Surviving Financial Problems

Posted by on Jun 14, 2021 in Blog | No Comments

The last 18 months have been incredibly hard for the heritage and arts sectors as we all know. Surviving rather than thriving has been the goal for many organisations, but even so, all may not still be trading as we move into 2022. There is no magic solution that fits all, but there are some things that we can all do to give our charities the best possible chance of surviving, and indeed even thriving.

It’s easy, with hindsight, to say our board should have had larger reserves, or better emergency plans. But I don’t think that many cultural organisations spend huge quantities of time preparing for a crisis like the pandemic, so it’s understandable that it caught so many by surprise. During 2020 and 2021, I have heard trustees, staff and volunteers say that their charities were already struggling or firefighting before the pandemic started, so were in no position to respond quickly or decisively. Even so, extraordinary efforts were made by many, and hopefully the results will be that those organisations continue into the future.

So what next? Here are a few of my suggestions for preparing for the next crisis (whatever that may be):

  1. I’ve already mentioned it, but reserves are important. If your charity does not have any funds in reserve then now is the time to put in place a 3, 5 or even 10 year plan to put them in place. If your reserves are fairly low ie. less than 6 months’ worth of expenditure, then it is so important that you build this up over the next few years. 2022 might be difficult for many to generate operational surplus, but now is the time to take advice and plan to do it over the longer term. It may be the difference between staying open or not during the next crisis.
  2. So many cultural organisations have learnt how to navigate the digital world far better than ever before during the pandemic. Really, we had no choice, but the result is that many museums, heritage sites and arts companies have refreshed their digital content and communications in a positive way. Some have created digital content for the very first time. However your organisation responded, the important thing is that it doesn’t stop working digitally once the pandemic ends. Expectations from potential customers, visitors and participants have shifted and standards need to be higher than ever before. In practice that might mean engaging people in digital content on your website or on social media. It might mean far slicker communications and booking facilities. Your charity may be offering virtual tours, online programmes to match real life ones, or enabling online retail for the first time. Whatever your digital plans are, continue to innovate wherever you can, and consider creating a digital plan as part of your business planning over the next 5 years. Futureproof your charity.
  3. Don’t dismiss the importance of having the right trustees in place who can be relied upon to plan for a crisis and respond to it in the most appropriate way. So if your board isn’t functioning well currently, this isn’t just a short term problem so start to tackle it. This could be high quality new recruits, it could be straightening out your governance processes and policies so you can plan properly or simply having an open discussion about where issues arise, reviewing how they were handled during the pandemic and learning from your mistakes. And put a new emergency plan in place, of course.
  4. The digital shifts mentioned above open up opportunities for monetarising more areas of your activity, and every cultural organisation will need a rethink about where their income will come from in the next 5 years. Consider where your raised most money from in 2019; will that still be your main source of income in 2022? If that’s true, are the levels the same? If not, what ideas and resources have you used over the past 18 months that could be turned in future income streams? Do you have archives that are used by people to search for family connections? Have supporters paid for online talks and lectures? Do you run donations campaigns linked to specific needs and could you do it better/more often? Could you improve your bid writing skills to ensure a more consistent level of project income from trusts and foundations? Are there retail or catering opportunities that you have never developed for your charity before? These are all basic questions of course, but now is the time to review your operation and act on those areas that could work for you.

Ultimately, so many who work or volunteer in the cultural sector care passionately about what they do, and have been distressed to see the effects of the pandemic on our arts and heritage. We have a chance now to re-establish some financial stability across the sector, and the more we plan and innovate, the stronger our organisations will be.

Don’t wait until the next crisis comes along!

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