Sample Case Study On Philanthropy And Government Funding In Museums

1.0 Introduction

Organisations within the creative and cultural industries sector are open to many income sources, from philanthropy and sponsorship to digital crowdfunding and government funding. But this case study focuses on philanthropy and government funding, exploring their advantages and disadvantages as income sources for the North West Museum of Road Transport. The museum, located in Merseyside, England, displays busses, classic cars, fire engines and trucks, though most displays are buses. Currently, it collects funds to repair the vehicles and maintain the building majorly through AmazonSmile and donations on its website. Through AmazonSmile, when people purchase products from Amazon.com, an e-commerce website, the museum collects 0.5% of the price (NWMORT, n.p). The case study is relevant in understanding how and why the museum, and other organisations within the creative and cultural industries sector, can utilise philanthropy and government finding to diversify their sources of income.

Cunningham et al. (2004) claim that investment, sponsorship, and philanthropy gradually increase, especially in China, while the state slowly reduces its financial support in the cultural sector (Wang, 2018). Therefore, it would be helpful for the museum management to understand how they can diversify their income to avoid overreliance on government funding. By exploring the benefits and limitations of the two funding sources, the museum would decide whether to adopt either of them or both. The paper argues that philanthropy is the best source of income for the North West Museum of Road Transport, as opposed to government funding, since the former focus on offering permanent solutions rather than short-term solutions, and the latter has been declining over time. The article first presents the literature review to understand the theory around government funding and philanthropy donations in the creative and cultural industry in the UK, then explains the pros and cons of these two sources of income, and ends with a conclusion.

2.0 Literature Review

2.1 Philanthropy

According to O'Neill (2018), a financial resource management specialist at Rutgers, philanthropy, charity, and volunteerism have one thing in common – "giving to others while lifting them through the voluntary contribution of money, talents and time." Therefore, the three are fundamental pillars of community development and improving people's lives in a particular state or globally. O'Neill (2018) clarifies the differences between the terms "philanthropy" and "charity", which are usually used interchangeably. Although both involve giving money to people or non-profit organisations, he claims that charities focus on immediate responses to short-term needs, while philanthropy funding is long-term based (Toepler and Anheier, 2020). He also cites Smith (2014), who gives a practical example that charity would offer bottled water to a drought-stricken village, and philanthropy would focus on building a well for the community. Both O'Neill (2014) and Smith (2014) give practical examples to help readers understand the actual meaning of philanthropy. They help one appreciate the need for philanthropy funding, where funders focus on establishing long-term solutions to societal problems (O'Neill, 2018). The theory reinforces the thesis by confirming that one advantage of philanthropy funding is being long-term focused, although it may ignore urgent but short-term problems. Therefore, one major shortcoming of philanthropy funding is that it may assume short term causes like extending support to artists, which the society may view as the most important. Understanding the advantages and disadvantages of this source of funding for the museum is the ultimate goal of this paper, and therefore, the authors' arguments are essential.

The article by Vallely (2020), published in The Guardian, refutes the argument that philanthropy focus on "transferring money from the rich to the poor." The author argues that in the US alone, which according to statistics, has the highest level of philanthropic funding, only a fifth of the cash given by the big donors is directed towards the poor. Much of the funds go to arts and sports, healthcare, education and cultural pursuits. For instance, Vallely (2020) argues that in 2019, most of the donations to education were directed toward the elite institutions that the donors themselves attended. Yet the situation is not different in the UK, where between 2007 and 2017, "over two-thirds of all the money that millionaires donated went to higher education, and half of it went to only two universities, Oxford and Cambridge." Therefore, the author reveals one disadvantage of philanthropy funding, especially in education, where the wealthy and the middle-class people give much to schools which they attended or those their children attend and less to the poor (Breeze, 2020). In the same era, British millionaires contributed over £1.04bn to the arts and just £222m to elevate poverty (Vallely, 2020). Based on the author's argument, although the arts and creative secret seem to be favoured much by the rich in terms of philanthropy donations, the donations are not majorly aimed at improving the lives of the poor but are meant for the elites (Rovers, 2009; Alexander, 2018). Therefore, the North West Museum of Road Transport should target more philanthropy from the rich by allowing them to name some of the buses under their name. The theory reinforces the case study by claiming that one disadvantage of elite philanthropy funding is that it focuses less on the poor but majorly on elite causes (Toepler and Anheier, 2020). Another disadvantage of this source of income is that the givers have much control over how the organisations use the money, meaning they may be forced to change their cause to keep the donations. Fortunately, the art and creative industries are highly favoured, and the North West Museum of Road Transport can take this opportunity to collect even more philanthropy donations from the rich and middle class.

2.2 Government Funding

The UK government takes the creative and cultural industries sector very seriously and makes regular donations to help the organisations sustain themselves. According to a press release on the government website (gov.uk) dated 1^st February 2022, the UK government announced it would be investing £50 million in creative businesses across the UK. The government claims that supporting these industries will boost economic growth and development across the region (Gov.uk, 2022). Earlier in 2013, the government had also funded the Historical Transport Museum with £7.7 million for rearrangement, according to the News Release. The UK views the museums as tourism attraction zones, which boosts economic growth by encouraging people, locally and internationally, to visit them, creating more employment in the society (Rex, 2020).

Similarly, recently, on 9^th May 2022, the government, through a public release, announced it would be channelling £128 million to improve access to arts and culture (Gov.uk, 2022a). The government encourages the organisations in this industry to submit expressions of interest to receive support. The museum maintenance and infrastructure works will be funded with £63.3 million. Therefore, it is evident that the UK government supports the creative and cultural sector, and the North West Museum of Road Transport should take this opportunity and apply for financial support. They could use the finances to boost their infrastructure and make some innovations within the museum to make it even more attractive for local and international tourists. And in turn, they will even earn more money from entry fees into the facility, like Tate (Slater and Armstrong, 2010). However, one disadvantage of government funding is that the allocation takes time, and the reporting requirements for public funds can be tedious and time-consuming. The theory backs up the argument that in addition to seeking government funding, the museum should pursue additional sources like sponsorship and philanthropy since they are much more easily accessible than government funds (Toepler and Anheier, 2020). Also, the government supports many organisations within the industry, which makes allotment per institution less than enough, yet the application process is lengthy and time-consuming. Still, the North West Museum of Road Transport should apply for government support and meet all the requirements.

2.3 Conclusion 

The literature review differentiates between charity and philanthropy, where the latter focuses on long-term solutions while the former mainly emphasises offering solutions to short-term causes. More so, philanthropy funding has increased over time in the UK, especially in the arts and creative industry. The North West Museum of Road Transport can take this opportunity to boost its income and improve its facilities. However, as the authors confirm, philanthropy does not always imply transferring money from the rich to the poor. For instance, most rich and middle-class support schools and institutions they schooled in (or their children did) or the ones they are directly associated with. The review also shows how the UK government have been keen to support the creative and cultural industries by offering regular grants. However, the museum should diversify its sources of income and avoid overdependency on the government since such funds can take longer to be allocated.  

3.0 Analysis Section

3.1 Advantages and Disadvantages of Philanthropy

3.1.1 Advantages

One major advantage of philanthropy as a source of income for creative and cultural organisations, like the North West Museum of Road Transport, is that there are no limits, as it is to government funding. The funding aims to offer the facilities permanent solutions to their problems. For instance, an article by Strong (2022) revealed that in November 2021, Oscar Tang and his wife Agnes donated US$125 million to the Metropolitan Museum of Art. According to the author, the gift was big enough to facilitate the museum's long-planned renovations of the New York wing. If it were not for the gift, the museum would have waited much longer to have its New York wing renovated, illustrating the relevant philanthropy donations. Therefore, philanthropy funding can offer a major financial breakthrough to the museum, helping it renovate all its facilities or even open different wings.

Another advantage of philanthropy funding is that the donations would help the North West Museum of Road Transport improve its national and international recognition. Since most of the donations are made by the rich or influential people in the society, the museums would receive more publicity as the media usually publishes content about the story. The donations are usually huge, meaning that the facility can manage to renovate its facilities to meet the national and international standards, thus acting as a tourist destination. The museum can also use philanthropy donations to expand its facilities (Sargeant and Shang, 2010). Therefore, it is not advisable for the North West Museum of Road Transport to over-rely on government financing since the government has decreased donations over time (Calouste Gulbenkian Foundation, 2017). The government has many facilities to support, making the finances received too little to make any structural or infrastructural change within the museum.

3.1.2 Disadvantages

            Since the donations are usually huge, the givers can set requirements of how they will be used, giving the museum less control. For instance, according to Strong (2022), although Oscar Tang and his wife Agnes did not set any official requirements on how the museum would use their US$125 million donations, "they supported its plan to spend on a new space that would exhibit work by artists from a wide range of countries and backgrounds." And in turn, they were ranked by the Chronicle of Philanthropy as 22^nd among the 50 top US donors in 2021. According to Vallely (2020), philanthropy is an expression of power, meaning that the rich can have a huge impact on society's priorities. The personal interests of the givers may concur with the urgencies of the society, but other times, they may challenge or undermine them. For instance, while the Bill and Melinda Gates Foundation has made huge grants in malaria research and polio, thus saving lives in the long run, the approach can be problematic. Polio may seem not a major threat in society and not a priority over providing free food to dying people (Vallely, 2020). However, the personal interests of the main donors control the foundation's goals and direction. On the same note, rich doners may influence the direction the museum takes, which may be contrary to what the locals want.

3.2 Advantages and Disadvantages of Government Funding

3.2.1 Advantages

            Information about government funding directions, requirements and application process is readily available, meaning the museum can estimate the amount to receive annually from the government. Unlike philanthropy donations, usually randomised, government funding is well documented in the government gazette or website. For instance, through a press release, Gov.uk (2022) announced that it aims to fund up to 60 organisations in 2022, a great opportunity for the North West Museum of Road Transport. All it has to do is submit its interests to the government. The UK government will focus on areas that have received little to no cultural investment, as it is committed to levelling up access to culture across the country (Isar, 2015; O'Brien and Dent 2021; Rubio-Arostegui and Villarroya, 2021). And doing so enhances fairness, making sure all the organisations that deserve the funding get it. Another advantage of government funding is that the museum would have control over what it wants to do with the money (Toepler and Anheier, 2020). This instance occurs because they have to submit their needs while applying for the funds, meaning that the government would already know the intended purpose of the projects, thus aligning to it without forcing the museum to change its direction, as it is with philanthropy donations. Moreover, the government's interests usually align with the interests of the society, thus avoiding the conflict between the society and the museum. Therefore, the museum should take this opportunity to express their interests in government funding announced and closely follow up on the process.

            According to Strategy 2020-2030 Arts Council England, for the first time, the UK created a shared vision and priorities, with public and private partnerships, to support and develop arts within the country. During the strategy launch, the Council acknowledged that the national and local government funding for the arts and culture fell over time. Therefore, the UK government is more willing to support the North West Museum of Road Transport and other organisations within the creative and cultural industries. And more funds are expected to be availed between 2020 and 2030. More so, according to the Arts Council Let's Create Delivery Plan 21-24, the Council aims to increase cultural investments throughout the country. And therefore, the museum should take this opportunity and apply for government grants to access funds to repair its vehicles and houses.

3.2.2 Disadvantages

One disadvantage of government funding is that the competition for the funds is usually very high, yet the budget allocated for supporting the creative and cultural industries, or any sector, hardly increases (Lee and Lim, 2018; McKinney and Tomlin, 2020; Danielson et al., 2020). For this reason, the UK government issues the funds on an equality basis, where if an organisation receives support in one fiscal year, it may lack support the subsequent year unless the budget allocated increases (Saha, 2017; Kolbe, 2021). Alternatively, the government also reduces the funds per organisation to fund as many institutions as possible. While this is a great approach, as it increases inclusivity of all organisations, this makes their support not reliable. Therefore, the museums cannot wholly depend on the government for survival. Also, the government funding is a long procedure and needs multiple approvals for the funds to be released, and the museums cannot depend on it for emergency responses (Toepler and Anheier, 2020). The North West Museum of Road Transport should seek other alternative sources of income, as government funding alone is not reliable.

4.0 Conclusion

The case studies explore the advantages and disadvantages of using philanthropy and government funding as income sources for the creative and cultural industries sector, specifically the North West Museum of Road Transport. The literature review helps one understand what the literature says about the relevance of these two sources of income in this industry, giving insights into their advantages and disadvantages. The main advantage of philanthropy is that it is long-term based and would help the museum conduct major repairs for buildings and vehicles. However, one of the disadvantages of this source of income is that the givers usually have much control over how the museum would use the funds. The government funding for this particular industry had been declining, but since 2020, the UK started increasing the funds in this sector. Unfortunately, the government funds cannot cater for emergency funds' needs since the application and allocation process takes time. The essay concludes that philanthropy funding since they are usually huge, could help the North West Museum of Road Transport to do more structural changes and repairs than government funds, although the museum cannot plan for the latter, as it wholly depends on the willingness of the funders to give. For this reason, the museum should explore both sources of income. The essay responds to the brief by clearly defining the advantages and disadvantages of using the two sources of income to fund the North West Museum of Road Transport, which operates in the creative and cultural industry.

5.0 References

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