, 10% in private equity, small allocations in real estate,
20% in market-neutral strategies including hedging, and 25% in fixed income” (Kaufman, 2001).
These portfolio models provide all of the benefits of diversification and capital preservation,
without sacrificing significant opportunities for capital gains.
BPL should also consider improvements in its commercial sales. With the popularity of
both the cafeteria and the café in the central library, BPL should consider expanding them, or
even opening up cafes/food services locations at the smaller branches. Also, with the growing
numbers of tourists visiting Brooklyn, BPL might want to open up shops in its main library
similar to the NYPL shop. On a smaller scale, BPL should also look into renting out or selling
items such as headphones, floppy disks, flash drives, and other materials often asked for by
patrons at the branch libraries. BPL should also consider the renting out of its facilities in order
Public Library Finance
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to realize the full utilization of its assets. Some of its buildings, such as the Arlington Branch
and the Central library, are noted for their grandeur and beauty, and are ideal places to host
events. BPL should also look to increase its patronage and start looking to new markets for
traditional services.
BPL Foundation
In addition to the improvements mentioned above, BPLF also needs to broaden its
funding base for private dollars, or at least improve some of its strategies for seeking out this
type of money. One seemingly underutilized source for aid is corporations and businesses. BPL
does have two partnerships; one with Xerox and the other with Snapple. However, the nature of
these partnerships possibly expresses the timorous view BPL takes towards such partnerships.
BPL needs to take advantage of the rich business and corporate environment of New York City
and actively seek these types of partnerships. BPL should seriously consider increasing
corporate sponsorships and partnerships. As discussed earlier, corporations enter cause-related
marketing alliances mainly to boost their good image (Andreasen, 1999). One great example of
a potential corporate ally is the pharmaceutical giant Pfizer. When Pfizer pulled out of
Williamsburg, Brooklyn earlier this year the community was livid. During its time in Brooklyn,
Pfizer employed many locals, built a local charter school and served as a “big
brother/benefactor” to the community (Newman, 2007). When Pfizer left Brooklyn its image
was severely damaged. If Pfizer had been approached by local institutions they may have agreed
to donating or involving themselves somehow with the community to redeem their image.
BPLF should also to redouble their efforts for individual giving; especially giving
towards the operating budget. According to Giving USA, an annual report on philanthropy,
individuals account for a majority of charitable giving. Individual giving accounts for about
Public Library Finance
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76.5% of the total giving in 2005 (“Giving USA,” 2006). Although most individuals rarely give
towards the operating budget preferring to donate towards efforts that publicize their name in a
positive light, BPLF needs to get imaginative in creating ways to entice donors to give towards
the operating budget. BPLF should to take advantage of the enormous pool of individuals in
New York City. BPLF has done a commendable job of approaching local donors such as
Stephon Marbury, point guard for the Knicks, and his foundation. BPLF should, however, also
start targeted PR campaigns for these individuals, especially towards the growing pool of young,
urban professionals. By targeting these young individuals BPLF can start building their future
supporters and donors.
Another area that is in dire need of funds is the branch libraries. As indicated earlier, the
majority of the capital fund is used for new capital projects, and very little is given to the
individual branches for routine repairs and maintenance. Unfortunately, capital funds are
restricted in how they may be used and very little is allotted to the branch buildings. Playing on
people’s fondness and devotion for their neighborhoods, maybe BPL can create some sort of
general building fund for each library branch. Each donor can become part of the “family” that
supports the building and maybe even plaques can be put up on the buildings announcing the
names of the branch supporters. BPLF is currently launching the “Support the Shelves Day,” a
fundraising initiative at each branch to garner donations for the local branches and has already
raised $7,000 from events held in just 30 branches7. Unfortunately, the money raised is
earmarked for material selection, programming and other services and not for individual branch
maintenance.
One of the primary ways in which the BPLF can achieve and expand these goals
is through the improvement of, and revitalization of, their friends groups. Currently, BPL has
7
from 4th Quarter System Wide Meeting held on May 3, 2007
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only twenty-four established friends groups. BPL should attempt to establish a friends group for
each branch and should also create some sort of central group to maximize the power of the
individual groups. Each individual group can do their part for the individual branches, but a
formal centralized group ensures effective communication between the individual groups as well
as with the branch and main branches. A formally established group enhances their power and
effectiveness borough wide and also has the power for much larger events and campaigns that
the smaller groups would be unable to achieve on their own. The main purpose of the friends
group would be to assist the BPLF in campaigning for the library and attaining funds. The
friends group would mainly achieve its goals by organizing events and programs that the BPLF
and regular BPL staff would otherwise not have time for. One example of a successful friend’s
group project took place at the Tippecanoe County Public Library in Indiana that created gold
library cards for the acknowledgment of special library supporters. (Gardner, Nawalinski &
Peterson, 2004). An example of a successful capital program occurred at the Melbourne Beach
Library in Florida that launched a “make your mark campaign” in which supporters donated
tiles, bricks, or books to the branch and in return their name was placed on a foyer tile, walkway
brick, or on a book plate (Gardner, Nawalinski, Peterson, 2004). The point is that BPLF can use
friends groups to alleviate much of their work pressure, while providing enthusiastic support and
fresh ideas.
Even more than just increasing corporate or individual support and creating friends
groups, BPLF needs to make efforts to seek out less restrictive funds. In general, the Foundation
needs to become bolder and more inventive about where, who, and how they are going to get
funds, and like the institution as a whole, needs to diversify its funding base.
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The Future of Brooklyn and BPL
With the overflow of Manhattanites into Brooklyn, and the increase in tourism,
Brooklyn is changing drastically. In a borough that was often disregarded by tourists for its
more popular neighbor, Brooklyn is beginning to see a surge in tourism. “The borough's top 27
attractions drew 12.5 million visitors in 2005, and are likely to do even better in 2006”
(Engquilst, 2006). Brooklyn’s growing popularity has even earned it an eight page spread in
Condé Nast Traveler (“Bright Lights, New Borough”). With this increased desirability,
Brooklyn is beginning to see major developments and revitalization projects popping all over the
borough. Perhaps the two most controversial projects are the Coney Island development and the
Atlantic Yards. Thor Equities LLC spent $100 million on property in Coney Island and is
hoping to build an entertainment/office/hotel complex in an area that he feels will be the next hot
neighborhood (“Making Huge Wager”). Another controversy revolves around the Forest City
Ratner Corporation’s plan commonly referred to as the Atlantic Yards. As currently conceived,
the plan calls for a new arena to house the NBA team the Nets, “6,430 units of housing that
blends market-rate condominiums with affordable housing at a variety of income levels, office
space, retail, a possible hotel, over 8 acres of open space, and significant infrastructure” (Ivy,
2007).
It seems that currently, one can say with a degree of certainty that these projects are
going to continue, and that many more are going to arise as Brooklyn undergoes a cultural and
developmental renaissance. Development is inevitable in New York City’s most populous
borough. However, as these projects move through the planning stages, the developers are
looking to win the approval of their largest potential obstacle, the objections of the local
community. Developers are looking to ingratiate themselves to the grassroots community. BPL
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can play a strategic role in developers’ plans by being an organization through which developers
can give back to the community. Similar to corporate partnerships, partnering with developers
becomes a mutually beneficial relationship in which developers can get positive and good PR
and in turn BPL can get monetary support. Even more than just budgetary support, BPL can
become part of and active in the future growth of Brooklyn.
BPL Can Contribute to Local Development
As discussed earlier, the role of libraries has changed to include an increasing role in the
community; especially in the economic and cultural development of the community. With a
huge number of major projects slated for Brooklyn, BPL needs to be at the forefront of this
transformation. One way is by contributing to the physical development of the borough.
Nationally, libraries are beginning to build central libraries as downtown attractions, integrate
libraries into commercial area developments, build libraries as vibrant urban spaces, and become
part of mixed use development projects. BPL can also make contributions to the economic
development that will follow the physical development by enhancing its job information centers,
providing more access to technology and tech training, providing targeted employment outreach,
pushing for more adult literacy training, and being a community support center (“Making Cities
Stronger”).
Libraries are also augmenting their role as cultural centers as well. Taking part in the
revival of Brooklyn, BPL has partnered with other local cultural institutions to create the Heart
of Brooklyn. The Heart of Brooklyn, a partnership between the BPL, Brooklyn Museum,
Brooklyn Children’s Museum, Brooklyn Botanic Gardens, Prospect Park and Prospect Park Zoo,
was created to encourage tourism and “as an integral part of Brooklyn’s renaissance….is
committed to strengthening the future of its neighborhoods” (“About Us”). With the plans of
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two major capital projects, BPL is further increasing its role in the cultural development of
Brooklyn. The first is the building of a plaza auditorium at the main library. The total budget
for this project is $15.8 million and is supported financially through the city, private donations,
and grants8. At street level, the plaza will provide outdoor seating for patrons, similar to NYPL’s
plaza at Bryant Park. The underground auditorium will be a venue for larger events, and BPL
has discussed charging for some of these events. The second, larger project is the construction of
a visual performing arts library. The library would provide space for contemporary and archival
collections, media rooms, reading rooms, an auditorium, and dedicated space for artists of
performing and visual arts. The library is projected to be complete in August 2010 and has an
estimated budget of $80 million9. The library will be strategically placed in a mixed-use cultural
district with hopes of revitalizing the neighborhood. Both of these projects indicate that BPL is
trying to place itself into the educational, cultural and recreational center of Brooklyn in
anticipation of the future of Brooklyn while at the same time creating another opportunity for
more financial support.
Conclusion
Recently, BPL has had to put the Visual Performing Arts Library on the
backburner. With its current budgetary constraints, BPL has not been able to raise the estimated
$135 million required for the project (Pogrebin, 2007). Presently operating with a deficit, BPL is
seriously restrained in their services and their plans for the future under the new executive
director. BPL’s situation serves as a microcosm for the difficulties that libraries face due to
unstable budgets and the repercussions of depending heavily on one source of funds. Not only
are libraries prevented from offering the best possible service they can, but they are also confined
8
From Brooklyn Public Library and Brooklyn Public Library Foundation Consolidated Financial Statements: see
references
9
Same source as 7
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in their future plans. On a more positive note, BPL has also successfully shown the business-like
initiatives that libraries are taking to alleviate their budgetary problems. Like museums, BPL
and many libraries are proactively attempting to look into alternative sources and to diversify
their funding models. Much can be learned from museums and how view and deal with their
finances. More importantly, libraries, like museums and businesses, need to exercise flexibility,
creativity and take the initiative when if comes their financial practices and budgetary model. By
empowering themselves, libraries will hopefully be able to successfully move into the future and
leave their financial woes behind.
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