Monday, June 29, 2009

Breaking Trail

This blog started last February—faced with its approaching six month anniversary I have been wrestling with the right balance of content. As I travel the country and cruise the web talking about CFM, asking how it can best serve the field, a frequent answer has been “we want examples!” So I am going to periodically use this space to highlight museums that are already treading the edge of the future: dealing with trends that will face all museums eventually and exploring new ways of operating. This week I want to highlight the good work of the Museum of Northern Arizona in Flagstaff

As the science fiction writer William Gibson observed, “the future is already here, it is just unequally distributed.” Arizona is facing some challenges sooner, and more swiftly, than the rest of the nation, but all of these trends (climatic, demographic, economic) will effect the nation’s museums eventually. Robert Breunig, director of MNA, is using the CFM report Museums & Society 2034 (M&S 2034) and other sources of forecasting information to break trail for the field—demonstrating the benefits of taking a long term view of the future. As Breunig led his board and staff through their recent planning process, he set the stage by presenting the pertinent data for their region, drawn from M&S 2034 and other sources. It’s a sobering picture. In the first half of this century, the state’s population is projected to more than triple, surging to 16 million. At the same time, Arizona faces profound environmental challenges including degradation related to population growth, continued drought, and species migration due to disruption of ecological niches. Higher fuel costs and/or energy shortages will threaten tourism, affecting the local economy, when Arizona already has poverty levels higher than the national average.

MNA’s approach to planning demonstrates the real world, practical application of forecasting. In the face of their local challenges, MNA is leading by example–demonstrating how to take action and helping people understand the changes taking place so that community members can make good decisions regarding their future. The museum just dedicated its new Easton Collection Center, a 17,000 square foot facility that will house many of the museum’s collections. The building is designed to earn the U.S. Building Council’s LEED (Leadership in Energy and Environmental Design) Platinum certification. Its living roof will capture and re-circulate water to sustain native species (including some of the local plants threatened by climate change and environmental degradation.) Photovoltaic cells help ensure that the building relies on minimal use of fossil fuel. And the building will preserve the biological collections that provide baseline data for the past and current flora and fauna of the region, key to assessing the losses that will occur in the coming decades.

The building is sensitive to cultural change, as well. There are long-standing tensions between the Anglo and Native American communities in Flagstaff, and this will probably be exacerbated by the increasing diversity resulting from the growing Latino population. Breunig wants the museum to help unify the community and serve as a trusted venue for hard discussions. In this spirit, MNA’s Native American Advisory Committee played a significant role in the building plans, contributing elements to the design they feel will make Native community feel at home in the structure.

Facing the future is not just about building “green.” MNA’s institutional plan outlines a path for addressing many of the challenges highlighted by trends forecasting. It sets a goal of strengthening participation and active involvement by people of various cultural backgrounds through collaboration with local groups and organizations. And it envisions MNA’s exhibits and programs as means to “present perspectives on the past to afford society the ability to make sound choices for the future.”

Many of MNA’s core documents, including its institutional plan, are available on its website. I hope you take a look at what they are dealing to grapple with the changes that will challenge Flagstaff in the coming decades. And please, comment here or email me at to share examples of other forward-thinking, innovative museums whose work deserves to be more widely known…

[Note: this article will appear in an expanded format in the upcoming issue of the Western Museums Association newsletter, WestMuse]

Friday, June 19, 2009

The Future of Financial Accountability

Can you resist a good “top ten” list? I can’t, and here is a whole bunch of them from Charity Navigator (CN) that prominently feature museums. Some are lists that any organization would like to appear on—10 Best Charities Everyone Has Heard of (National Gallery of Art); 10 Charities Expanding in a Hurry (they mean it in a good way and give kudos to the Louisville Zoo.) Some must be making a few museum directors cringe or fume—such as 10 Highly Paid CEOs at Low-Rated Charities. Besides being addictive reading, these lists and the way they are generated provide an instructive glimpse of the future of nonprofit accountability in the United States I think they also throw down a challenge to the field to start a public conversation about how we will be judged and reported on.

For those of you who are unfamiliar with Charity Navigator, it is a nonprofit organization that evaluates charities based on their publicly available IRS 990 statements. Their purpose is to help donors decide which charities would make good use of their money. To do this, they run financial ratios (like program expenses as a percent of total expenses) to assess organizational efficiency and sustainability. Using these ratios, they assign a charity 0 to 4 stars (like the Michelin Guide or Yelp), as well as offering helpful lists of “charities performing similar types of work” and their ratings for comparison.

On a conceptual level, I think this is great. The past couple decades have seen a trend towards higher public expectations for nonprofit transparency and accountability, and I think this will continue. Museums need to prepare for a future in which donors and citizens who support nonprofit museums through their tax dollars want detailed information on how those funds are being used and benchmarks by which to evaluate the results.

Ideally, we can find a way to this that does not impose a burdensome reporting requirement on museums. Heaven knows it is already laborious enough to fill out an IRS 990 and having filled it out, it is natural to look to it as a primary means of accountability. But, while it’s all very well for an organization to say “our 990 is on the Web,” most people don’t have the vaguest idea how to interpret the numbers. (Though they can have fun looking up the salaries of the director and senior staff.) A website, or better still, multiple sites, running ratios, offering analysis and benchmarks could be a real boon to donors and the field. So, good on Charity Navigator for the concept.

But I have a beef with the way this is actually playing out. As a researcher and statistician myself, I am painfully aware that just because something is expressed in numbers (and the math is done correctly), doesn’t mean it’s true. Numbers can be misinterpreted as easily, maybe more easily, than words. So it is incumbent upon any group or individual interpreting museum financial numbers to do so with a great deal of caution and some humility regarding the limits of any methodology.

Applying straightforward ratio analysis to museums is tricky enough. Sure, it is reasonable to expect that a nonprofit not have bloated administration. But many museums have huge infrastructure burdens in the form of collections and historic buildings, driving up the costs of building maintenance, insurance, HVAC costs, etc. Staff at CN assure me they take this into account when rating museums on the main page for each organization. (And, they point out, they are happy to add comments and addenda submitted by the rated charities. You might want to check your page and see if you want to take them up on this offer.) However, since its inception in 2002, the site has evolved from straight-forward reporting of financial ratios to adding opinion pieces, donation tips and top and bottom-10 lists that rank efficient and inefficient organizations in a number of categories. Hence the lists I cite at the beginning.

The current “Top Ten Charities Stockpiling Your Money” demonstrates how problematic this becomes. Seven of the ten charities on this list are museums, when museums only constitute 4% of the charitable sector. Does this mean museums are the Grinches of the nonprofit world? I don’t think so. I think it reflects the application of financial benchmarks that don’t suit the way museums work. CN introduces the organizations featured on this list as follows: “Each has stockpiled at least two years of reserves in the bank. Each has grown its revenues at least 25% for each of the past three to five years. Despite those deep pockets, these charities operate stagnant operations, expanding their programs by less than the rate of inflation (3%). Shouldn't all that cash be used more aggressively?”

Let’s pluck the top two from this list to examine in detail. Historic New England, listed as number 2, has had some hard times recently (as have many museums) running operating deficits in two of the three years covered by CN’s calculations (’05 and ’06) with a healthy recovery to a surplus in ’07. So, yes, it increased its income without increasing its expenditures commensurately—because it was balancing its budget and rebuilding its reserves. During this same time period Cleveland Museum of Natural History (#1 on the list) merged with and absorbed the assets of two other nonprofits—EcoCity Cleveland and Healthspace. For one thing, this makes it almost impossible to compare one financial year to another in this span (since it arguably became a different, bigger organization.) For another, it takes time to assimilate, repurpose and deploy assets on this scale. CMNH is just now beginning to reap the benefits of a fledgling distance learning program adopted as part of the Health Space portfolio, projecting a 60% increase in audience served. So that program did, in fact, expand, but after a 3 year lag taking on the initial assets.

Which brings up one of the issues that I think makes the some of the CN methodologies ill-suited to museums. They are based on 3 years of data, but many major financial events in the life of a museum (notably capital campaigns and building projects) play out on a longer time frame. In the case of Historic New England, the “stockpiling” reflects in part the rebuilding of investments decimated by the financial downturn following 2001. The organization actually has a very aggressive spending rate on its endowment—4.75 to 6.1%—exceeding IRS recommendations. But HNE uses a conservative 20 quarter rolling average on which to apply that rate. That means that a windfall from increased value of investments will be slowly be disbursed over 5 years, and the financial impact of financial downturns will last an equally long time.

This is particularly notable because museums rely on endowment income as an important component of their funding. The recent financial crash aside, trend data from the most recently completed AAM Museum Financial Information Survey (to be released in August 2009) shows that reliance on investment income has grown over the last decade relative to the others sources of museum income (government, private donations, earned revenue.)

Maybe it’s easy for me to snark about Charity Navigator because I am deeply immersed in the very specialized (dare I say geeky) world of museum finance. But I will note that I had no special knowledge about either Historic New England or CMNH when I looked askance at CN’s listing. While I did call the directors of both institutions for confirmation, my general theories regarding the story behind their numbers were drawn from public information on their websites and in the news. CN has chosen not to do this kind of investigating reporting to check the appropriateness of tagging charities as wasteful or inefficient. That being so, it behooves us as a field to be vigilant about such listings.

In the end Charity Navigator is just an example of a larger phenomenon to which museums need to respond. If we let outside groups set the terms of the discussion, be it the government in the form of the IRS with its newly expanded interest in nonprofit accountability or private groups such as CN, we may not feel the results are fair or appropriate. But what have we as a field offered as an alternative?

Here a few steps I challenge you to take:
• Look up the rating of your institution (or your favorite museum) on Charity Navigator. Do you agree with their assessment of your financial condition? Have they selected appropriate peer institutions for benchmarking? Do you appear on any of the Top 10 lists?

• Do a scan to see how your museum presents financial and other performance data to the world. What is on your website? In your annual report? Is it sufficiently detailed and compelling to shape donor perceptions? Do you have a model for reporting (c.f. the Indianapolis Museum of Art’s dashboard) that could serve as a model for other organizations?

• What could we be doing as a field to shape the future of nonprofit accountability? Now would be a good time to put together a session proposal for the 2010 annual meeting in Los Angeles. Make it a working session and set a goal of coming up with a plan for creating a standardized set of financial benchmarks for museums or recommended guidelines for assessing financial performance. Invite someone from Charity Navigator to participate!

Comment here or e-mail me at to share your thoughts.

Wednesday, June 10, 2009

The Future of Museum Conferences, continued: Why Not Run a Conference Like Maker Faire?

I just got back from an intense, exhausting, exhilarating week in northern California that encompassed two very different conference-like events--the Creativity and Collaboration Retreat (C2) organized by NAME/AAM and Maker Faire, put on by Make Magazine. These experiences fueled my ongoing musing on the future of museum conferences. Nina Simon has blogged about C2 , concluding that, for her, the retreat format is a superior experience to the standard listen-to-sessions-and-meet-in-a-bar conference experience. I want to reflect on lessons learned from Maker Faire. Wandering through this energetic, stimulating exposition built on the thoughts I have already posted regarding the best use of physical conferences. What makes travel worth the cost and environmental impact? What kinds of experience can’t be provided via the web?

This was my first time attending Maker Faire, and its fourth year of existence. The event is organized by Make Magazine to "celebrate arts, crafts, engineering, science projects and the Do-It-Yourself (DIY) mindset." The Faire encompasses a broad variety of “makers”: most prominently electronic buffs who create anything involving circuit boards (aquatic, terrestrial and aerial robots, games, sound systems, etc. etc.), people who make large, often mechanized, objects (cars, fire sculptures, steam engines, bicycles), crafters (engaged in sewing, crochet, knitting, jewelry, glass, woodcarving) and people who make believe (steampunk and the Society for Creative Anachronism.) There were also numerous smaller groups—people who make music, people who make messes (home chemistry), people who make food. Notably not people who make art, at least not fine art.

Every sector has a culture shaped by its historical origins, and this culture in turn shapes its convenings. The typical museum conference follows a traditional academic model. Its central feature is presentations of peer-reviewed papers/sessions, an oral version of what might well become a published report. While museums have noodled around the edges of this model (embellishing the talks with PowerPoint or, for the uber-hip, Prezi), encouraging alternative formats such as skits, and tacking a few workshops on the end, our academic roots still show. It was refreshing to see an event designed for the same end (exchange of information, ideas, skills, providing inspiration, making connections), arising from an entirely different culture with a markedly non-academic perspective.

The Faire sprawled out over much of the San Mateo fairgrounds, encompassing 7 buildings, numerous tents and outdoor activities (rocket launching, robotic warship battles.) It had a scheduled program of speakers rotating through two stages in one of the main buildings, but the majority of the Faire was made up of individuals and groups who apply for exhibit space—primarily 10 x 10 booths—in which to present their projects and demonstrate their expertise. Many groups guided participants through how-to activities such as “hack cool things with microcontrollers, “learn the basics of bargello needlepoint” or “fix your bike and help change the world.” Participating “makers” occupied free booths, allocated by an application process that encouraged encourage “exhibits that are interactive and that highlight the process of making things.” Mixed in with these maker booths were exhibiting companies and sponsors including Crayola, NASA, Radio Shack and the Exploratium, showing their own wares and demonstrating products and services.

Altogether it was a giddy, high energy, hands-on, information rich environment. And fun! Most of what was presented (with the exception of the traditional lectures) was uniquely suited to a first-person, 3-D exposition of the subject at hand. Sure you might delve into associated literature in more depth, afterwards, but it was an effective immersive introduction to lots of ideas, techniques and materials. All the presenters (other than the lecturers) were available to chat one-on-one with attendees dropping by their booths.

So, what if someone tried running a museum conference like Maker Faire? Ditch the traditional panel sessions, keep a few particularly stimulating invited lecturers, and turn the rest of the conference over to people who demonstrate and teach what they do, and how. Instead of watching a PowerPoint presentation on how a museum did rapid prototyping of exhibit labels, drop in on a mini-workshop where you try it out. Examine how one museum’s exhibit fabricators use laser cutters to turn digital data from scans into 3-D models. See a curator demonstrate how she makes her scientific research accessible via public demonstrations.

What might be the advantages?
• More one-on-one interaction for attendees with a greater number of presenters, rather than the typical “crowd to the front of the room and present a business card” experience.
• More choices about how to absorb content: skimming and grazing through the exhibitors, or diving into workshops and discussion groups.
• Exhibitor and sponsor content integrated in with participant content, putting these groups on more equal footing (and giving equal time to the content expertise each has to contribute.)
• More practical, hands-on experience and less theory.

What are some potential disadvantages?
• More chaotic, and potentially harder for an attendee to structure the experience.
• Not clear how some important traditional conference topics (finance, management, HR) lend themselves to this format. (Though maybe that is precisely the kind of content that can be effectively delivered in print or over the web.)
• Some displays might devolve into glorified poster sessions (not my favorite format, for quality or impact.)
• Instead of being “on deck” for an hour and fifteen minutes and then free to attend the conference, presenters would have to man their exhibits for extended periods of time.

Of course, what I am describing isn’t really a reinvention of the traditional meeting format so much as a radical shift in how the parts are distributed. It expands the traditional “Expo Hall” format to encompass much of the content delivery, encourages more workshops and roundtable discussions, and increases the role of performances and demonstrations. This might unduly slant the experience towards the physical (exhibits, storage mounts, technology) but I think it has broader application in the museum realm. After all, what else to we “make”? Standards, policies, decisions, projections. A conference could encourage workshops that prototype such things—proposals for new standards, projections regarding trends in the field, recommendations regarding policies with museums or governing the museum field. Instead of going away with just ideas, attendees could go away with potential action steps and commitments for follow-through. Worth a try? You tell me—if given the chance to “exhibit” at a museum faire structured like this, what would you present?