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Renting Museum Facilities for Events

Category: Museum Magazine

This article originally appeared in the July/August 2011 issue of Museum magazinea benefit of AAM membership.

The great majority of museums rent their space to outside groups. In addition to generating revenue, space rentals may introduce new audiences to the museum and increase the affection of existing audiences. Museums struggle with the issue of renting their facilities because there are inherent tensions between stewardship of collections and earned revenue from facility use. Each museum must create a policy determining what will be permitted, for whom and when. These decisions are then codified in a written facility-use policy or other institutional policy.

What should I include in my facility-use policy?

Generally, policies outline whether or not the museum allows food and drink in the galleries. Some policies make note of other issues associated with event planning, such as the use of filming, recording or sound equipment, and the presence of flowers and plants that have the potential of bringing in pests. To put policy into practice, many museums provide a list of approved caterers, florists and DJs. If those who rent your facility are well versed in your facility-use guidelines, you can avoid the time and effort involved in managing multiple written facility use agreements. Your policy should adhere to fire codes and outline your facility’s capacity. Other important considerations in drafting or revising your policy are fees/deposits/refunds/payment policies, hours, equipment rental, deliveries/ cleanup, parking, alcohol, smoking, dancing, decorations/use of rice or confetti, docents/guided tours, insurance, gratuities, movement of objects/exhibits, media coverage, use of the museum’s name and logo on invitations, use of the museum’s image, security and whether or not membership is a requirement to rent the space.

What are going rates for renting out my facilities?

Rental rates vary depending on the museum, the type of events the museum allows and the geographic area. Try surveying your local area to see what other museums and venues charge. Thoughtfully consider the direct and indirect costs (including staff time) involved in this activity. Each museum should make decisions about facility use based on its own mission, strategic goals and available resources.

What insurance coverage should I consider?

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It’s important to consider your existing coverage and elements of risk management as part of your facility-use policy and planning. In some cases, museums offer general liability insurance, requiring the client to pay for additional coverage or provide a security deposit. Others require the use of approved vendors that can provide proof of licensing or insurance or require that the client accept responsibility for any damages on the premises. Either way, you should discuss options with your insurance agent and general counsel and include these details in your written agreement. Huntington T. Block, an insurance agency serving museums and an industry partner in AAM’s Member Discount Program, offers several insurance plans, including the Museum Collection and Temporary Loans Program, Property and Casualty Insurance Program, and Directors and Officers Liability.

What’s UBIT? Does it apply to my museum?

Although your museum may be tax-exempt, you may have to pay UBIT (Unrelated Business Income Tax) if you have earned income that does not advance your mission. Unrelated business income is defined as income derived from a trade or business that is regularly performed and which is not substantially related to the performance of tax-exempt functions. Common types of earned income requiring museums to pay UBIT include operating a museum shop or opening the facilities for weddings, corporate events or luncheons. If you are thinking of using your facilities for these purposes or if your earned income does not substantially further the exempt purpose of your museum, you should speak to a financial advisor and/or legal counsel.

Are there any standards for the field that we should follow?

As the national association representing museums of all kinds, AAM serves as a forum in which museum professionals come together to formulate standards and best practices that guide museum operations. These voluntary national standards and best practices are benchmarks against which museums measure their own performance. They also help policy makers, media, philanthropic organizations, donors and members of the public to assess museums’ achievements. The Characteristics of Excellence for U.S. Museums outlines AAM standards that address “big picture” issues about how museums operate. Following are the characteristics for facilities and risk management:

  • The museum allocates its space and uses its facilities to meet the needs of the collections, audience and staff.
  • The museum has appropriate measures to ensure the safety and security of people, its collections and/or objects, and the facilities it owns or uses.
  • The museum has an effective program for the care and long-term maintenance of its facilities.
  • The museum is clean and well-maintained and provides for the visitors’ needs.
  • The museum takes appropriate measures to protect itself against potential risk and loss.

More information on standards and best practices is on the AAM website.

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