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| Photo Credit: Jennifer Brandel |
Fair enough.
For context, we should remember that these institutions rely on these operating grants for half or more of their revenue. The other half of their funds are raised through fundraising, commercial activities, and front door admissions.
Please bear with me while we do a little math:
Let’s say we have an institution with an annual balanced
budget of $46M. Half the revenue comes from the province ($23M) and half is
raised by the institution ($23M). The 1%
cut on the grant side is $0.23M which doesn’t seem too bad. However, in the
coming fiscal year that institution can expect its expenses to climb by $1.15M
due to inflation (assuming a 2.5% annual rate) so now our institution has to
find an extra $1.38M in order to balance its books. It would have to take its
earned revenue from $23M to $24.38M - a 6% increase.
Practically, a 6% growth in earned revenue year-over-year
for a cultural institution is not a particularly easy target (to put it mildly)
and it only gets worse in future years as the cuts are programmed to deepen.
So the question then becomes what should they do about it?
Of course they should fight like hell to raise what internal
revenues they can, but they are very likely going to have to cut their
expenses. And what is what is their main expense? People. They are going to
have to cut to cut staff and reduce services. So my question to you, Dear Reader, is
who should they cut (speaking generally, no names please) and how and when
should they cut them? In other words: what
cultural services are most expendable?
Is the most effective cultural institution in Ontario going
to be the one that has the best plan to shrink?
I hope not. I think
they are smart enough to shrink their expenses and still extend their reach.
But I predict it will be a painful process.
Hard to say. It seems most institutions have already streamlined their visitor services department but this is what keeps people coming in. Many places continue to hire only part-time or contract positions so will it be a case of even more fundraising options?
ReplyDeleteFundraising is certainly one way to bridge part of the gap, but the philanthropic climate in Canada is not likely to warm fast enough or far enough to solve the whole problem. Plus donors like to fund collections and other tangible things. Soliciting funds to cover operational costs is very tough to do.
ReplyDeleteI agree that most institutions are already pretty lean in the front-of-house. Reducing services that generate revenue doesn't make a lot of sense either, so Museums and the like will have no choice but to take a hard look at the back-of-house. Indeed they are doing this already.