This is a recorded session from the 2024 AAM Annual Meeting & MuseumExpo. What is the state of museum governance today? Hear the results of AAM’s Museum Board Leadership survey, including critical benchmarking data on governance practices, board responsibilities and performance, board culture, diversity, and more. Drawing from the insights of museum board members and directors across the country, this session will share where museum governance is flourishing and where there’s room to grow, and as well as share actionable takeaways for how museums can help their board, and their museum, thrive for years to come.

Additional Resources:

Research Insights from AAM’s Museum Board Leadership Survey slides

Read the 2024 Museum Board Leadership: A National Report

Transcript

Cory Garfin:

So, I just want to mention about the initial survey that was run in 2017 was sent to museum directors and board chairs. This was sent to museum directors and their boards so there’s a slight difference in the methodology. We heard from 456 directors and 606 board members that represented a really broad cross-section of the museum field. We sent it to 4,42 directors and then we asked them to distribute to everybody on their board and just a process note throughout these charts that you’re going to see the letter N indicates the sample size for each question. Some of them are slightly different than the others and any statistical significance between side-by-side data are indicated by a carrot symbol.

Okay so we primarily heard from people from history museums, historical societies, and art museums. You’ll see that the directors are the kind of dark blue bars. The board members are the light green. So that’s and that is the makeup of who we heard from and I’m going to jump into some of the key findings my colleagues are going to go into the details and we’re going to start with questions of diversity the working title for this project was the board leadership and diversity study the published title is the board leadership study.

So, a lot of the emphasis was on diversity or a lack thereof, but we did find that boards have made meaningful progress in diversifying their ranks, but they still have some significant room for improvement. And that’s we’re going to go into detail about how they can improve but there are some actions that we can take, and Carys has. At the end of our deck there’s a QR code that links to the full report and there are some really helpful guides and tips for action to take off of this.

Okay boards and directors widely agree that diversity and inclusion are important to board performance. This sentiment has grown since the 2017 study. So, it’s not just the board effectiveness as a board as a body it’s really how they represent the museum. It’s their ability to advance on the Museum’s overall mission and it’s their ability to understand communities that the museums serve so that’s what they think diversity does for them and what…next slide. Well, most boards have engaged in conversations about diversity and inclusion, but many museums have not followed up on these discussions with concrete actions to promote diversity. Again, we’re going to have some tips for that but just as an example most boards are recruited through personal networks so if a board is predominantly white it becomes an echo chamber which we found of people in their network. So, we did find that there’s relative parity in representation in the responses between men and women on boards and a majority of directors are women. There’s one caveat here though is that women are much more likely to run museums that are smaller. So, about 75% of museums with revenue under a million dollars are run by women.

So, and we found that boards can widely improve their performance regarding things like fundraising, outreach, advocacy, and government relations. We did ask boards to grade themselves and then we asked directors to grade the boards. So, we’re going to talk more about those grades as we go but these are some of the areas that rose to the top of things that could do better. And then finally the museum field continues to face financial strain with half of museums indicating at least one sign of financial stress. So this was a question that asked in the past six months back when they took it in 2023, have you had any of the following and there were things like having to dip into their endowment. Things like laying off staff. Things like sunsetting programs.

So, half of museums have done something, at least one of those things. Some of them many. So, with that we’re going to dive into the details.

I’m going to pass it back to Carys you.

Carys Kunze:

Thank you, Corey. The results of this survey are going to be divided into three sections the people, the work, and the finances. I’m going to be chatting more about the people that make up museum boards and before we dive any further I’ll mention that, like Corey said, these results are coming from a larger report that you can find on AAM’s website at the end of this at the end of this session will also have a QR code up on the screen linking directly to the report. And we’re really just sharing the highlights a select amount of the findings so a lot more you can find in the report and I’ll also mention that some of these data visualizations are pretty dense some of them have a lot of text in the answer options so no need to stress about reading every word. All of the data visualizations are in the report for you to be able to look at in more detail.

The report is also full with a lot of actionable resources so here’s an example page where if you’re looking at a particular area of the findings and you’re saying yes this is an area that my board could stand to grow in there will be a selection of resources directly linked for you to start working on that particular topic. And with that let’s go ahead and dive into the results.

So we’ll start with the race and ethnicity of board members and directors and we found that board members and boards overall have made significant strides in improving their diversity, and that there’s still a lot of continued room for improvement. So, compared to the first iteration of this study which we ran in 2017, at that point almost half of directors reported that there were no people of color on their boards so that their board was entirely white. That of course was a highly concerning statistic to find and it sparked AAM’s Landmark initiative, Facing Change, which was focused on supporting boards in increasing their diversity. Looking at the results from this survey we see meaningful movement on this.

So, at this point we’re seeing a decrease to 27% of directors reporting their boards as entirely white coming down from that 46% in 2017. That’s a meaningful increase. Obviously, there’s still a lot of distance to be covered there. 71% of directors reported that 3/4 or more of their board members are white which indicates to us that a lot of the board members of color that are serving on museum boards are in many cases one of only a few people of color or the only person of color that’s serving on their board. And as you can see from the chart the vast majority of both board members and directors today are white despite board members and directors widely agreeing and recognizing the importance of diversity and inclusion to their museum’s missions.

Taking a look at gender we see relative parity between men and women on museum boards. Both of those are very close to 50% when we’re looking at directors 64% of directors share that they identify as women. And as Corey alluded to that is very different based on the size of the museum that we’re looking at. So, for museums that are under 1 million in annual revenue about 75% of those are directed by women and then museums that are over 1 million in revenue it comes to a closer to a 50/50 split. Taking a look at LGBTQ+ identity we found that only 5% of board members reported that they were part of the LGBTQ+ Community that’s a higher number for directors at 133% and even higher for directors who identify as men 20% of whom identified as the LGBTQ+ Community and for benchmarking about 7% of us adults identifies as LGBTQ+ next taking a look at disability for benchmarking about 13% of the civilian population is disabled directors report pretty close to the statistic at 12% but board members were much less likely to report living with a disability at only 4% taking.

A look at age, the majority of board members are over the age of 50. We found that 37% of directors reported no one under the age of 40 on their board and 82% of directors indicated that there was no one under the age of 30 on their board. Next, we asked directors and board members how important they felt board diversity and inclusivity was for increasing the organization’s ability to advance on various issues and there was wide agreement that board diversity inclusivity is important for many goals and a lot of these sentiments have increased since 2017. So, the vast majority of both board members and directors were agreeing that board diversity and inclusivity are important for increasing the organization’s ability to advance on its mission overall, enhancing its standing with the general public, understanding the population served by the organization, and a number of other important goals so these beliefs and values form a very important space for any further institutional DEI work.

Next, we asked directors what concrete actions their board has taken in relation to various DEI goals we found that about 2/3 of boards have agreed that it’s important to incorporate diversity and inclusion into their organization’s core values but we saw much less frequent use of very concrete actions. So, for instance just over one-third of boards have modified their recruitment efforts to pursue potential candidates from diverse backgrounds. Only about a third have also conducted DEI training for staff and/or board members. And we saw only 12% of directors reporting a detailed plan of action for the board to become more inclusive. So one of the big takeaways, I think, from this data is this gap that exists between belief between discussion and between more concrete action. That’s an important area for our field to continue growing as we’re moving towards these important goals. And when we’re talking about board members and who’s serving on boards it’s important to consider how they came to be on the board in the first place. So we asked both directors how they recruited new members and asked board members how they personally were recruited. The vast majority of board members said that they had been recruited by either a board member that they already knew or a director that they already knew. And about three quarters were recruited by someone who was already in their own personal network. That can be a challenge, like Corey mentioned in his earlier remarks, that can be a challenge because personal networks are often homogeneous and so it can create sort of a cycle where it can be difficult to open up the board to more diverse candidates. And so considering other potential avenues for recruitment can help boards to consider potential members they might have otherwise missed.

We also asked directors what importance their board assigns to various criteria when they’re recruiting new board members. So, over half of directors agreed that passion for the mission and community connections are important criteria. We also saw a wide variety of other potential criteria that are being used. So, about 1/3 of directors reported placing a high value on demographic characteristics. About the same amount said that they were placing a high value on candidates being a member of the community served by the organization. Recruiting might also be based on desired skills such as HR, technology, marketing, and those more concrete skills. About 28% said that they placed a high priority on the ability to fund raise. That’s notable because as Jackie will talk about later in the report or Linda I believe many of our directors also said that their board could grow when it comes to fundraising and then not very many directors reported that they were placing a high priority on prior involvement with the organization, knowledge of the field at large, or connections with public officials. That brings us to the end of the people, and I’ll now hand it to my colleague Linda to take us through the work.

Linda C. Harrison:

Thank you. So the work this is where at one point my fellow directors may feel when you are interacting with your board wow it feels really good that might be when you first start your job or it could be that you go okay they’re getting it yay and then somehow you get to that that point where I think I’ve got to send them to kindergarten camp so that they can figure out how to talk to each other and the director. So, this first slide that I want to show you has to there’s a lot here on this particular slide about board and engagement in culture. But there are the top three which is probably not surprising to us. Where the board has interest of the organization really over their own personal agendas and about 96% of the board the boards that were surveyed are in this camp.

Not surprising that as directors we have a slightly lower number of about 78% that second highest is that there is communication. The board was at 90%. We were the directors at about 76% and it could be that in this my experience is that we have a lot of communication I have a lot of communication with my chair and with my executive team and probably chairs of the committees and the rest of the board generally gets their information probably at the board meetings. But that’s something that will also be interested in in your comments as well. The third expected or not surprising is that the board is a collaborative team, and they really work on being a collaborative team.

We tend to find that it is the chairs of committees that work more, in a more collaborative way than say the general board especially if you have a larger board. At least this is something that I find in my world. But I was very interested in this slide where you we’ll see down at the bottom where I think that there is a key challenge where the majority of board members are actively engaged well, they think they are at 74%. But we tend to think it’s a little lower at about 58% and that’s what ties back to perhaps there are that core group that’s more engaged than the overall general board. And then board members share accountability and take responsibility for the failures and the mistakes. Well, the board thinks they are right there taking accountability.

I don’t know, is this a safe room is this a safe space should we formally make this a safe space. Only 41% of us as directors feel that the board is taking responsibility and being accountable and this is something that communication with them. Sometimes board members they may be participating in a meeting but maybe not hearing what is the work that we are about to do and then come and ask what happened. How did this happen that our staff seems to be unhappy? Well, we’ve been telling you that and we’ve been sharing with you what we want to do about that. So, this is an area that I think we will…I think is an opportunity more for us even though it’s not in that top three.

So, job satisfaction well I would say this side of the room is not happy with their job according to well 25% of you according to this survey and if you look at the 75% of assess directors who are satisfied well maybe that first 25 of the 75% are those who just started in their world and it’s all beautiful and then as you move towards the middle they’re assessing and then by the time we get to the last 75% it could be that you’re about to join the 25% that are not happy with their job. So, we may want to have some wheat grass juice when we get out of here with chamomile. So that we can continue but this is why you come to a to be reenergized and inspired to continue this difficult work that we do and that leads us going right into from job satisfaction may be directly related to fundraising. So, 84% of us think that…indicate that our boards rely on the staff for fundraising. I could ask you to raise your hands right now do you feel this is a safe space, raise your hand if you are part of this 84% that feel that your board thinks it’s your job. Okay all right, safe space, this is something that we continually want to work with, and the survey also said that 67% only 67% of our board Trustees say that they were clear and it was made clear to them about our the expectations of them on the board.

Now I can personally tell you that I am one of those directors who came from the corporate world and I said we are going to sign a document that says roles and responsibilities of the Board of Trustees two and a half pages of stuff you got to sign it and I sign it and the chair signs it and yet I’ve experienced trustees telling me, Linda I didn’t know that that was the expectation. Okay this is where the kindergarten camp comes in and so it’s one of those areas that really moves us into where are the areas of growth. The top three areas that the survey shared was strengthening the fundraising efforts because 52% of our trustees believe okay, they should participate but what’s happening with the other 48% of our trustees? What is causing that disconnect and 52% thought strengthening outreach and acting as ambassadors was important. Well, I tend to think that we, you should come in knowing that that’s going to be your job 100% of your job in connection with the governance of the organization. So it’s an area of growth for us.

And the commitment to engagement this is this is something where 41% of our board members feel like they’re engaged and all of this to me is leading towards what should our retreats maybe look like with our Board of Trustees. It actually gives you a some fundamentals there but this was of note to me that I wanted to bring up for a possible discussion and that is conducting a self-assessment. It’s not in the top three it’s buried that’s not buried but it’s low on the priority list for both directors and our trustees so what does this say. I think we are fearing being self-assessed. We talk about the 360. We talk about you know performance evaluations and then when it comes to the board maybe us as directors, we don’t even want to know you know and the trustees are like why should we self-assess ourselves and this is something that my board I suggested to the board chair we need to do this.

It was painful and then it got more painful and then really painful when we talked about the results and then it just like stay home for a week to recover. When we wanted to talk about how are we going to take this assessment and now fold it into our daily way of being in terms of an effective organization and we got through it. But I’m it shocked me that this is not just standard operating procedure for all of the boards that we interact with.

And then we get to advocacy, and this was a surprising number because somewhere maybe 24% it could be a little higher sometimes it’s a little less for those organizations who are getting some of their budget funding from the government it could be the local or state feels that only 10% of our trustees are engaged with our advocacy work. And 10% maybe even know about our advocacy work and this is something where we send at my museum the trustees, they are getting all of the updates every time we are doing something. Particularly when I’m interfacing with any of the legislators, but this survey says even when it comes to those who are participating it’s only 133% and that’s pretty low number when as a director, I’m spending a lot of time you are spending I’m sure a lot of time interfacing with legislators particularly if we’re getting any kind of funding from them. So, I noted that as an area that I thought could need some help from us.

And then our final slide is board meetings and maybe all of this leads up to pretty much if about 75% of our board members attend the meetings and in that 75%, they’re not attending all the meetings and so that becomes a challenge. When you’ve prepared all of this information you’ve done all of this work and it seems like even though we’re in quarterly meeting in my world it’s like we’re rolling from one board meeting to preparing for the next and then our board members don’t attend the meetings. We also know personally when we were in lockdown the board attended more meetings because they were Zoom and then when we switched to in person in fact my chair said I don’t think we should switch to in person and I said we’re a museum and now we’re open I think you got to come to the museum and experience the museum but we had a decline. I almost felt like we we’re like what’s the entertainment to get our board members to come to the museum. This is a direct can have a direct impact on are they participating in the fundraising, are they participating in the meetings, not only with legislators but other key stakeholders that that may be important, so this was an area that also needed to dive in a bit mor. Which we do in the detail of the report but it’s one that I think may be part of that long retreat now that we all are going to have when we go back as a result of this and that moves us to finances, Jackie? [Applause]

Jacqueline Jordan:

All right good evening everyone. So, the last topic for the board survey that we’ll address today. I’m sure is everyone’s favorite which is finances. But on a serious note, I sit within our foundation institutional advisor practice at Northern and we serve about 400 clients and I’m always traveling around the country talking to my clients about what have they been working on in areas of focus and what are the priorities going forward. And I would say, always in the top three is self-preservation through financial sustainability it is always on the front minds of directors and boards. And when you think about Arts and Cultural organizations you guys really are and you really do preserve the history and the beauty of society, and you are on the front lines of really exposing citizens to cultural experiences. And so the concept of lasting into perpetuity and having a legacy is really important for this group in particular. And the best way to do that is by financial security and so when we go through some of the data points we’ll be discussing today use them as a benchmark for your organization to kind of see how you fit within that space. And some of these areas where you can allocate some resources or have board discussions, I think will be very relevant going forward.

So, let’s jump right into it. So, when we think about how do we maintain or obtain financial stability and sustainability. The first way of doing that is identifying really the ways you can allocate or really get revenue. So, revenue sources are the first area of focus. So, when we pulled all of the board survey participants, we really realized that there is some diversity in how museums and historical organizations are getting revenue. But looking at this data ultimately shows you that 2/3 of Revenue is really built on the responsibility of the museum. Yes, there’s Federal funding available you see at 3 % for board participants. Right, state, and local government as well but if you look at it 32% of museum revenue is arrived from program related revenue as well as you think of dues and fees and things of that sort. And so, I think right around the pandemic the art museum culture and community was really hit unfairly by the pandemic. A lot of the revenue that was derived from some of the activities really on pause and so as we’re coming on the back end of that a lot of board members and directors are focused on building up their programs and allocating resources to make sure they’re really engaging the community to get back in and improving those revenue sources.

As a complement to that so you think about earned income, charitable contributions, and donations take up a third of the revenue sources and so as we know development and fundraising, and donor engagement is one of the toughest jobs in the business, but it accounts for a third of museum revenue. And also, and you think about the pandemic a lot of charitable revenue and contributions that went to the arts and culture were steered more towards essential services and so as we’re getting back to people focused really on arts and culture. You know donor engagement is becoming a huge priority for museums and historical organizations going forward and so when you look at the broader survey I want you to pay attention to some of the data points around fundraising and Linda showcased some of those as well that the board finds it a priority but the actual action items and actually doing fundraising there is a gap in the goal and the actual making sure that we get money in the door. And so when I talk to a lot of my clients about fundraising best practices and the really successful ones that have planned giving programs. I would say there are two areas where they’re allocating resources or having conversations the first and I know we talked about board commitment but really truly 100% board commitment to donor cultivation.

So when you think about setting expectations for board members on the front end of their participation or even throughout you’ll see that there is a lot of support when you’re when they’re giving themselves. So they’re fine you know doing charitable contributions but the most successful boards when it comes to fundraising in general feel comfortable having the ability to articulate the mission to their own communities are more ambassadors when really trying to showcase the needs of the museum or the organization and so doing just kind of a refresh of board expectations but just educating them on the mission, the value, right, the impact to the community.

We also arm them to be able to go into the community and really be ambassadors for staff and directors as well I would also add outside of just full board engagement, I would say there’s been an increased in just development staff in general, you know. I would say 15 years ago you used to have very robust development teams and we’ve kind of seen those go to now they’re one or two people within an organization and they’re responsible for the fundraising goal for the whole year. And so I think there’s been a priority for a lot of clients on making sure the individuals that their priority is development make sure they have the right resources available to them make sure that they can also articulate the mission but then can also explain to potential donors on ways of giving now and ways of giving in the future.

I think traditionally you know outright gifts from cash marketable securities is very straightforward, but you know 80% of planned gifts are bequest so that’s estate planning. So, that’s having the ability to articulate with individuals who really find the value of your organization to be a part of your legacy and do that through planned gifts. And that can be as simple as being the beneficiary of an insurance policy or a 401k, things like that really do make a difference in fundraising goals and targets overall. And so making sure that your development staff is very tied closely to the planned giving councils. Make sure that they’re networking with other development staff but also have a board liaison that also interacts with staff that can really help with the ongoing fundraising efforts because as you see 2/3 of the success of a museum is built on really yourselves which is the programs and then the fundraising.

So, I’d be curious to know everyone’s thoughts on that as well another portion I want to highlight, and this is a good segue to the next slide is around investment income. And so, when we pulled the survey participants we uncovered that 74% of the individuals or organizations had less than $10 million of investable assets now a best PR best practice when we think about reserve accounts or endowments is that they should be somewhere between 2 to three years of your operating expenses.

So, that’s kind of a good starting point but when you talk to boards, and you talk to directors their goal is to last in perpetuity so to have investable income and endowments that can last through pandemics and things that we really cannot control and so this is an area of growth for the museum Industry in general. But I will pause and say that this is always somewhat of a conflict within the nonprofit space. You’re having and especially when you think about charitable contributions, you’re posed with the issue of do I deploy those dollars today or do I save them so that I can deploy them in the future and donors always have this conversation, right, if you’re a charitable organization or an art organization you’re supposed to be providing services to the public. So, when I give you money right, they’re supposed to be deployed immediately. But the conversation is around how do we last forever and that to me inspires a conversation around endowment building and investable assets and so it’s a conversation that needs to be having at the board level, right, at the staff level, but also at the donor level too. And so, there’s a lot of good resources available for that. But as you see there are a lot of organizations within this space that have a lot of room for growth within the investment portfolio. So, if you do have one, they did a good job of asking kind of how are they structured. And then where are these assets deployed so in the first area you see that majority if you do have investable assets, they’re diversified global portfolio which is pretty standard. But one area I want to point out is we’ve seen an increased trend in investable assets being allocated to like ESG or diversity equity and inclusion initiatives. And I think there’s some interesting points there and I’ve seen a lot of arts organizations, historical organizations, and broader nonprofits also use it as a marketing tool.

So, we recently had let’s say for example a zoo put a screen on their investment portfolio and then they put a newsletter together highlighting to donors that if you’re prudently right giving investable assets to the endowment we’re still being thoughtful on how we’re investing that we’re still aligning with our mission and value and so being able to actually use ESG as a marketing tool to get discretionary dollars in the door. We’ve seen an increase in that and so I’m sure as we continue to do this if we do this survey over the next four years, we’ll see an increase in that.

But it also ties in nicely with just the overall focus on diversity equity and inclusion so based on the data that we saw that Carys talked about and Linda there seems to be a board focus on making sure that women are represented, and minorities are represented as well. And so, it’s been beautiful to kind of see the progression in the in the investment industry to see that there are women-owned firms and minority-owned firms that have very fantastic performance. And so you’re starting to see them incorporated in portfolios and then you can speak to donors about that as well so we’re just being very thoughtful and prudent and investing which lead to more dollars in the door which is the goal now how are your investable assets actually being purposed right so they did a good job of breaking this down but it kind of aligns with the need of investment portfolios right. So, the benefit of having investment income is it can go towards your operational needs it can go towards program related expenses and then of course it can go back into the endowment to continue to build it but the benefit and the beauty of having an investment portfolio is it gives you more flexibility overall and you see exactly how the museum clients are using those assets now from a governance standpoint. Especially for board and directors they ask the question on if you do have investable assets right how often are you looking for the provider how often are you going out to RFP so an industry standard is really like two to five years. The majority of organizations who have an investment adviser or a partner go out to RFP, and it really truly is a best practice for a couple of reasons. First from a fiduciary responsibility you want to make sure you have the best partner and that you’re aligned well but it also allows you to see what’s new what else is out there. You know I have seen where organizations may have the same partner for 15 plus years and when they finally go out to RFP, they realize there’s so many more options as far as those that align with their mission and value but may have other focuses that they can bring to the table that can grow your portfolio overall too. So, it looks like from the board study results still in line with the industry standard but just keep that in mind if you’re responsible for overall governance the 2-to-five-year window is the sweet spot where a lot of people do look for providers.

And then last but not least you know we talked about the financial challenges that hit the museum and historical you know community and we talked about a lot of the synergies involved here but I want to highlight the first bar where you see that 25% of the survey participants did pull from their endowment. So, we talked about the financial hardships but the benefit of having, right, those pools of assets is that you have the ability to pull from them when you need to and what that does is that enables you not to have to do other things like programming and staff and things of that sort. Which you see that over the past six months some of our museum peers had to do that in order to make sure that they were covering their operational expenses. And so about 51% of Museum and historical organizations did have financial hardships within the past 6 months. But it’s nice to see 49% did not. And so, if you think right around the pandemic those numbers would have been a lot higher. And so, it looks like we’re coming out of that space where most organizations we’re facing some level of challenges. And so, still keep these in mind as overall themes but I would say financial challenges we’re getting to the tail end of some of them but some of them will remain and so that overall theme of making sure from a board standpoint and staff standpoint you’re focused on program related revenue because that’s a third of how we’re keeping our lights on and then the third and the other third is just focus on donor cultivation, which you know, armed with the right staff and full board participation could really account for a lot of the revenue and could help overcome some of these financial challenges that are on this slide today. Thank you.

[Applause]

Carys Kunze:

Thank you to all of our wonderful panelists today up on the screen is a beautiful QR code this will take you to the report that all of this data is drawn from, so it’ll have all of the data all of the visualizations that we shared today and also quite a lot that we didn’t have time to include in this particular presentation. Thank you all so much.

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This recording is generously supported by The Wallace Foundation.