Our Museum has wrestled with this since our inception. We have little on
site storage space and we're trying to find a permanent off-site storage
space.
For now, it hasn't been a problem. We have largely become program driven,
with two or three exhibits a year drawn largely from generous loans from
our community.
Our collections criteria have been dated among the trustees almost since
day one and with every new group of trustees. Because of our mission, and
because of the community we serve, collection creep can be a very real
problem as we grow and mature as a museum and as a fixture in our
community.
I have tried to describe our collecting mission as a series of concentric
rings, all related to the central mission of telling the stories of the
Jewish people of Monmouth County. For reasons of geography and just the
way our community has developed over the years, we've had to expand the
focus of our mission to include the two immediately neighboring counties.
Still, we have to maintain reasonableness in the collecting sphere.
So, the model I set up with our founding board some 8 years ago:
Core: items from Monmouth County residents; relating to the Jewish people
of Monmouth County.
This is the primary focus of our collecting. But, we will also consider
items with the following priorities:

Secondary: items from residents of Ocean and Middlesex Counties and items
relating to those counties, where there is a familial relation with
residents in Monmouth County, or when the items are related to events or
people with indirect historical ties to Monmouth County, including those
related to famous or otherwise significant Jewish personalities that have
in some way touched Monmouth County's past or present

Tertiary: items representative of the history of the Jewish people of New
Jersey as a whole. Ideally these are items with an intrinsic tie to
Monmouth County's history.

Otherwise, we will, as needed, accept donations that fall outside these
criteria because of the usual reasons: the item is in danger of being lost
in one way or another to the community's legacy. These ideally will be
items of a spiritual or religious nature, or items we deem so significant
that acquiring them is the best way to save them.

The one place we have to draw the line is when an item would require care
that is beyond our museum's ability to provide or whose size or other
features would make acquisition impractical or an undue burden on the
Museum's resources.

Especially in the world of small/local/historical society museums I have
found this to be a great piece of advice: always know what other museums,
etc. are in your region that have collections that would be more
appropriate for an item you would like to accept, but can't for any
reason.
For items that fall into the "that sure is nice, but we can't accept it"
category, you can contact another collecting body that might be a better
fit, tell them about the potential donation and see if they'd be
interested.
You can then direct the donor there directly. Or, if time or other
circumstances demand it, accept the donation with the understanding that
the item will go to Museum X and then facilitate the donation with Museum
X. The donor will then get acknowledgements and thank yous from your
institution and, ideally, the museum that will ultimately take possession
of the item.
I have done this in the past and found everybody is happy in the end. The
donor finds a home for an item. We prevent the item from disappearing into
the mists of time, or the collectors market, and another museum gets an
addition to their collection they may never have had the opportunity to
get. Small museums need to help each other.  This is a great way to build
a strong museum network.

Sorry for being so long winded.
Scott Peters

Jersely Speaking,  Minister of trivia, errata and miscellany --
 Founding Trustee, The Jewish Heritage Museum of Monmouth County
 ------------------------
 "The ordinary distinctions in society are often vague, and imply no just
pre-eminence: rank and titles are adventitious
 things and instead of designating merit or virtue, are frequently the
baubles of imbecility, or the sparkling decorations of meretricious
pageantry" William Griffith, 1803

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