June 21, 2004
Balancing act | After dire forecasts, the Farnsworth finishes its fiscal year in the black
By Taylor Smith
The Rockland-based Farnsworth Museum in January of this year made a surprising announcement. After hefty operating expenses and lower-than-expected attendance numbers cut deeply into the museum's revenues, director Chris Crosman decided to shutter the Farnsworth for two weeks in late February and early March.
Crosman and his staff used the downtime in part to plod line-by-line through the Farnsworth's already razor-thin budget, hoping to find ways to cut costs. They trimmed the office supply budget and reined in the museum store's inventory. Crosman also put a call out to the museum's members and supporters, asking for donations to help balance the Farnsworth's budget.
That last item turned out to be the key: Late last month, Crosman announced that the Farnsworth had been able to erase the budget shortfall from its books when its fiscal year ended in March. The Farnsworth finished its year roughly $10,000 in the black thanks to the community of donors who turned out their pockets to support the museum. The Farnsworth raised $200,000 in 2003 ˆ a significant amount according to Crosman, who notes that annual contributions typically max out at $150,000. "We definitely saw a jump up" in contributions, he says. "We put a call out to the membership and they responded very generously."
The institution has been a downtown anchor for Rockland since its opening in 1948, and community leaders credit the museum with helping to revitalize the local economy in recent years. However, that obviously doesn't mean the Farnsworth is immune from its own economic troubles. Though it survived its close call last winter without any long-term repercussions, the Farnsworth, like other museums, remains susceptible to the welter of forces that are nibbling away at the budgets of cultural institutions nationwide. And that's a matter of pressing importance to local business people, many of whom stake their presence in Rockland on the Farnsworth's lure for local and out-of-state visitors.
Bob Hastings, executive director of the Rockland-Thomaston Area Chamber of Commerce, notes that Rockland's downtown area only has one vacant storefront today, down from more than 20 just two years ago. The Farnsworth, he says, has been a magnet for upscale galleries, which in turn attract restaurants and boutiques to serve the increased traffic in the downtown area. "Having a first-class museum makes a big difference," says Hastings. "The Farnsworth is critical to the success of the downtown. It's an economic driver."
Still, Crosman and his staff could do nothing to shrink the museum's $96,000 electricity bill last year, as the Farnsworth galleries require high-tech climate and temperature controls to protect the artwork. Nor could he control the slight drop in attendance during last summer's tourist season, which the Farnsworth relies on heavily for increased revenues from admission and museum store sales. Those two line items make up nearly 40% of the Farnsworth's annual operating budget, which last year reached just under $2 million. Projections called for attendance of between 70,000 and 75,000 last year, but museum visitors numbered fewer than 69,000. "Even a small percentage drop in attendance has a large impact on revenues," says Crosman.
A shrinking endowment
But does the Farnsworth have such poor financial controls in place that routine fiscal hiccups like a small drop in attendance could threaten the livelihood of Rockland's downtown anchor? Not so, say observers. In fact, such small budgetary scrapes helped deflect attention from other, more pressing financial issues that have plagued the museum industry in recent years.
Ed Able, president and CEO of the Washington, D.C.-based American Association of Museums, notes that endowments have shrunk, individual contributions are down and foundation grants ˆ an important funding source ˆ have fallen between 40% and 70% at many museums. The main culprit? The stock market's hideous returns in 2001 and 2002, which hit the endowments of museums and their funders. "It's been a tough three years, and the same thing is happening to museums all over the country," he says.
Crosman has been vigilant in protecting the Farnsworth's endowment, which recently totaled more than $9 million. Museums routinely dip into their endowments to fund a percentage of their annual operating expenses. The Farnsworth a few years ago was drawing nearly 25% of its operating budget directly from its endowment, but in recent years has scaled that back to less than 18%. "When the economy began to slip a bit, we realized we needed to take less for our operating budget to protect the corpus of our endowment," says Crosman, who notes that the museum's endowment has shrunk between 15% and 20% during the past few years.
Alden Wilson, director of the Maine Arts Commission, applauds Crosman's efforts to maintain the museum's endowment, especially in light of the fact that Maine cultural institutions typically don't have sizable endowments. Wilson also supports what he calls Crosman's "strategic move" to temporarily close the Farnsworth. "The Farnsworth's situation last March was kind of catalytic in that it garnered other resources for the institution," he says. "It said that there was a serious problem that needed to be addressed by the community."
Though serious, the situation wasn't so dire that Crosman had to lay off any of the museum's 30 full-time employees. Personnel costs make up between 65% and 70% of the Farnsworth's annual operating budget, and are the number-one expense for most museums. As a result, museums across the country have been forced to cut their staffs as budget gaps widen. Most recently, the Museum of Fine Arts in Boston announced it had laid off 23 of its more than 700 full- and part-time employees as part of a $4 million budget reduction for its fiscal year that begins July 1.
But cutting staff typically is the last resort for cash-strapped museums, according to Able. "A museum has an enormous investment in the staff," he says. "People aren't going to stop coming, and the museum needs to maintain staffing in order to maintain a level of public service."
Crosman realizes that importance, and his unwillingness to lay off Farnsworth staffers illustrates his refusal to throw short-sighted solutions at short-term problems. "We've got to be thinking in the long term," he says. "It's irresponsible not to think about what's going to happen five or 10 years down the road."
To that end, Crosman hopes to ensure that the museum's future fiscal years don't suffer from the same kind of budgetary crisis the Farnsworth experienced in 2003. One strategy is to use the museum's resources more efficiently ˆ such as crafting cost-effective brochures to raising extra income from traveling exhibitions. Such exhibitions can net the Farnsworth as much as $30,000 per stop for lending its art to museums around the country; Crosman hopes to schedule two traveling exhibitions this year.
Crosman also plans to extend the museum's closing time this summer by two hours, from 5 p.m. to 7, to cater to tourists who spend the day boating or locals finishing up their workday. "We have to be there when people are available," he says.
And when Crosman is asked if he worries that this summer's tourist season will turn out like the last, he simply answers, "We're optimistic."
Crosman and his staff used the downtime in part to plod line-by-line through the Farnsworth's already razor-thin budget, hoping to find ways to cut costs. They trimmed the office supply budget and reined in the museum store's inventory. Crosman also put a call out to the museum's members and supporters, asking for donations to help balance the Farnsworth's budget.
That last item turned out to be the key: Late last month, Crosman announced that the Farnsworth had been able to erase the budget shortfall from its books when its fiscal year ended in March. The Farnsworth finished its year roughly $10,000 in the black thanks to the community of donors who turned out their pockets to support the museum. The Farnsworth raised $200,000 in 2003 ˆ a significant amount according to Crosman, who notes that annual contributions typically max out at $150,000. "We definitely saw a jump up" in contributions, he says. "We put a call out to the membership and they responded very generously."
The institution has been a downtown anchor for Rockland since its opening in 1948, and community leaders credit the museum with helping to revitalize the local economy in recent years. However, that obviously doesn't mean the Farnsworth is immune from its own economic troubles. Though it survived its close call last winter without any long-term repercussions, the Farnsworth, like other museums, remains susceptible to the welter of forces that are nibbling away at the budgets of cultural institutions nationwide. And that's a matter of pressing importance to local business people, many of whom stake their presence in Rockland on the Farnsworth's lure for local and out-of-state visitors.
Bob Hastings, executive director of the Rockland-Thomaston Area Chamber of Commerce, notes that Rockland's downtown area only has one vacant storefront today, down from more than 20 just two years ago. The Farnsworth, he says, has been a magnet for upscale galleries, which in turn attract restaurants and boutiques to serve the increased traffic in the downtown area. "Having a first-class museum makes a big difference," says Hastings. "The Farnsworth is critical to the success of the downtown. It's an economic driver."
Still, Crosman and his staff could do nothing to shrink the museum's $96,000 electricity bill last year, as the Farnsworth galleries require high-tech climate and temperature controls to protect the artwork. Nor could he control the slight drop in attendance during last summer's tourist season, which the Farnsworth relies on heavily for increased revenues from admission and museum store sales. Those two line items make up nearly 40% of the Farnsworth's annual operating budget, which last year reached just under $2 million. Projections called for attendance of between 70,000 and 75,000 last year, but museum visitors numbered fewer than 69,000. "Even a small percentage drop in attendance has a large impact on revenues," says Crosman.
A shrinking endowment
But does the Farnsworth have such poor financial controls in place that routine fiscal hiccups like a small drop in attendance could threaten the livelihood of Rockland's downtown anchor? Not so, say observers. In fact, such small budgetary scrapes helped deflect attention from other, more pressing financial issues that have plagued the museum industry in recent years.
Ed Able, president and CEO of the Washington, D.C.-based American Association of Museums, notes that endowments have shrunk, individual contributions are down and foundation grants ˆ an important funding source ˆ have fallen between 40% and 70% at many museums. The main culprit? The stock market's hideous returns in 2001 and 2002, which hit the endowments of museums and their funders. "It's been a tough three years, and the same thing is happening to museums all over the country," he says.
Crosman has been vigilant in protecting the Farnsworth's endowment, which recently totaled more than $9 million. Museums routinely dip into their endowments to fund a percentage of their annual operating expenses. The Farnsworth a few years ago was drawing nearly 25% of its operating budget directly from its endowment, but in recent years has scaled that back to less than 18%. "When the economy began to slip a bit, we realized we needed to take less for our operating budget to protect the corpus of our endowment," says Crosman, who notes that the museum's endowment has shrunk between 15% and 20% during the past few years.
Alden Wilson, director of the Maine Arts Commission, applauds Crosman's efforts to maintain the museum's endowment, especially in light of the fact that Maine cultural institutions typically don't have sizable endowments. Wilson also supports what he calls Crosman's "strategic move" to temporarily close the Farnsworth. "The Farnsworth's situation last March was kind of catalytic in that it garnered other resources for the institution," he says. "It said that there was a serious problem that needed to be addressed by the community."
Though serious, the situation wasn't so dire that Crosman had to lay off any of the museum's 30 full-time employees. Personnel costs make up between 65% and 70% of the Farnsworth's annual operating budget, and are the number-one expense for most museums. As a result, museums across the country have been forced to cut their staffs as budget gaps widen. Most recently, the Museum of Fine Arts in Boston announced it had laid off 23 of its more than 700 full- and part-time employees as part of a $4 million budget reduction for its fiscal year that begins July 1.
But cutting staff typically is the last resort for cash-strapped museums, according to Able. "A museum has an enormous investment in the staff," he says. "People aren't going to stop coming, and the museum needs to maintain staffing in order to maintain a level of public service."
Crosman realizes that importance, and his unwillingness to lay off Farnsworth staffers illustrates his refusal to throw short-sighted solutions at short-term problems. "We've got to be thinking in the long term," he says. "It's irresponsible not to think about what's going to happen five or 10 years down the road."
To that end, Crosman hopes to ensure that the museum's future fiscal years don't suffer from the same kind of budgetary crisis the Farnsworth experienced in 2003. One strategy is to use the museum's resources more efficiently ˆ such as crafting cost-effective brochures to raising extra income from traveling exhibitions. Such exhibitions can net the Farnsworth as much as $30,000 per stop for lending its art to museums around the country; Crosman hopes to schedule two traveling exhibitions this year.
Crosman also plans to extend the museum's closing time this summer by two hours, from 5 p.m. to 7, to cater to tourists who spend the day boating or locals finishing up their workday. "We have to be there when people are available," he says.
And when Crosman is asked if he worries that this summer's tourist season will turn out like the last, he simply answers, "We're optimistic."
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