Jim Remar wrote:
>
>         List-serv users:
>
>         My Musuem is currently building its budget for the next FY as well
> as developing a financial plan.  It has become apparent that projected
> expenses are going to exceed projected income.  We realize we will either
> have to dip into our principle our take on some debt (we are currently debt
> free).
>
>         What are some existing debt structures for smaller museums?  What is
> the amount of debt carried vs. assets/income for most museums?  If expenses
> exceed income should we take on debt as well as dip into our principle?  If
> we have no income to pay for a loan is it responsible to use our principle
> for this?
>
>         Please respond to [log in to unmask]
>
> Jim Remar,
> Director
> Mifflinburg Buggy Museum
> Mifflinburg, PA


My approach is to tell the Board that this is the amount of money they
have to raise in the coming year.  Going into debt is the last thing I
would consider.  After all, the two primary functions of a Board of
Directors are:  Policy-making and Fundraising.  If they approve a
deficit budget projection, they should do so with the understanding that
it is their responsibility to raise the needed funds (after proceeds
from events, etc. are considered).

We generally build our budgets around what we experienced in previous
years and what we have in the bank (maintaining a reserve).  I operate
the museum as a profit making enterprise.  If I can't project a surplus
then I cut the budget.  Going into debt only worsens your problem for
future years.  I would consider long term indebtedness if it were for
physical improvements or construction of new facilities.  But I don't
think that is the problem you are confronting.

Bob Handy
Brazoria County Historical Museum
Angleton, Texas
http://www.bchm.org