Let's be straight - this is a tough time for many companies, organisations and families. But how is all this gloom affecting museums and heritage organisations, and how is it likely to unfold over the next year or two?
The charitable organisation of which I'm CEO - Historic Royal Palaces - cares for five royal palaces: the Tower of London, Hampton Court, Kensington, the Banqueting House in Whitehall and Kew Palace. We get no public funding.
The £55m that we need to run the organisation and do all the good things we aspire to has to be earned from our visitors, members, donors, volunteers and sponsors, as well as our commercial activity.
Although the country has been in recession for at least two quarters, we have seen only limited evidence in the financial year 08/09 of impact on our various income streams.
Visitor numbers (with adjustments for changing Easter dates) are running a couple of percentage points ahead of last year. Whatever negative recessionary impact there is on the visitor market is being offset by the dollar/euro/pound exchange rates, which have made London prices 30 per cent cheaper than a year ago and dampened British enthusiasm for foreign trips.
In contrast to the high street experience, retail spend in our shops is also slightly ahead of last year, probably for the same reason. However, in our functions and events business, we have seen some fall-off in hire of venues for corporate events.
This is worse at the Tower, where city-based finance companies make up a larger share of the customer base than at Hampton Court Palace. In our charitable fundraising activities, we have enjoyed a record year for membership.
We've had new major project sponsors and good support from trusts and foundations, although we're less sanguine about the year ahead and corporate sponsorship looks under pressure. Interest income from our cash reserves has of course been hammered as rates have fallen under one per cent.
So, if that's the story so far, what's going to happen next? Uncertainty has been a characteristic of this downturn. We also need to keep in mind that the worst effects on the so-called "real economy" have yet to be fully felt.
The leadership challenge is to pitch the strategic and communication response with the right balance of prudence and realism on the one hand, but maintaining a sense of hope for the medium-term future.
It's important to remember that we're in this for the long haul. The Tower has been around for nearly 1,000 years and has seen harder times than this.
The worst news in the medium term is probably going to be in public funding streams. It's hard to see how national and local authority museums are not going to have their funding reduced significantly from 2011/12 onwards after the next election, as whichever party in power seeks to rebalance the public finances and claw back public borrowing.
Charitable giving by trusts and foundations will also be affected by lower returns in their endowment funds. Businesses will be more cautious in releasing non-essential finance for sponsorship, events and corporate memberships.
I do think, however, that we can be cautiously optimistic about the lifeblood of all our organisations - our visitors. There's evidence from past recessions that people actually increase their consumption of cultural and leisure activities during the bad times.
The National Theatre's director Nicholas Hytner is bullish about the market for theatre. Forward bookings for UK holidays are reportedly up for this summer, especially for family-based holiday venues such as Center Parcs, and the continuing weak pound will help here.
And with the pound below $1.40, if President Obama's stimulus package begins to work in the US, we might see American visitors starting to return to London for the first time since 9/11.
There are also opportunities to expand volunteering and community programming as people find themselves between jobs or choosing to stay closer to home. Partnerships with other organisations, to find efficiencies or to achieve shared goals, will also offer scope for supporting survival.
Institutions with high public funding ratios will need to look at alternative income-generating strategies while giving even more care to communicating their value to funders.
Looking into the long term, the UK as a whole should be boosted by the Olympics in 2012. Most importantly, the pressures of this time call for us to bring strategic focus to our organisations. We have to be clear about why we exist, the value we create in society and for our customers, and what really matters now.
Most of our organisations are characterised by ambitions that are out of sync with the resources at their disposal and their energies are spread too thinly. Leadership, hard choices and great communication are needed.
The museums and heritage organisations that survive the next two years are likely to be well placed to have greater impact as the world economy recovers, as expected, from 2011.
Michael Day is the CEO at Historic Royal Palaces
The charitable organisation of which I'm CEO - Historic Royal Palaces - cares for five royal palaces: the Tower of London, Hampton Court, Kensington, the Banqueting House in Whitehall and Kew Palace. We get no public funding.
The £55m that we need to run the organisation and do all the good things we aspire to has to be earned from our visitors, members, donors, volunteers and sponsors, as well as our commercial activity.
Although the country has been in recession for at least two quarters, we have seen only limited evidence in the financial year 08/09 of impact on our various income streams.
Visitor numbers (with adjustments for changing Easter dates) are running a couple of percentage points ahead of last year. Whatever negative recessionary impact there is on the visitor market is being offset by the dollar/euro/pound exchange rates, which have made London prices 30 per cent cheaper than a year ago and dampened British enthusiasm for foreign trips.
In contrast to the high street experience, retail spend in our shops is also slightly ahead of last year, probably for the same reason. However, in our functions and events business, we have seen some fall-off in hire of venues for corporate events.
This is worse at the Tower, where city-based finance companies make up a larger share of the customer base than at Hampton Court Palace. In our charitable fundraising activities, we have enjoyed a record year for membership.
We've had new major project sponsors and good support from trusts and foundations, although we're less sanguine about the year ahead and corporate sponsorship looks under pressure. Interest income from our cash reserves has of course been hammered as rates have fallen under one per cent.
So, if that's the story so far, what's going to happen next? Uncertainty has been a characteristic of this downturn. We also need to keep in mind that the worst effects on the so-called "real economy" have yet to be fully felt.
The leadership challenge is to pitch the strategic and communication response with the right balance of prudence and realism on the one hand, but maintaining a sense of hope for the medium-term future.
It's important to remember that we're in this for the long haul. The Tower has been around for nearly 1,000 years and has seen harder times than this.
The worst news in the medium term is probably going to be in public funding streams. It's hard to see how national and local authority museums are not going to have their funding reduced significantly from 2011/12 onwards after the next election, as whichever party in power seeks to rebalance the public finances and claw back public borrowing.
Charitable giving by trusts and foundations will also be affected by lower returns in their endowment funds. Businesses will be more cautious in releasing non-essential finance for sponsorship, events and corporate memberships.
I do think, however, that we can be cautiously optimistic about the lifeblood of all our organisations - our visitors. There's evidence from past recessions that people actually increase their consumption of cultural and leisure activities during the bad times.
The National Theatre's director Nicholas Hytner is bullish about the market for theatre. Forward bookings for UK holidays are reportedly up for this summer, especially for family-based holiday venues such as Center Parcs, and the continuing weak pound will help here.
And with the pound below $1.40, if President Obama's stimulus package begins to work in the US, we might see American visitors starting to return to London for the first time since 9/11.
There are also opportunities to expand volunteering and community programming as people find themselves between jobs or choosing to stay closer to home. Partnerships with other organisations, to find efficiencies or to achieve shared goals, will also offer scope for supporting survival.
Institutions with high public funding ratios will need to look at alternative income-generating strategies while giving even more care to communicating their value to funders.
Looking into the long term, the UK as a whole should be boosted by the Olympics in 2012. Most importantly, the pressures of this time call for us to bring strategic focus to our organisations. We have to be clear about why we exist, the value we create in society and for our customers, and what really matters now.
Most of our organisations are characterised by ambitions that are out of sync with the resources at their disposal and their energies are spread too thinly. Leadership, hard choices and great communication are needed.
The museums and heritage organisations that survive the next two years are likely to be well placed to have greater impact as the world economy recovers, as expected, from 2011.
Michael Day is the CEO at Historic Royal Palaces
