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Financial Sustainability Is Everyone’s Responsibility

Category: 2019 Annual Meeting
Laura Lott onstage at a podium with the AAM logo on it.
In her opening remarks at the 2019 Annual Meeting & MuseumExpo, AAM President and CEO Laura Lott addressed the imperative for financial sustainability, strides toward DEAI, and the trust the public puts in museums.

Prepared Remarks of Laura L. Lott
President & CEO of the American Alliance of Museums

Opening General Session of the 2019 Annual Meeting & MuseumExpo

May 20, 2019

Good morning and welcome to the 2019 AAM Annual Meeting, the largest annual gathering of museum professionals in the world!

This is always one of my favorite weeks of the year. Not only do I get to see friends and colleagues from around the world, but I love to see and experience the true power of our Alliance.

We have a lot of first-timers here! Where are you first-timers?

We have veteran meeting-goers here who have been attending for a decade or more—some for forty years! Go ahead, give a wave; we know you started coming as children!

You are all part of our Alliance—now nearly forty thousand strong. Give yourselves a round of applause!

Financial Sustainability

As our AAM veterans know, our meetings always have a theme or focus area.

As we continue to apply our collective wisdom and power to address areas of diversity, equity, accessibility, and inclusion in museums, and the deliberate integration of our museums into societal structures such as the PreK-12 education system, this year, we also turn our attention to the financial sustainability of museums, exploring the theme Dynamic, Relevant, Essential: Sustaining Vibrant Museums.

New Orleans is a perfect venue for exploring the financial sustainability and vitality of museums.

It’s nearly impossible to find a better example of resilience and a vibrant culture amidst change and challenge than this city. The people of New Orleans have persevered through natural disasters, economic downturns, and societal changes like so many cities in the US.

New Orleans has done all of this while preserving its historic culture, unique charm, and vibrant character. What an inspiration for museums!

Now, too often when I say that “changing business models for financial sustainability” is one of the Alliance’s three focus areas, museum professionals politely nod and try to hide the glazed-over look in their eyes.

Too often, in my experience, there is a perceived division between those professionals who design the programs and curate the exhibits—and those who are responsible for maintaining the financial health of the institution. Sometimes our passion for the amazing work of museums blinds us to the business realities within our organizations and the disruptions and financial pressures coming from outside.

I fear that many of us are dangerously close to a fatal mistake of assuming that funding will come—somehow, somewhere—because we deserve it.

Please take two things from my remarks this morning:

First, museums will be much better positioned to inform, inspire, and enrich our world if they have healthy balance sheets.

And second, long-term financial sustainability is everyone’s responsibility. And it’s something we must talk about open and honestly.

Data from our recent Museum Board Leadership report suggests nearly ONE-THIRD of museums dip into their financial reserves (their savings or rainy day funds) or endowment funds to cover basic operating expenses. What’s frightening is that this reserve spending is occurring in a strong economy. And, even more frightening, many predict that we’re on the doorstep of another recession—for which many of us are not adequately prepared.

As budgets tighten, museums defer basic necessities like facility maintenance, putting their people and collections at risk. This is a photo of the devastating fire at the National Museum of Brazil last year.

Like many nonprofits, they often stretch and ultimately burn out staff resources, and risk losing great talent to higher-paying industries.

On the revenue side of the equation, museums are competing against a growing number of nonprofits for crucial funding. Philanthropic giving is increasingly focused on solving specific societal problems and demanding quick and measurable outcomes. In many parts of the country, government funding is shrinking even as public officials seek more tax payments from nonprofits. And museums of all sizes are competing for the attention of visitors and their spending.

As the pace of change quickens, our field needs to improve our financial discipline, business planning, and data literacy. This is not an option; it is a necessity. Museums must innovate, experiment, and implement new business models in order to secure their financial futures.

Many of you have heard me admit: I’m a recovering Certified Public Accountant and I have a secret love of numbers. But the issue of financial sustainability is not just for the accountants. It needs the collective genius of our field.

As the saying goes: no money, no mission!

This week, as we learn from each other, and in the days and months ahead, I challenge you and your museums to renew your focus in a few areas of financial sustainability:

  1. Design new mission-related income streams around the core businesses and talents of your museum
  2. Explore shared service models to optimize key functions of your institution in order to contain costs and to improve capacity
  3. Be proactive in demonstrating to donors and funders that museums provide essential (and often measurable) social, economic, educational, and community good
  4. Become truly inclusive in all aspects of our operations, leadership, and engagement with our increasingly diverse communities. We literally cannot afford to leave anyone out.

I want to hear your ideas, what’s working and what’s not, and how the Alliance can help.

DEAI

Another area in which AAM is taking a leadership role is in exploring issues of diversity, equity, accessibility, and inclusion in all aspects of museums’ structure and programming.

Now, I believe there are lots of “cases” to be made for museums to prioritize DEAI. But, if you or your board is looking for the business case, here it is…

Research shows the makeup of museums’ core audience is stuck in the 1970s. Data shows that visitors of color make up 11 percent of museum audiences, on average – but 39 percent of the US population.

Museums are going to find it increasingly difficult to survive if we’re only serving half the population. Both because, in business terms, it means declining market share.

And because most museums, as nonprofit or quasi-governmental organizations, have a legal obligation to serve the public—the whole public, not just a segment.

Our field’s lack of diversity calls into question how well we’re actually serving the public and puts public funding and tax advantages at even greater risk.

To quote New York City’s Mayor Bill DeBlasio on his plan to require the city’s cultural institutions to demonstrate diversity, “It’s important to ensure if we’re investing public money that these organizations represent everyone and include everyone.”

And this is not just a coastal or big city issue. Our colleagues at Connor Prairie in Indiana just released a public opinion poll on the role of history and museums as education, community, and entertainment institutions. They learned that 79 percent of Americans think it is important that museums demonstrate a sustained commitment for advancing diversity, equity, and inclusion.

And 92 percent of Americans think it is important that museums are fully accessible to all guests.

Museums’ viability and financial sustainability depends largely on their ability to be relevant, magnetic, and inclusive—reflecting our communities.

If you visit a museum and don’t see anyone who looks like you, and the board’s strategic decisions don’t reflect your cultural identity, and the collection and interpretation don’t include you and your history, you’re probably not going back.

Make no mistake, DEAI work is about museum excellence—and it’s a moral, political, and business imperative.

The best part of being in an Alliance is knowing you are not alone. There is a lot of help out there. AAM is raising up museums’ successes here at the Annual Meeting this week and year-round.

A quick glance at our website will reveal the many aspects of DEAI we are addressing—with your help—and that of our LGBTQ Alliance, Latino Network, DivCom and other partners such as the Gender Equity in Museums Movement.

Many of you saw the national news coverage of our new initiative, Facing Change: Advancing Museum Board Diversity & Inclusion. But I want to share some details of this unprecedented initiative…

First, let me acknowledge that I am as impatient as anyone for urgent change—and there is a strong temptation to dive into action and “fix” past wrongs. However, for real and lasting impact, the first step is understanding.

So, at AAM we began by talking to many of you to understand your concerns and challenges—and bright spots—what seemed to be working.

On the heels of the Museum Staff Demographic Survey by the Mellon Foundation in partnership with AAM and AAMD, Dr. Johnnetta Cole and I led a field-wide DEAI Working Group.

Together, we asked a lot of questions and explored why there has been such insufficient change in the demographic makeup of our staffs, visitors, and boards, despite ongoing work for more than twenty years.

The Working Group’s Facing Change report identified five key insights, including that we each must do personal work to face our own unconscious biases, and that we need to move from transactional steps to systemic change, and that inclusive leadership is essential at all levels of an organization.

Our Museum Board Leadership report gave us insight into a previously unaddressed area of DEAI work: museum boards.

The survey revealed that nearly half of museum boards are entirely white.

Three-quarters of museum directors believe diversifying their boards, racially and ethnically, is important, but far fewer have developed plans of action to become more inclusive, provided inclusion training to their boards and staffs, or implemented other changes to the status quo.

To begin to fill this gap and address museums’ needs and desires to better reflect the communities they serve, we are launching the unprecedented national initiative called Facing Change: Advancing Museum Board Diversity & Inclusion.

Backed by a record gift for AAM, a $4 million grant from the Mellon, Alice L. Walton, and Ford Foundations, this three-year initiative will provide the framework, training, and resources for museum leaders to build inclusive cultures within their institutions that more accurately reflect the communities they serve.

To make real and lasting change, work needs to be done at the top where the tone and priorities for each museum are established. AAM aims to drive long-lasting systemic culture change through this initiative. And this board- and director-level work complements the hard work and investments already being made to diversify museums’ talent pools, programming, and collections.

The first phase includes:

  • Intensive training and resources for fifty museum boards in five communities—aimed at developing sustainable inclusion plans tailored to the needs of each museum and its unique community
  • A Museum Trustee Resource Center. Just launched, this section of our website will reach many more museums in communities across the country with resources for truly inclusive museum governance.
  • A board-matching program to connect individuals interested in serving on museum boards with museums seeking new perspectives and talents on their board
  • And, lastly, at this meeting we’re convening a Task Force to look at how DEAI gets more embedded into our Excellence programs, from the Code of Ethics to MAP to Accreditation. This is an incredible group of museum leaders from all types and sizes of museums, across the country, led by two leaders whom I truly admire: Lonnie Bunch and Elizabeth Pierce.

Underlying this initiative is a team of stellar professionals—from AAM’s growing staff DEAI team, to ten senior fellows, selected from a highly competitive pool of over 140 applicants.

I hope you will join our listening session later this afternoon—or stop by the AAM Resource Center in MuseumExpo to learn more and provide your input into this effort.

Or come chat with Sister Doctor Johnnetta Cole and me at our book signing on Wednesday. Thanks to incredible thought leaders and contributors, we have compiled a text of some of the most important essays around DEAI in museums over the last twenty years, because we need to continue learning from the past as we chart our path forward.

Trust

One of the best parts of my job at the Alliance is that virtually everyone I deal with loves museums.

And a recent public opinion poll of thousands of Americans conducted by AAM and Wilkening Consulting confirmed what we always knew were true facts:

  • 97 percent of Americans believe that museums are educational assets for their communities, and
  • 96 percent of the public wants Congress to fund museums.

This poll revealed that supporting museums is a core value of the American public that crosses political lines, bridges divides between urban and rural communities, and is even consistent among those who do not regularly visit museums!

And museums share another unique and favorable attribute. In this age of “fake news” and rampant distrust of traditional sources of information, museums are among the most trustworthy sources. Museums’ trustworthiness is rated higher than local newspapers, nonprofit and academic researchers, and the government.

Neither the public’s support nor its trust is guaranteed, however—and museums must fiercely protect both.

We must also realize the weighty responsibility of having the public’s trust.

The information we choose to share, the stories we choose to tell (and not tell), the individuals we involve in our museums as board members and funders, and how we handle our inevitable mistakes all stand to impact how trustworthy—and worthy of support—the public considers museums.

I hope you’ll read AAM’s newest TrendsWatch report from the Center for the Future of Museums, which explores this weighty and really critical topic.

And if you missed TrendsWatch: The Scenario Edition, you are really missing out on a powerful museum planning tool—to turn the trends we’ve been tracking into action and to apply a futurist framework to your strategic planning.

Closing

In closing, I would be remiss if I didn’t thank many people who are key to all of this work—and a lot of other work happening at the Alliance:

  • AAM’s incredible board of directors and accreditation commission
  • Our dedicated Professional Network leaders who provide invaluable networking and focused learning opportunities for everyone here at the Annual Meeting and at events across the country
  • Thank you to Susan Taylor and Stephen Watson and the entire Local Host Committee for your warm New Orleans hospitality.
  • And to the National Program Committee who put together this week’s stellar program of sessions
  • The talented and dedicated AAM staff, almost all of whom are here this week, wearing their staff badges and ready to help
  • And, last but not least, thank you. There is no Alliance without you.
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