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Will Smile for Cash Page 5

Feature: At $43 million and counting, The Leonardo Museum better kick some ass.

By Stephen Dark
Posted // August 29,2007 - BURN, BABY, BURN
The price for letting “the fund-raising momentum diminish” from the halcyon days of matching funds is most noticeable in the as-yet unaudited bottom line of The Leonardo’s financial statements for the fiscal year ending June 30, 2007.

Compared to the $2.2 million surplus of June 2006, the following year saw a shortfall of $1.6 million. That said, Wyffels says thinking in terms of profit or loss when it comes to a museum is the wrong concept. “We have an operating budget of $4.3 million, and we have to find sources of revenues that cover that amount. If we are negative including fund raising, then we have to get money; if we are positive including fund raising, we are going to put money into reserve funds.”

“Negative including fund raising” means they raised only $230,377 in the financial year just ended but spent around $1.8 million. Tull cautions to report such figures in context, pointing out that together with the city, The Leonardo raised $1.9 million toward building costs during the last financial year, money that can’t be included in its income.

Wright says the poor fund-raising is due to Salt Lake City being “a difficult community to raise funds in; there’s a lot of competing interests.” He argues that after “the bond was passed, a lot of people thought the whole thing was over. It’s a momentum issue.”

Nevertheless, the first days of August this year must have looked grim for cash flow. Wyffels notes The Leonardo has $150,000 in unrestricted cash in the bank. Unfortunately, it also has a current monthly “burn rate,” as they call expenses, of $220,000.

Wright says management has been instructed to match cash flow against operating expenses so “we can get from where we are now to finishing programming issues.” He adds that he expects the burn rate to drop off and more fund-raising to come in.

Wyffels echoes him. “We expect new fund raising to kick in again as soon as the building situation is solved.”

Management is not the only one using the building’s fate to hang problems on. James says she does have the beginning of a marketing plan, after complaining in a December 2005 board meeting about the need for something concrete to show people what The Leonardo “experience” actually means.

The Leonardo experience, as James offers it, revolves around Leonardo buzzwords like “renaissance” and “transformative.”

“Our challenge is putting something that is the size of an ocean in a thimble,” she says.

Which begs two questions: How do you sell an experience so loosely defined, and how do you know that The Leonardo’s brand of science and art center will attract visitors from Salt Lake City and beyond?

A more daunting question, however, is how much The Leonardo will cost and how it will fund its future.

As of today, construction work, Tull writes in an e-mail, is budgeted for $25 million; exhibits, programs and ramp-up are budgeted for $18 million.

Grand total: $43 million.

Assuming, that is, the facility opens in April 2009. Given the many times The Leonardo has extended its opening date, it’s understandable if some view it with skepticism. And more delays cost more money.

Although Wyffels dismisses the idea of profit and loss being applied to a museum, when asked in an e-mail if he believed The Leonardo would be profitable in its first year, he wrote, “Absolutely. And, since we are a nonprofit, we will also be able to put funds in our reserve fund.”

This is not, however, the entire picture.

The museum, he continues, “anticipates a larger-than-usual ‘earned revenue’ share, and thus less dependency on fund raising.”

On average, U.S. science museums, according to 2005 Association of Science Technology Center’s figures, operate on a 47.5 percent earned-revenue share, meaning that they have to generate donations to pay for the other 52.5 percent of expenses to break even.

The Leonardo assumes a generous earned-revenue share of 63 percent, Wyffels says. So, to break even and generate reserve funds the first year, The Leonardo will have to raise more than the other 37 percent, which means raising $2 million to $2.5 million those initial 12 months.

“We will continuously ask for money for operations and exhibits,” Wright says. “[But] we’re not expecting to get a tax stipend each year to operate The Leonardo.”  >>

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Posted // August 30,2007 at 06:03 Stephen Dark is to be complimented. Having worked obliquely with various parties at various times - the CDA, the Leonardo, and SLC Corp - I found the issue difficult to get my arms around and comprehensively understand it well, especially understanding how it developed and continued to grow, and as a result, what problems exist now and into the future. nnThis article has provided an excellent, fairly comprehensive explanation of most of this. Thanks for the great work!