Innovative Ideas and Practices in Revenue
Generation and Cost Control
American Association of Museums - 2009 Conference
Session Chair:
Ted Silberberg, Senior Principal, Market and Financial Planning,
Lord Cultural Resources
Speakers:
Laura Kleinman, Director of Shared Services, University Circle Inc.,
Cleveland
Van Romans, President, Fort Worth Museum of Science and History
Ted Silberberg
Cr ea t in g Cu lt u r a l Ca pit a l
Many Museums Have Been Adversely Affected by
the Current Economic Downturn
•
•
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.
Revenue Generation and Cost Control Strategies…
…Particularly Important Today but are Always
Essential for Museums
First Case Study: Cleveland Cultural Collaborative
•
Laura Kleinman, Director of Shared Services,
University Circle Inc.
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 Background
The “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
Accomplishments
Enhance 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
Accomplishments
Decrease 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 Collaboration
Innovative Ideas in Revenue Generation and Cost Control
Van A. Romans
April 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
Cr ea t in g Cu lt u r a l Ca pit a l
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 Children’s
Museum
Dallas Museum of
Natural History
The 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!
Focus Even More on Resident Markets in
a Recession
=
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
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
45%
Earned
40%
35%
Contributed/Private
30%
Investment/Endowment
25%
20%
Government
15%
10%
5%
0%
1989
1999
2002
2005
Earned
30%
29%
30%
31%
Contributed/Private
19%
32%
35%
35%
Investment/Endowment
12%
11%
10%
10%
Government
39%
28%
25%
24%
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