By Marjorie Schwarzer
A first glance at the Western Museums Association 2014 Annual Meeting Program
My husband and I put it off as long as we could. But after our beloved house’s gutters leaked a greenish slime that was seeping into the wooden supporting beams, we bit the bullet, canceled plans, tightened our belts and ponied up for a new roof. Although the sudden financial bite was large; the cost of not re-roofing would’ve been far greater. And it could have all been avoided if we had just paid a bit more attention over the years to the roof over our heads, strategically replacing it at the rate of a few shingles per season instead of enduring the mightily expensive one-time punch of a sudden major construction job. The silver lining is that we saw a warning sign before our entire home was in danger of succumbing to dry rot. And luckily, we had set aside a rainy day fund that could cover the cost of re-covering our nest. We have resurfaced, safe and sound.
Unfortunately, arts and cultural organizations have not been so lucky. Many do not know how to recognize the warning signs of potential financial danger. Even more do not have a sufficient rainy day fund to cover unforeseen messes. This was true even before the Great Recession. A report titled Getting Beyond Breakeven, commissioned by the Pew Trust in 2007, found almost 40% of nonprofit cultural organizations were slowly oozing resources. Their operating expenses over the years were flat, but income was falling, meaning that “green stuff” was slowing leaking away. If this trend continued, they risked collapse. Working with outmoded tools for measuring and assessing warning signs, they were continuing to patch up crumbling budgets with layoffs and shortsighted cost-cutting rather than making over-arching changes to their operations. Obviously an already shaky situation took a turn for the worse during the Great Recession. Many arts organizations emerged with less working capital and resources than ever to cover basic infrastructural needs.
The consequences of not recognizing and responding to financial and other kinds of organizational warning signs are dire. They go beyond the short-term pain of layoffs, and canceled programs. By not continually assessing where they stand and making adjustments as well as bold moves when necessary, non-profits risk for-profit corporate takeover, compromised missions and the loss of a precious community resource.
A desire to help empower everyone who works in museums to get in front of financial and structural challenges was the motivation behind Playing the Numbers: Learning the New Rules of Museum Finance, a session I will be co-presenting with Dr. Robyn Raschke and Deborah Frieden at the WMA 2014 Annual Meeting this October 5-8, 2014. The purpose of the session is to review and explain simple techniques of financial analysis that you can use to gain a coherent and clear picture of your museum’s financial and administrative underpinnings.
Robyn Raschke, an innovative accounting professor at the Lee Business School at University of Nevada, Las Vegas, is a passionate museum visitor who is excited to meet those of us who work behind-the-scenes in institutions that she loves to spend time in. An inspiring teacher (yes, financial accounting can be inspiring!), she will focus on how museums might adapt the Balanced Scorecard approach to financial planning. More comprehensive than the familiar SWOT method of diagnosing an organization, Balanced Scorecard was developed in 1992 at the Harvard Business School for identifying, measuring and, most important, integrating your organization’s key attributes and goals. The technique has since evolved from an attractive but passive document into the "daily marching orders" for an organization’s staff and board. Its framework not only provides performance measurements, but also helps organizations identify what should be done and measured.
Since one common strategy for improving and upgrading an organization’s infrastructure is a capital campaign, it seemed wise to invite an expert who has seen it all! Deborah Frieden is well known in our field for her rigorous work leading complex capital improvement projects for museums and other community resources. She will review techniques for determining whether and how to take on a responsible capital improvement plan for your museum.
I’ll add to the Monday morning session by leading you through some ways to measure your organization’s fiscal strength with a few deceptively simple calculations that are part of the re-tooled graduate financial and cultural management course I teach at University of San Francisco.
So: load up on coffee, charge up your calculator and get ready to count some beans with us in Las Vegas at the Playing the Numbers session. We hope you’ll leave with some useful tools for staying on top of your museum’s finances and planning for a safe and sound future.
To register for the 2014 Annual Meeting attend this session, please click here.
Marjorie Schwarzer is Administrative Director at the Graduate Museum Studies program at University of San Francisco and a former WMA board member and program committee co-chair. She holds an MBA in non-profit finance from the University of California, Berkeley, has a roof over her head, enjoys crunching numbers (sometimes).