Museums opt to take their futures on trust - Museums Association

Museums opt to take their futures on trust

Funding cuts are causing museum services to rush to switch to trust status. Geraldine Kendall investigates whether they are really a panacea
Trust status has come to represent a lifeline for struggling local authority museums in recent years.

While there are no overall figures to show how many council-run museum and arts services in the UK have made the switch to charitable trust, it is certainly a trend that has been gathering momentum.

A glance at the most recent Accreditation statistics –which show a fall in the number of Accredited museums in the UK overall – indicates that the number of museums registered as “local authority” has fallen 9% to 575 between 2011 and 2014. This represents the biggest decrease out of all museum types.

Although the individual reasons for this drop are sure to vary, it is likely that a reasonable proportion have changed their legal status and/or merged with other services.

These include high-profile museum services such as Birmingham (formerly England’s largest local authority-run service), whose trust is entering its third year, and Derby, which transferred to trust status in 2012.

The trend is just as prevalent in Scotland, where Fife, Falkirk and Dundee are among the local authorities that have transferred their cultural services to a trust.

The move to independent trust status – once regarded as beyond the pale for publicly owned collections – is intrinsically linked to the funding cuts
of the past four years.

In 2011, the Museums Association’s (MA) first UK-wide cuts survey found that more than 50% of local authority respondents had considered or were considering transferring to trust status. That figure rose to 72% among museums that had suffered budget cuts of 25% or more (see bar chart).

There are many intangible benefits to being in a trust: less bureaucracy; greater scope for entrepreneurialism and flexibility; and the freedom to make quicker decisions and to be more responsive to new circumstances.

Counting the cost

But the move is increasingly framed as “trust or bust”, with councils or museums themselves often citing financial benefits as a key reason for the move.

Hampshire and Winchester’s arts, museums and heritage services, which are in the process of merging into the Hampshire Solent Culture Trust, were warned that they faced having venues closed and collections mothballed if they stayed under local authority control.

There are many financial advantages. A charitable trust can bid for external grants and fundraising not available to local authorities. It also gets an 80% reduction in business rates, which can rise to 100% at the council’s discretion, plus reduced rates on fuel and power bills.

In addition, a trust can recover input VAT on its council funding by treating it as a fee for the provision of services, and can also carry its reserves forward from one year to the next. Disparate services can make greater VAT efficiencies by registering as one group.

Being part of a trust also means a museum can negotiate ring-fenced funding agreements for a set period, which may offer some protection against annual fluctuations and restructures.

But this is by no means guaranteed: Museums Sheffield is one of several trusts to have had its annual grants cut due to a council shortfall.

Many believe that it is a mistake to view trust status as a money-saving exercise.

One 2009 study found that in the long term, trust status often proves to be cost neutral, while sources indicate that several recently created trusts significantly overestimated the amount of funding they would be able to raise independently.

There are also doubts about the rushed nature of some transfers. “There is a fear that some went too hurriedly and there is a danger of things unravelling after the first couple of years,” says one museum professional.

What works for one museum service will not work for another, says Steve Miller of Norfolk Museums and Archaeology Service, which rejected a move to trust status two years ago.

Miller, who previously worked at Ironbridge Gorge Trust, says: “Having lived with both models, each one was right for the service in question. You have got to keep the end in mind and look at what you are trying to achieve.”

Public relations

Norfolk rejected trust status over fears of a lack of accountability and the strong feeling among residents that the museums should remain in public ownership.

There are other drawbacks, with trusts losing access to other council facilities such as legal services and HR. Workers may also lose out. Under employment protection rules, staff transferring to a trust should have their employment terms upheld, but the same rights do not apply to new workers.

For those deciding against trust status, there are other options. Several museum services, including Norfolk, Bristol and Tyne & Wear, have recently established “fundraising foundations” – charitable bodies that can access the same grants and tax breaks available to trusts.

Norfolk hopes its new museum development foundation will generate more than £100,000 a year.

If it succeeds, this model could prove to local authorities that trust status may not be the only way forward.

Make it clear that your financial and social outcomes are aligned

If you’re an ex-local authority trust, you’re not an independent museum but an independent operating company.

You don’t own collections or buildings, you can’t rationalise property for savings or borrow against the assets. In that respect, you are no different from the likes of Serco.

However, rather than create value to shareholders, new trusts should audibly speak of the social and economic value they create for the community.

To achieve this, there is a need to create a structure that reflects your charitable and business mission. This might differ greatly from when you provided a universal museum service in the local authority days.

Restructuring and bringing in entrepreneurial wisdom to ensure you thrive within your means can be protracted and painful for people. While the motive for trust status may be cost savings, it is vital from the outset to broadcast that financial and social outcomes are aligned.

You will also need to manage the expectations of the authority as to the income that you will generate from a standing start. This is why it is important to emphasise the value, rather than the cost.

And while you will be free from the bureaucracy of a local authority, you won’t operate outside of the political realm.

In fact, you will be closer to politicians who will feel they can talk directly to the board or chief executive.

Tony Butler, executive director, Derby Museums Trust

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