Do Heritage Sites, Museums And Galleries Need To Modernise Income Streams?
In the UK and across some of Europe, the general public benefit from free entry to National museums, art galleries and other heritage sites. The philosophy behind free entry to museums is that the world history, arts, culture and education held inside is accessible to all, regardless of financial situation or background. For those that do charge entry, most are signed up to the government Gift Aid scheme which claims tax back from the HMRC, on behalf of the donor, and donates this back to the museum, gallery or heritage site to provide additional funding.
Of course, heritage sites, galleries and museums are not cheap places to run. They require staffing, building upkeep, technology investment, as well as preservation of and updates to collections. They also still need to attract visitors through marketing and need ticketing, retail, food and beverage, CRM systems and other technology to support their operational and commercial needs. Much of this is funded through charitable giving as well as private donations and grants. As well as income through ticketed events, exhibitions and sales of products.
Museums and galleries are designed to educate, celebrate and develop culture. As well as being responsible for;
- Supporting local communities through learning
- Caring for and preserving artistic and historical collections
- Attracting tourism and enhancing national culture
This can only be achieved when these institutions are properly funded. In the past few years though, many cultural and historical attractions have found funding to have stagnated whilst running costs have drastically increased. The Cost Of Living Crisis has affected individuals and businesses as wages and income have failed to rise as fast as inflation and energy costs have skyrocketed. All of this has also had a profound impact on cultural attractions still in recovery from the pandemic. It has even led some previously free-entry museums and galleries to begin charging admission fees.
However, even museums, galleries and heritage sites that do charge for admission are often only covering basic running costs via entry fees. Hence why so many are reliant on gift aid and other forms of fundraising.
So, do heritage sites, galleries and museums need to reevaluate how they are funded and consider diversifying their income streams? Let’s look at some of the ways that cultural attractions might adapt to thrive over the next few years.
Should Museums, Galleries and Heritage Sites Be Relying On Gift Aid?
Many cultural attractions take advantage of the Gift Aid Scheme.
Launched in 2000, the Gift Aid scheme enables charities and other eligible organisations to claim an extra 25p for every £1 donation. Since it is a donation, this cannot be included directly in the ticket prices and the donation can only be made by taxpayers, since it is deducted from their tax obligations. As such, a separate pricing structure is necessary for visitors who wish to gift aid.
The gift aid scheme is worth £1.3 billion to the charity sector but every year, according to the Charity Finance Group, over £500 million goes unclaimed. It is speculated that this is largely due to the general public not being fully aware of how the scheme works.
Whilst the scheme is helping to fund heritage sites, museums and galleries, many in the industry are concerned that reliance on this scheme’s longevity could be a mistake. With rising inflation and pressure on public services, the UK government could decide that the gift aid scheme, which is funded through taxes essentially, is no longer viable.
The disastrous mini-budget introduced, and then swiftly dropped, by Kwasi Kwarteng in 2022 could have reduced gift aid drastically. Since Gift Aid can only be claimed by taxpayers paying the rate of 20%, the proposal to drop income tax to 19% would have made a lot fewer people eligible to donate. Thankfully, this did not happen but it did bring to light the fragility of the scheme.
Despite it being a wonderful way for attractions to enable the UK taxpayer to support them in a cost-effective way, Gift Aid is not an uncomplicated scheme. For one thing, since it cannot be simply added to the ticket price, there is often an expense incurred in setting up separate payment models. This presents challenges for ticketing software partners to provide separate pricing structures for those who wish to add a Gift Aid donation. Initially, the scheme was only available to visitors taking out annual memberships but this was updated to allow for donations to be made on singular visits, so long as a 10% minimum extra charge was added to the standard cost of admission, or if the ticket allowed admission for a minimum of a year.
Whilst Gift Aid remains a viable scheme and an ethical way for museums, galleries and heritage sites to raise funds, it would be foolish not to take advantage. The right ticketing partner, with software that allows for Gift Aid contributions and other donations alongside standard entry ticketing options, can help to make the process simpler and more appealing to visitors.
For attractions who feel they are not gaining the uptake on Gift Aid that they need, it may be worth reevaluating your ticketing software. Rework’s ticketing consultancy service, can help you to either make more of your technology partnership or to explore other options if another software partner can provide you with a ticketing model that allows you to make Gift Aid an easier and more enticing option for purchasers. However, alongside making the most out of Gift Aid, cultural attractions may wish to explore other ways of diversifying their income streams.
How Can Heritage Sites, Art Galleries And Museums Modernise The Funding Model?
The reality is that museums and galleries in the UK need substantial funding to curate and protect their collections, to survive and to thrive. To attract visitors, both new and returning, these institutions must continue to invest in their collections, the experience and their marketing. A more commercial model could help to support them in this.
As challenging as the pandemic was, the COVID-19 crisis and the lockdowns it prompted meant institutions and businesses had to find new ways of reaching consumers. Attractions, particularly those with an educational focus, found themselves adapting, moving online, and creating virtual tours and videos to showcase their art and artefacts. Arguably, some of this was even more educational than simply wandering around the museum.
Not only did those impacted by school closures benefit, but it also opened up cultural attractions to those who had previously been prevented from visiting a gallery or museum physically. Above all, the pandemic exercised these attractions’ ability to adapt.
Free entry, or staggered pricing, has long been the solution to enable those from all walks of life to access cultural attractions. However, accessibility is a far more complex issue that goes beyond and sometimes has little to do with cost. In fact, there is an argument to say that being free puts off visitors since, as a society, we have come to associate cost with value. Free entry, free trials, and free events often are undervalued and when local visitor numbers plummet, this could well be one of the reasons.
The pandemic forced historical and cultural attractions to modernise but the need for this did not expire after lockdowns ended. The attractions industry suffered but we also proved we could find creative ways to engage audiences and this may be the path to longevity. Promoting accessibility through more interactive and digital experiences may be one pathway towards making museums and galleries more accessible in the long term and basic entry fees could aid this movement. Meaning that by charging entry fees, museums and galleries may become even more accessible for those who truly need it. It could also provide more opportunities for institutions to invest in quality experiences.
Some institutions are moving into priced ticketing by adopting a pay-what-you-can model, encouraging visitors that can afford to opt for full-price tickets to alleviate the expense for lower-income visitors.
However, aside from looking at entry fees, there are also many other ways galleries, museums and heritage sites may modernise their funding models.
Some ideas for diversifying income streams include:
Membership Programmes: Loyalty or membership options that provide exclusive benefits such as discounted or free admission, return visits, VIP events and behind-the-scenes tours.
Venue Hire: Making the space available to hire for private events such as weddings, corporate use and private parties can bring in additional income, as well as drawing in those who may not typically visit.
Fundraising Events: Specialised lectures, educational and further access events could be ticketed separately and provide extra income whilst furthering and underpinning the attraction’s core values.
Digital Initiatives: Although virtual access to a museum or gallery should be accessible, interactive and/or virtual experiences could provide an amazing add-on experience and inspire new visitors to the attraction.
Partnerships: By partnering with other educational organisations and curators, heritage sites museums and galleries can attract new visitors by offering a more varied range of experiences which could also support diversity.
Patrons Programmes: Patrons provide the funding for many YouTube channels, podcasts and other alternative media outlets but patrons have also been beneficial for educational, heritage and cultural institutions. Patrons enjoy exclusive benefits in return for a long-term commitment in terms of funding and sometimes also influence and advice.
Ultimately, if cultural attractions wait too long to modernise their funding model or rely too much on the Gift Aid scheme, they risk a fight for their future. By adopting a more commercial approach to funding, however, museums, galleries and heritage sites could not only relieve the pressure they’re under but could provide an even greater experience for their visitors.
Are You Looking To Develop Your Ticketing Model Or Membership Offering?
Finding the right technology partner can help to diversify your income streams, develop your funding model and simplify the ticketing process for both you and your visitors. Whether you need guidance on technology partners, support in developing your membership offering or help sourcing the best technology to support sustainable growth, Rework’s experience and expertise can help. Get in touch today to learn more.