Covid-19 Impact on Museums and Galleries Sector in Scotland

Prepared by Museums Galleries Scotland (MGS)

Last updated 08/04/2020

Current situation overview

• MGS announced details of and opened two new funds to support museums and galleries on 08/04/2020.
• An Urgent Response Fund will support independent museums and galleries – a part of the sector that has been critically affected by Covid-19 at this time – £700K is available
• A Digital Resilience Fund will support equipment purchases to enable home working and digital access to museum and gallery collections and activity. This £55K fund is open to all museums.
• We are keenly aware of the limitations of our funding – it is not going to meet everyone’s needs. For that reason, we are having to prioritise through the eligibility criteria and non-Accredited, community museums are not eligible.
• We are encouraging all museums, particularly those not eligible to apply for our Urgent Response Fund, to advise us of their current situations so that we can continue to respond in this evolving situation.
• We are conscious that although our fund will offer some immediate relief to some parts of the sector, we need to prepare for a sector wave of crises.
• We are stepping up efforts to understand who is tapping into emergency funding and to identify where the gaps lie. We will also be working with other funding bodies to share what information is available.  
• We are receiving reports from museums who have or will soon furlough staff. We are also getting questions from smaller organisations who are unsure of whether this applies to them.
• The two new funds are part of a raft of measures in the first stage of MGS’s three-phased approach of ‘Emergency, Recovery and Resilience’ to support the sector in 2020/21. Future phases will support the wider sector to recover and build resilience. MGS will announce further details of these in the coming weeks.
• All MGS’s regular funding programmes will be suspended until further notice to allow flexibility to respond to the current situation.

Sector feedback on their situation – 01/04 – 08/04

• “At present the future looks bleak, and I can see that it will be 12-18 months before we can begin to function again and so our colleagues, volunteers and Board are preparing for the long haul”
• “As a small, independent museum who relies heavily on local government funding it’s unclear where we can seek support. The main question being for small museums in this situation is – are we allowed to furlough staff if we receive Gov funding? HMRC guidance seems to say we can’t but many small independent museums get local Gov funding and all nationals get funding through central Gov. This would rule out a lot of organisations. Without the ability to do this, we can’t save money and staff will lose their jobs which nobody wants.”
• “COVID 19 has kept our doors closed. COVID 19 has kept our doors closed We will have no reserve in approximately 3 ½ months We will have no income, most likely, until April 2021. We will have a financial shortfall of £22,000 and no reserve to fund the stock to start the new season or pay seasonal staff. If we wanted to start April 2021 with the same start up reserve, we would have a £30,000 deficit. Our footfall is in the region of 7000p.a. We would need to increase footfall by about 3000 to repay this.”
• “It’s going to be a tough few month for us as our income will be significantly down due to the closures”
• “The site is closed and 95% of staff has been placed on furlough”
• All staff being furloughed from Friday 10 April

Earlier impact reports are included below for reference

COVID-19 IMPACT ON MUSEUMS AND GALLERIES SECTOR IN SCOTLAND 

01/04/2020

Museums and galleries are a vital part of Scotland’s tourism offer        

• Museums number seven of the top ten visitor attractions in Scotland
• Scotland’s museums attract more than 27.6 million visits each year
• According to Visit Scotland statistics, culture and heritage is the second most important reason why visitors come to Scotland

Sector breakdown of a population of 406 museums

• Independent museums and galleries – 240
• Arm’s length external organisations (ALEO’S) – 70
• Local authority – 56
• Military museums – 8
• National Museums and Galleries – 10
• University Museums – 22

Situation overview

• Many museums and galleries currently fall between the gap of support already announced by the UK and Scottish Governments. MGS is working to determine the extent of this, but initial feedback highlights that schemes need to be more adaptable or inclusive if they are to achieve their potential to support museums and galleries (additional feedback on emergency funding below)
• Independent museums, which make up more than half of the sector population, are those who are in most need of immediate support. Most have no core funding and are entirely reliant on earned income, with high seasonality meaning the coming months are critical and this time of year is their cashflow low point.  The smallest museums are volunteer-run with no paid staff and for the most part are more financially stable (reflected in survey responses below) but still have fixed costs
• University Museums are not reporting immediate concerns but there might be future budget implications from loss of university fee income, particularly from international students.
• Local Authority and ALEO museums are not reporting immediate difficulties but will need to prepare for future financial issues as already stretched services come under review.
• It is important to note that when a museum closes (short term or long term) the collections and building still need to be looked after so will always carry a financial cost.

Feedback on current emergency funding schemes

While the Job Retention Scheme has provided some museums with breathing space to plan there are some issues / need for clarification.

Museums must retain some staff particularly those essential to running the organisation who are often the highest paid, or managing security, but these staff are not producing income or able to be subsidised.

More detail is needed for museums to understand how it might work for them. Some specific questions have been raised which we can share.

Third Sector Resilience Fund – Not all museums are eligible to apply, and MGS will be working to determine where the gaps are.

A number of museums are unable to receive either of the Business Continuity Grants due to the rateable value of our Museums, despite nearly all already receiving rate relief and being not-for-profit organisations.

Suspension of business rates brings no benefits to charities who do not pay them. Payment holidays for National Insurance, VAT or loans are no use in circumstances where the lost income will never be recouped.

Cashflow loans are unsuitable when organisations are not generating net positive cash, and many will be operating at breakeven then they would asked to repay.

Responses to MGS survey

• What is your current cash flow situation and how long will your business survive if you do not get access to financial support quickly?

• We are totally dependent on earned income to pay its bills. Mid-March is normally the lowest point in its seasonal financial cycle; Easter is normally the busiest period, with upwards of 20% of annual income is earned in April. We employ 38 and have weekly staff costs of £11k. As soon as it shuts its doors, this will trigger staff dismissals, wage cuts and redundancies. Seeking a bank loan to help at this time. Estimate 10 weeks to liquidation.
• Some of our smaller organisations are looking at financial insolvency before the start of the 2021 season. Despite cuts to funding some of the museums have been able to build some flexibility or reserves into their cash flow. However, all are reporting that they will need to use up any reserves to maintain staffing and museum standards with most anticipating depleting these reserves within 16 weeks.
• Reserves will be exhausted in 4 weeks and we cannot cover the overheads and salaries as we have no income.
• As a council run service we have an annual allocated budget – we hope to reopen but we are not a core service. Lately it was announced we would be undergoing a review with cuts of £50K anticipated
• No income whatsoever and will only survive a couple of months, as we are still paying £1416 per month rent & service charges to the Council
• Fragile – we have had a long winter with very, very little income and were anticipating an upturn as we approach Easter. The future is precarious without an injection of support.
• We have no income because we are closed and we rely on donations. We should survive this season but utility bills are still coming in and need to be paid.
• We are at a standstill and can survive six months.
• We cannot cover the overheads and salaries as we have no income and can survive for four weeks.
• As a local authority we are protected but the present closure may have long term consequences
• Most trading income has ceased therefore critical cash flow situation. Self-employed consultants unpaid. No staff liabilities. We estimate that we can get by for 4-6 months.
• Unaffected at present but and we could survive indefinitely because of our HES revenue support grant, but without earned income or a substitute we would have to implement major savings, including reduced hours and redundancies, from May.
• No income and a moratorium on non essential spending. Future is uncertain
• Secure for the short-term. Reliant on continuing grant support from Local Authority and Creative Scotland. Can survive 4-6 months.
• Very difficult, we are totally dependent on earned income to fund our activities, mid-March is normally the lowest point in our seasonal economic cycle and we depend on the Easter holidays to recharge coffers. About a fifth of annual income is normally earned over the busy Easter holidays. We’ve about £40k liquid cash remaining. We’re liquidating £50k of reserves despite their plummeting value. Our £161k reserves were valued at £138k at time of partial liquidation. Our staff costs alone are £12k a week. I’ve terminated some staff and will have to make others redundant, but even then we’ll run out of funds within 10 weeks, if no other support is available.
• Current financial position is positive and we have a guarantee from the Council that our management fee will not be cut.
• We should be able to see out this crisis, assuming it does not go on for longer than anticipated.
• We have 6 months operating costs, having been closed for the winter, we have had no visitor income from four months. We are working to reduce our overheads/maximise income. We have 6 months operating costs, after that we will be in dire straits.
• Very poor, we rely on ticket sales and income from our cafe and shop to cover the salaries of the 10 operational staff we employ, and also to provide income that partly covers the museum’s other staff. We run a trading company, and we will have to let go of the 10 operational staff employed through this within a week (27-03-2020). The main body (parent charity) organisation will be in liquidation within 2 – 3 months without further financial support.
• We have £60K in reserves enough for nine months.
• We have enough cash to pay staff and bills at the moment but that will deplete all our reserves. Because we are volunteer run our staff bill is small. We will survive a year.
• Will be reduced we operate on very little and have some reserves (no paid staff) Stable for a year
• No cash coming in. We intend to pay wages as normal during April. We are fortunate in having healthy reserves thanks to a recent generous legacy.
• OK, grants are still being honoured and earned income is the area negatively affected. We should be OK for the duration but will need to draw on unrestricted reserves. The issue will be retaining support of funders during this time, but I feel hopeful.
• No income and working on existing capital but should be ok for this year
• The Trust are projecting a loss of revenue of £160-£240k. Seeking additional funding for their project and have stopped cataloguing so can’t access collections, marketing and are concerned may lose their 40 volunteers.
• The museum is under considerable financial strain and may not open as it was using grant funding to pay staff this year
• Our situation is very fragile, the calculated loss of income for the period up to May is £78K. This comes from cancelled tours, events and admission. We have no reserves We’ve hit the overdraft of 20k: had a personal donation and have not taken on the part time staff.

3) What is your one key ask of the Scottish and UK Governments at this stage?

• Keep acting to keep people safe
• Help us quickly. We have a fantastic team and we were looking forward to re-opening following a £1m refurbishment which the Scottish Government invested heavily in. Heart-breaking to think it was all in vain.
• To include charities receiving charitable rates relief in the small business grant scheme. To date only SBRR and rural Rate relief are included.
• Can they stop visitors coming to the Highlands. Especially the motor homes as nowhere is open and they risk infecting people here
• pleased to have help with salaries from HMG SG could help local authorities offer rates relief
• Financial support for voluntary organisations who cannot generate income
• Currently we receive no statutory support, relying on volunteers to staff our operation, and donations and sales to cover costs. We need an injection of cash to ensure we remain a viable business in a remote area.
• To make temporary cash available to employ able-bodied (less at risk) staff to take burden from vulnerable volunteers
• Support for independent museums
• General guidance
• Emergency Grant aid to offset unavoidable losses in the region of £10,000-£20,000.
• Grants to cover lost net income.
• Please ensure that help is swift and easy to access, and that guidance is clear.
• When the current crisis abates, provide a financial boost for the sector to develop alternative digital options when visitors are unable to come in person.
• Maintain support (though Local authorities and MGS) for museums in the independent sector.
• Please keep the cultural institutions in mind if/when making any extra funding available. We play such a significant role in society, through all ages groups locally, bringing in tourists & have a massively positive impact on people’s lives, we really are so much more than a museum.  We’re a lifeline for many, especially older people.  We provide a purpose, an educational & emotional resource.
• Clarity on funding available to registered charities. Pressure on insurance companies to include Covid-19 within acceptable diseases to trigger business interruption payments.
• Support for Higher Education to make up for loss of international students next year.
• Make it simple to claim relief
• I think it is important to recognise that, although our work is not considered ‘essential’ our collections and venues are highly vulnerable during this shutdown, with the potential to lead to irreparable damage that will last far beyond the current crisis.
• Honour funding agreements and support the sector with resourcing where needed.