Planning for lean times

Context

Independent museums are facing what can appear to be a perfect storm. High inflation adds significantly to the costs of running and maintaining museums (e.g. energy costs, staff costs, core activities, capital projects).  Declining wages (in real terms) reduce the spending power of many visitors.  Local authority finance continues to be squeezed with ever more pressures on any funding that can be deemed discretionary. And then there is the state of the economy in recession, still recovering from the pandemic and increasingly feeling the impact of a hard Brexit. These conditions depress the ability of charitable Trusts and Foundations and corporates to give the level of support the sector needs.

AIM’s 2022 survey showed that half of responding museums believed that they could absorb cost of living pressures in the short but not long term.  As has been observed, reserves can only be used once and then they are gone. The same survey found 40% of responding museums scaling down activities.

Museum Boards should not feel bad or guilty about tough decisions they may need to take in the coming months.  These conditions are not of their making, nor can museums exert much influence over them.  While some conditions may improve in 2023 (e.g. a drop in inflation), the storm is not an overnight phenomenon.  The Chancellor’s Autumn 2022 statement made clear the pressures on spending in the public realm over the next several years, and the Government’s tight fiscal response.  Museums will be aware of the pressures on arts funding bodies to provide support to museums within certain strictures. There is unlikely to be much change in political direction over the next two years with a General Election not formally required until January 2025.

Beyond conventional thinking

Conventional advice to charities centres on battening down the hatches – prudent risk management, good financial information, reminders to Trustees of their duties, minimising costs, managing fuel costs etc.  This advice has a place but could have been issued at any point in the last decade as a short-term fix. It doesn’t have the measure of the damage that is being done in present conditions to the wide public benefit museums provide to the general public. Such exceptional conditions require larger less insular answers.

Four big options

Our assessment is that many independent museums face a choice between four big options:

  • Shrink
  • Grow
  • Merge
  • Close

We examine each in turn below.

Shrink

The critical choices in shrink are between salami slicing provision (e.g. closing some days or at some times) or specific major cuts (e.g. close part of the site). This will require in many museums clarity on what it is practical and ethical to ask volunteers to do, including what paid staff may previously have done.

Shrink is rarely an easy option as closing part of the site, for example, will not necessarily remove all the costs of maintaining buildings.  Equally, shrink may reduce the collections on display, prompting often overdue discussions on relevance, interactive displays, handling collections, and the notoriously hard question of whether some part of the collection should be disposed of. Shrink requires a tighter focus around current and potential audiences, their reactions to changes and achieving low- cost engagement.

Shrink is almost inevitably a reluctant option.  It requires firm decisions to stop doing some things, and that usually involves challenge to stakeholders, internal or external, with a particular interest.  Where shrink needs to be followed, a critical danger is that too little is decided too late requiring yet further reductions in service that could otherwise have been avoided.

Growth

It may seem strange at this time to suggest growth as an option.  However, a hollowing out of provision in the wider charitable sector over the last decade may provide space and fresh opportunities for new projects, expansion etc.

Some funders may develop new funding streams, as happened during the pandemic, precisely because of the challenging conditions.  Equally, there may be value in direct dialogues between museums and funders with an interest in the sector to encourage those funders to think more creatively about funding new initiatives.

Growth requires focus on what can realistically be achieved, by when and with what resources.  There will be sunk or irrecoverable costs that the museum is unlikely to ever get met by a funder, but are at the same time are essential to making that growth or change happen. It is important to consider non-core projects that could be reduced in order to release staff and volunteer time.

It is essential that the museum works within its existing objects and powers in developing any new projects.

Merger

Mergers are sometimes unhelpfully linked with collaborations.  However, many collaborations are operational and tend to be short term.  Mergers often involve wholescale change, and unlike collaborations are much harder to undo.

Mergers are not a strategy in themselves.  The key consideration is what synergies the merger enables you to achieve.  These can be in governance, staffing, technologies, collections, programming/exhibitions, new audiences, or volunteering. While some mergers can release cost savings, the prime benefits of mergers are usually in greater resilience, efficiency and effectiveness.

Mergers are only partly a technical exercise establishing the legal route to be followed, due diligence, and transfer of assets and liabilities following final agreement to merge. The most effective mergers are ones that create a new and more capable organisation with similar objects looking outwards to new opportunities and audiences.

Mergers amongst museums are even less popular than in the wider charitable sector.  They are of course not a universal answer or a magic bullet. They involve developing shadow plans for future strategy, structure and activities, and cultural change for the merged organisation.  Effective mergers require planning and facilitation.  In current conditions, they must be regarded as a serious option.

Closure

The Museums Association produced a helpful guide for museums facing closure. Much of this advice remains relevant.  The guide underlines the value of planning well in advance to close well.

Closure though regrettable should not be seen as a statement of failure.  It is recognition that the current proposition cannot be sustained at this time. The task then becomes one of looking at what positive legacy can be left and above all how interests of visitors and the wider public can continue to be served.

Scenario planning

We have sketched four broad options above.  To be applied, these require more detail. Amongst other tools, we recommend consideration of using scenario planning techniques.  Any scenario developed for a museum needs to build on the range of impacts of:

  • Big Picture factors (set out above in context)
  • changes in the immediate environment (e.g. visitor numbers, alternative attractions, recruitment, retention and motivation of staff, entrance costs etc)
  • finance, culture and operations of the museum

At its simplest, best and worse realistic scenarios can be developed with clear story lines and then subjected to robust critique.  This will help determine the bandwidth in which the museum operates now and in the period ahead, and the option that is most suitable.

Respective roles

How work is allocated to pursue these four big options will depend on whether the museum has the staff, skills and expertise, and how involved the Trustees are or should be in the operations.

The process requires both leadership and collaboration to sustain a process that will be challenging and can be draining. This involves sensitivity to the position of staff. At a formal level, staff have rights to information and consultation regarding their roles, salary, terms and conditions and future employment. It is equally important to attend to the welfare and wellbeing of all those involved.

Conclusion

Trustees and staff will need to make time to plan for exploring these four big options, ensuring that in the process they maintain good governance and employment practices based on a realistic set of assumptions.

Hilary Barnard and Ruth Lesirge are the founders of HBRL Consulting.