As we near the end of 2009, I wanted to share with you the current outlook for 4Culture’s funding and services next year and some of the thoughts we are having as we make decisions about how to allocate fewer dollars in the coming year.
Like all organizations, the recession has taken a toll on 4Culture’s revenue stream. 4Culture’s funding programs and levels of giving to the field are highly dependent on King County lodging taxes. Nationally, the hotel/motel industry is mired in the worst downturn in 50 years. On average, lodging occupancy is down 20% in 2009 compared to 2008. Seattle fares a little better than many communities, but occupancy is still down by 17%. Room rates are lower, further eroding revenues.
In the Helicon Collaborative study produced in February of this year, our constituents in the field strongly recommended that funders be candid about keeping “grantees up to date on the options funders are considering and the allocation decisions they are making.”
So here goes:
4Culture will potentially have a 1.5 million dollar gap in our funding sources in 2010. We’ve been able to track the lodging tax returns and were able to anticipate this beginning last spring. We’ve been strategizing ever since. We took a good look at our administrative budget, and were able to cut many costs earlier this year. By doing so, are currently on track to underspend our approved 2009 operating expenses by a third this year, saving us approximately $250,000 that we can put toward next year’s programs. We also have tried to be strategic about investing staff time in efforts that could garner more funds for our constituents. For example, we applied for and received $250,000 in federal job stimulus funding to re-grant to our constituents in King County (beginning this year and going into next.) We recently made the decision to implement staff furloughs in 2010. Through this and a variety of other initiatives, we have identified an additional $250,000 we can apply toward the gap.
Even with all these efforts, we are still left with approximately 1 million less to distribute next year through our ongoing programs and have more choices to make. Our charter gives us a certain amount of flexibility with how much funding is allocated to specific programs. For example, we can preserve the amount of funding we have to offer in our arts and heritage operating support programs (sustained support) but by doing so, we will have to reduce our facility/equipment programs for the year. Another example: The arts program has one pool of money this is split between projects for groups and individuals. With fewer dollars, we’ll need to decide how much should go to individual artists and how much to groups who apply through this program.
Another question we’ve been weighing is: should we use reserves this year? Our reserves are interest income generated by the endowment we’ve been building since 2001, as mandated by state law. Unless the efforts to extend the use of lodging taxes for cultural programs is passed by the state legislature within the next three years future arts and heritage funding in King County will be entirely reliant on the funding generated from the endowment interest income. In other words, any reserves we use today will reduce the size of the endowment we may have to rely on after 2012, and reduce future funding.
The 4Culture Board has some decisions to make in the next month as we finalize the 2010 budget. Faced with trimming our programs, we have been turning to our citizen volunteer advisory committees to help guide us in how to prioritize funds for next year. (And of course, if you have thoughts to contribute, feel free to comment on the comments field below.) In the past, the board has chosen to prioritize and maintain steady levels operating support, and preserve funding for individual artists when times are tough. For the heritage community, we remain committed to funding Collections Care and Sustained Support. We will offer the Landmark Challenge grants in our preservation program at the same level as 2009. We may choose to postpone the deadline for Cultural Facilities Program, which would typically occur in January. The board also recently renewed a resolution stating that “the extension of the lodging tax to support cultural programs in King County is the highest priority of 4Culture.” This gives them the authority to continue to advocate on behalf of the field in the coming year with the goal of strengthening the revenue stream for cultural programs into the future.
The recession is affecting all of us, grantors and grantees. But this will pass as the economy recovers, which it will. In the end, we are likely to be stronger, leaner, more efficient, but in the meantime, know we are as passionate about of missions, programs and services as ever.
We will endure.