FINANCIAL MANAGEMENT/Changing public library funding

These are tough times for libraries. Last year, Seattle shut down all its libraries and furloughed staff for two weeks after the city cut the system’s budget by five percent. Minneapolis Public Library has eliminated 33 positions and is considering canceling the construction of its new downtown library in anticipation of a $25 million budget shortfall over the next 10 years. Meanwhile, in Queens, N.Y., a 20 percent budget cut led to lay-offs for 100 library staffers and reduced operating hours in many branches to only 30 per week.

The situation has become so dismal that the Chicago-based American Library Association launched its Save America’s Libraries campaign in January. The campaign aims to get governments to mitigate funding cuts and even to restore funding.

The association faces an uphill battle. Because more than 90 percent of the funding for public libraries comes from local and state taxes, any restored money just means deeper cuts for other services.

However, a review of funding models successfully adopted by museums, public broadcasting and other institutions suggests that public libraries have failed to tap some important non-tax funding sources. For example, just as libraries circulate books for free, Seattle’s public radio station, KUOW, provides programs free to anybody who wants to listen. Unlike most public libraries, however, KUOW and other public radio stations no longer depend on tax revenues for most of their operating budgets.

In 1985, public radio stations faced a loss of federal tax funding and turned to alternative revenue sources. They expanded pledge drives, adopted direct-mail fundraising practices and convinced many people to contribute money to support free programming. They developed millions of dollars in corporate sponsorships, and some stations began selling items through catalogs and other retail operations.

In just a few years, public radio completely changed its funding model. While 85 percent of public radio funding came from tax dollars in 1985, today more than 61 percent comes from private sources. Only 14 percent of KUOW’s revenues now come from taxes; the rest come from individual memberships (51 percent), business sponsorships (31 percent), and retail and other sources (four percent).

Meanwhile, some libraries have begun to experiment with more entrepreneurial approaches. A number have set up foundations to help them raise money; most have Friends of the Library groups that provide modest levels of support. Corporations like San Francisco-based Wells Fargo and New York-based Verizon help underwrite activities.

The Ferguson Library in Stamford, Conn., adds $45,000 per year to its revenues by leasing space to Starbucks, and a growing number of libraries are installing cafes and gift shops to improve the ambience and generate revenue. However, while some initiatives have generated modest revenues, so far efforts to diversify library funding have been piecemeal and uncoordinated, and the vast majority of library revenues continue to come directly from taxpayers.

Maybe it does not have to be that way. If museums, orchestras, public broadcasting stations and other cultural institutions in the community can raise substantial portions of their budgets from non-tax revenues, why not the library?

Change will not come overnight: It took nearly ten years for public broadcasting to change from a largely tax-funded service into a largely listener-supported one. However, public libraries’ reliance on taxes is not currently working and probably will not improve soon. In the long run, the best way to save America’s libraries may be to help them develop new funding tools and models they can use to save themselves.

The author is vice president of product development for Germantown, Md.-based Library Systems & Services.