It’s in the most interesting places that we are often surprised with the most unusual questions. Recently, I was at a wake for a family member of a good friend. As I finished paying my respects and was heading out the door, I bumped into an acquaintance. After some pleasantries, sharing what was new, he wound up and tossed me a hand grenade.
“I see you’re doing a lot of construction, repairs and other work at the museum,” he reported.
“Yes,” I agreed.
He shook his head slowly and mumbled, “With so much money to spend … how come you still need so much money?”
Hmm. A snarky question. A tough one, too.
“Well, the construction is paid for with capital funds and –”
He waved away my explanation, “I know, I know…”
He didn’t want my answer. It seemed he already knew it. In the tradition of funeral discussion etiquette, he was passing time by blowing rhetorical steam.
“I know you still need money to operate. That’s the way it goes right?” he said as he shook his head slowly.
It’s those little snippets of conversation that sometime hit a nerve. With mischievousness in his watery eyes, he had zoomed in on one of the biggest misunderstandings that not-for-profits have to deal with: Just because an organization has funding for special projects doesn’t mean the floodgates are open and funding is flowing into the annual budget.
Restricted vs. unrestricted
To grasp this we need to understand that there are two basic types of funding: restricted and unrestricted. Restricted funds are designated for certain projects such as new buildings, restoration or special programs. Restricted funding is usually received from donors, foundations, corporations and public sources. These dollars are designated or restricted to the project for which they are raised. There are other types of restricted funds, but they are limited as well.
This funding can only be used for the purpose they were given and nothing else. Legally, the donors’ wishes restrict these funds. They can’t pay for the everyday things that keep you running. So you may have a well-funded capital project that contributors were inspired to support, yet still have a pile of everyday payables that need funds. Institutions work very hard to raise these unrestricted funds for operations. Unrestricted income covers everything from utility bills to payroll to equipment maintenance.
Some institutions find that this type of revenue is the most challenging to raise. It’s not always easy to find someone to pay for paper clips and toilet paper.
At Historic Richmond Town, we are fortunate to be working with almost $14 million in restricted income right now. This funding is being used for a number of important projects:
• The construction of three new collection storage structures for our horse drawn carriage collection
• A major upgrade to our main campus with new utilities, sidewalks, street surfacing and traditional style (LED) lighting
• The refurbishment of our Third County Courthouse Lobby — the new Laura Patrick Welcome Center
• The restoration of the Kruser-Finley House after the malicious fire almost destroyed the 1790 home
• The conservation of specific collections
• The design of a new site plan
• Engineering and architectural reports for capital planning
• Enhanced and broadened school programs
These are terrific projects that will have great impact. Wouldn’t it be nice to congratulate ourselves and call it a day? But there are other things that need real attention. Look closely and you’ll see there’s too much wear and tear and not enough hands or resources to make things shiny and bright again. And before you jump up and say, “Get some volunteers,” please note that we have hundreds of wonderful volunteers working with us. They help us tackle our needs. But they can’t replace unrestricted operating funding. So, yes, even though we have raised a lot of money, we still need money.
Nonprofits require unrestricted operating funding. We use it to take care of 100 acres, four sites, more than 30 historic landmarked buildings, a working farm and hundreds of thousands of artifacts dating back to the 1600s. This is precious, rare American history in our hands. Original. Authentic. Real.
Our collections tell the rich and diverse story of the American people who worked side by side to build an extraordinary country. Since 85 percent of our land and structures is owned by the City of New York, we receive an unrestricted funding allocation to help us maintain the property and buildings.
But that funding began to shrink eight years ago. Today we receive 13 percent less from our city than in 2008.
With cost increases, aging collections and more wear and tear, we should be receiving at least 10 percent more than in 2008. And we are not alone. All of the xultural institutions of the City of New York are receiving fewer dollars from the city.
Since this shortfall in funding creates deficits, we’ve had to work even harder to make up the difference. Here’s what we’ve done over the last few years: reduced our staff by 27 percent; cut our expenses by 31 percent; froze increases for five years; expanded our grant outreach five times; boosted our earned income 300 percent; raised board giving expectations by 20 percent; increased events and campaigns by 25 percent; increased school visits from all five boroughs by 30 percent; tripled our attendance; and it’s not enough.
Recently, NYC Council Minority leader Steve Matteo and Majority Leader Jimmy Van Bramer took a bi-partisan tour of Historic Richmond Town and the Staten Island Zoo to see the challenges for themselves. It was a fun tour but it revealed the dark side of underfunding. It was obvious to everyone that we need a bigger commitment from the city to deliver the services we provide.
This year, Van Bramer and Matteo are asking the city to increase the cultural budget line by $40 million. It seems like a lot of money but it’s less than one-tenth of 1 percent of the city budget.
Educate and inspire
For Historic Richmond Town, the support of our local elected officials is vital. We applaud their efforts. With right-size municipal funding, we can continue to educate tens of thousands of schoolchildren each year. Without it, the American history we hold in our hands will begin to fade away.
That’s our story behind the excavators and backhoes. What’s going on in your hometown? As you drive through your community and notice a non-profit working on a project, dig a little deeper. Find out the story behind the story.
See how well they are doing. Do they have enough general operating money to keep things working well each day? What you discover may surprise you.