National Standards & Best Practices for U.S. Museums

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Financial Stability

Standards Regarding Financial Stability

  • The museum legally, ethically and responsibly acquires, manages and allocates its financial resources in a way that advances its mission. 
  • The museum operates in a fiscally responsible manner that promotes its long-term sustainability. 

Standards Regarding Developing and Managing Business and Individual Donor Support

General Principles

  • Loyalty to mission. To ensure accountability and informed decision making, museums should develop written policies, approved by their governing authorities, guiding the museum’s development and management of business and individual support in a manner that protects their assets and reputation and is consistent with their mission. 
  • Public trust and accountability. The museum community recognizes and encourages appropriate collaborations with a variety of stakeholders, including a museum’s donors. Such support often comes with expectations regarding involvement in the museum’s activities. It is essential to a museum’s public trust responsibilities that it maintain control over the content and integrity of its programs, exhibitions and activities.
  • Transparency. Museums should provide business and individual donors with accurate information about mission, finances and programs.
  • Fidelity to donor intent. Museums should use support from business and individual donors for purposes that are mutually agreed upon. 
  • Ethics and conflict of interest. In soliciting and managing business and individual support, the museum should comply with the Alliance's Code of Ethics for Museums and its own ethics policies, with particular attention to potential conflicts of interest. 
  • Confidentiality. A museum should ensure that information about donations is handled with respect for the wishes of the donor and with confidentiality to the extent provided by law.

Purpose and Importance

Not-for-profit, charitable, educational and scientific organizations and those they serve have always benefited from the business sector and the generosity of individual donors. Businesses and individual donors also have benefited from their relationships with the museum community. Through association with museums, businesses seek to positively affect their enterprise by showing their commitment to a not-for-profit’s mission, generating goodwill within communities in which they operate and increasing the recognition of their business identity. Through their generosity, donors reaffirm their commitment to the arts, sciences, history and lifelong learning and to creating a stronger and more civil society by making objects and information accessible. In addition, individual donors often have family connections or other close personal relationships with the museums they support.

In light of often intricate museum-donor relationships, the Alliance has worked with the field to create these standards on developing and managing business and individual donor support. While these standards provide general guidance, it is essential that each museum draft its own policies appropriate to its mission and programs.

Managing Support

Museums should create policies regarding business and individual donor support either as separate documents or as part of other museum policies. A museum should be consistent in following its policy; any changes should be driven by evolving standards and best practices and the institution’s mission and strategic direction. A museum should not change policy solely in response to a specific situation.

These policies should: identify the museum’s goals for developing and managing support; define the responsibilities of the governing body and staff for decisions about business and individual donor support, including but not limited to solicitation, gift acceptance, fulfillment, recognition and public inquiry; ensure that the museum has the necessary human and financial resources for fulfilling its obligations in any donor relationship; and address conflicts of interest in situations involving business or individual donor support opportunities in which a member of the museum’s governing authority or staff may have an interest. 

Conflict of Interest 

The policy should address the obligation of members of the staff or governing authority to disclose any interest in the relationship under consideration. Such disclosure does not imply ethical impropriety. The museum may require that the individual recuse himself from any discussion and/or action regarding support from a business or donor with whom he or she is associated or has an interest, and document the individual’s role in any other aspect of the project or program supported by that donation.

Donor Communication and Relationships

The policy should clearly identify which staff or governing body members are authorized to make or change agreements with businesses or individual donors. In addition, a museum should have a clear policy concerning the level of financial, tax and legal information it will provide to supporters, including a policy of recommending that they consult their own legal and financial advisors.

Types of Support a Museum Will Accept

A museum should develop a gift acceptance policy outlining the types of support it accepts from businesses or individual donors and delineating a process for determining whether or not—from a mission, operational, business and legal perspective—to accept a gift as offered. A museum should determine whether it will exclude any business or category of business because of the business’s products and services, taking into consideration the characteristics, values and attitudes of its community and audience, discipline and mission. In deciding whether to exclude certain supporters a museum may wish to consider: products and services provided by a business; the business practices of the potential supporter; and whether to associate certain exclusions with particular activities (e.g., children’s programming).

Recognition

A museum should consider the range of recognition it may offer a business or individual donor. In doing so, it should consider general standards for recognizing donor support based on the level of support received, such as those relating to the use, placement, size of names and signage.

Confidentiality

A museum should ensure that a relationship of trust is established and maintained with its donors by respecting the private nature of information about the donor and the donation, if appropriate. In doing so, it may consider developing a system to control access to and handling of donor information; balancing the museum’s obligation to maintain public accountability with its obligation to protect donors’ privacy by outlining what type of information can and cannot be kept confidential; and collecting only relevant information about donors or potential donors.

Anonymity

A museum must determine whether and under what circumstances it will accept anonymous gifts. A museum should avoid agreeing to requests for anonymity that conceal a conflict of interest, real or perceived, or raise other ethical concerns.

Uncollectable Pledges

Situations may arise when donors cannot or do not honor a pledge. In determining the enforceability of a pledge that is not honored, a museum may consider legal and accounting implications; the overall impact of the gift on the museum; the museum’s history and previous relationship with the donor; and the attitude of the community toward the situation. 

Documentation

A museum should require that all documents relating to the development of donor support be maintained and retained in accordance with applicable law and record-retention policies.

Application of Policy

A museum should identify clearly all entities, such as friends groups, voluntary organizations, components of a museum system, etc., that must comply with its policies about business and individual donor support.

Public Accountability

A museum should respond to all public and media inquiries about its support from businesses and individual donors, including allegations of unethical behavior, with a prompt, full and frank discussion of the issue, the institution’s actions and the rationale for such actions.

Issues Related Specifically to Business Support

Use of Museum Names and Logos

A museum should set clear parameters for the use of any of its names and logos by a business supporter. In creating such a policy a museum might address: the contexts in which it will permit such use; its responsibility to approve all uses of its names and logos; specific prohibitions; and conformity with its policies for protecting intellectual property (e.g., trademark, copyright).

Promotion of the Museum-Business Relationship

A business may wish to promote its relationship with a museum in its marketing, advertising and public relations activities. In its policy, a museum might address: limits on the scope of how and the extent to which a business may promote its relationship with the museum, and the responsibility of the museum to approve any such promotion. 

Support from Vendors

Current or potential relationships between a museum and a vendor providing goods or services should not be contingent upon a contribution from the vendor.

Exclusive Arrangements

A museum should carefully consider whether or not it is willing to enter into a relationship with a business that restricts the museum from receiving support from the business’s competitors or from using a competitor’s products and services. 

Standards Regarding Retrenchment or Downsizing

In challenging economic times many museums are experiencing a dramatic loss of income from multiple sources, including endowments, parent organizations, funding agencies, admissions and museum store sales. In response, many museums make changes in their governance, staffing and operations. These actions can be necessary and appropriate steps in securing the museum’s future. Sometimes, however, downsizing or retrenchment is mistakenly assumed to be an indicator of bad management. This standard addresses the issues of downsizing and retrenchment, and how they may affect museums.

Downsizing and retrenchment can be responsible and necessary corrective actions in response to financial reductions. When preparing for retrenchment, museums: focus on retaining their ability to fulfill their mission and serve their community; take actions consistent with the highest ethical, fiscal and management standards in the museum field; and carefully consider the effect of their actions on their staff, their community and the collections they hold in trust for the public.

The following observations provide guidance regarding application of these standards to issues that commonly arise when a museum is considering downsizing or retrenchment.

Collections

Collections often receive special scrutiny during retrenchment either because of the expense of maintaining them appropriately or because of their potential as financial assets. In considering the role of collections in retrenchment, museums are guided by the following principles.

Collections are held in trust for the public, and a primary responsibility of the governing authority is to safeguard this trust. The museum may determine that it is unable in the long run to appropriately care for some parts of its collections. In such cases, the most responsible action may be to deaccession and transfer material to another suitable caretaker in an orderly manner that safeguards the collections and their documentation. Museums may carefully consider whether it is appropriate for the material to remain in the public domain at another nonprofit institution or whether it can responsibly be placed through public sale. Deaccessioning, however, is never a fast or simple solution. It may take a great deal of time and other resources to research the material in question, determine its provenance, identify any restrictions on the title and arrange for an appropriate and safe transfer. In the short run, it may actually require additional expenditures on the part of the museum to conduct the necessary research, prepare the documentation, arrange for disposition and affect the transfer. Deaccessioning is part of a long-term, thoughtful decision on the part of the museum about how best to fulfill its mission with available resources. It is conducted in accordance with standards and best practices in the field, and with the museum’s own code of ethics, collections planning and collections policies. 

Various statements of ethics in the museum field prescribe what can be done with the funds resulting from deaccessioning. All museums are expected to abide by the Alliance's Code of Ethics for Museums and by any additional codes of ethics particular to their discipline. The Alliance's Code of Ethics for Museums specifies that proceeds from sales resulting from deaccessioning can be used only for acquisitions or direct care of collections. While the interpretation of “direct care” varies between museums and disciplines, there is a strong consensus that it does not include use of funds to pay operational expenses. The code of ethics of the Association of Art Museum Directors (AAMD) explicitly specifies that art museums can only use funds resulting from deaccessioning for the acquisition of new collections, and that of the American Association of State and Local History (AASLH) specifies that history museums can use such funds only for acquisition or preservation.

There is increasing pressure on museums to capitalize their collections and to use them as collateral for financial loans to the museum. The Alliance's Code of Ethics for Museums requires that collections be “unencumbered,” which means that collections cannot be used as collateral for a loan. The AAMD code of ethics also precludes using collections as collateral, and further bars museums from capitalizing collections. The AASLH has also issued a position statement that declares that capitalizing collections is unethical. 

A museum’s collections are valuable only insofar as they are accessible to the public and to scholars and the information inherent in them is preserved through documentation and the knowledge of those who care for them. “Mothballing” collections, i.e., putting them in storage and eliminating or minimizing curation and use, may seem a desirable short-term strategy for cost reductions, but it carries measurable risks. Many kinds of collections are not stable in storage without constant monitoring and attention. Often, collections can be made accessible in a meaningful way only through the mediation of an experienced, knowledgeable staff that, once dismantled, may not easily be rebuilt.

Human Resources

Museums often reduce staff size in response to financial reductions. This may be accomplished by leaving positions temporarily unfilled, eliminating individual positions or eliminating whole departments or program areas. In considering the reduction of staff as a part of retrenchment, museums consider the short-term and long-term needs of the institution. Leaving a position vacant when a staff member departs is less traumatic than laying off existing staff. It can also, however, leave key positions and vital roles unfilled at a crucial time. Museums weigh the needs of the staff and the needs of the institution in choosing a strategy for staff reductions.

Museums also consider the impact of downsizing on the museum’s programs and operations. The museum’s mission is accomplished primarily through its staff, but many museums also rely on volunteers and partnerships with other institutions. Staff reductions are planned in light of the overall impact on the museum’s mission and activities and as part of an overall strategy for scaling back operations, supplementing paid staff with volunteers or partnerships or other strategies for accomplishing the museum’s goals.

Museums in Non-Museum Parent Organizations

Museums that are part of a college or university or organized under municipal, county or state government have additional factors that affect their response to a financial crisis. When parent organizations need to make financial cuts, the museum may bear a disproportionate portion of the burden. Many museums within larger parent organizations have increased their financial stability by cultivating diverse sources of income. This is particularly important to museums in parent organizations. Museums that derive significant portions of their income from outside sources are less dependent on funding from their parent organizations. This minimizes the impact of funding cuts from the parent and the likelihood that the parent will see eliminating the museum as an attractive financial strategy. 

Museums can also develop a separately incorporated friends organization. A separate 501(c)3 support group can provide significant income, serve as an advocate for the museum and buffer it against sudden organizational changes. A formal memorandum of agreement between the parent and the friends group can ensure that the support organization has a voice in any decisions concerning the museum’s future.

Another strategy is to embed the museum in the parent organization’s operations. A museum that is an integral part of its parent organization is less likely to be an immediate target for financial reductions by the parent. By being strongly connected to the community served by the parent, reaching out to a broad constituency, attracting new sources of funding, garnering positive publicity and, most of all, being valued by a large number of people, a museum makes itself less vulnerable to cutbacks. An active and engaged constituency will encourage the parent organization to continue its support. 

Parent organizations usually have no legal obligation to continue to operate a museum. They may not consider the possibility that the museum could lose accreditation as a result of changes made as part of retrenchment. The Alliance, representing the public’s interest of stewardship of collections held in the public domain, urges parent organizations to take into account the following moral, ethical and practical issues. First, museums are a part of an institution’s long-term strategy of civic engagement. Any decisions regarding the future of museums operated by a parent organization should take into account their long-term role in serving the broader public good. While in the short run, cutbacks to a museum may result in financial savings, in the long run they may damage the parent organization’s ability to serve its community and reach out to a broad audience. And second, museums operate in the public interest and hold their collections as a public trust. If a parent organization is considering downsizing or closing a museum, it has an ethical obligation to do so in a manner that safeguards the public’s interest. The fate of the collections must be carefully considered. Having taken on the obligation of caring for collections, the parent must plan to transfer this stewardship to another suitable caretaker in an orderly manner that safeguards the collections and their documentation. The new caretaker should be carefully chosen with attention to its ability to care for the collections and to continue to provide public and scholarly access. As discussed earlier in this standard, this process may require additional resources in the short term and may not be a useful strategy for immediate cost savings.