The art of survival for regional gallery

When it comes to financial sustainability, the theory is easy: "diversify".

But the difficult thing is actually making that happen. And this case study illustrates just how tricky it can be to improve finances in practice.

This is the dilemma faced by the Castlemaine Art Museum (CAM), whose heritage spans more than a century in Victoria's goldfields region.

The gallery is a big tourist drawcard and houses an impressive collection of Australian art from the 1800s, Edwardian times, and later.

It boasts works from Fred McCubbin, Tom Roberts, Arthur Streeton, Rupert Bunny, Margaret Preston, Russell Drysdale, Fred Williams, John Brack and Albert Tucker. Recently it hosted the shocking Graham, by sculptor Patricia Piccinini for Victoria's Traffic Accident Commission (TAC) to demonstrate how humans would look if designed for car crashes.

But even as Graham was pulling in the punters, the gallery announced it would fire staff and shut its doors in the face of a financial meltdown, which featured a revenue gap of about $400,000.

Luckily - and partly as a result of the media frenzy that ensued - the well-loved tourism drawcard in the centre of the picturesque town won a last-minute reprieve thanks to generous art lovers.

On the face of it, the gallery already had a diversified funding base.

It had members, it charged admission, it had a regular largish donor, and it had funding from both local and state governments.

So what went wrong?

Let's look at how the gallery employed the seven funding pillars.

The gallery itself used the seven pillars method to develop its initial fundraising strategy, but as chair Jan Savage put it, "That didn't go so well."

The first pillar: donations

What they had: They had a substantial donor - the SR Stoneman Foundation, which paid about $30,000 annually - and a separate gallery foundation that raises funds for the gallery.

Why that was a problem: The SR Stoneman Foundation's founder had included a "poison pill" in its constitution that said funding would be cut off if the gallery incorporated, which was necessary if it was to get other grants. And most of the gallery foundation's money was tied up with caveats that meant it couldn't be spent on day-to-day upkeep.

What they've done: Last year, the gallery decided to push ahead with incorporation, despite the difficulties, with the aim of sourcing money elsewhere. That money didn't roll in as predicted, or in time.

After the shutdown, a fresh donor came forward to promise $250,000, which will keep the gallery operating for several years more - but the money came with a condition: abolish admission fees. This cuts about $25,000 a year from the budget. So the net gain is about $175,000 over three years, or about $60,000 a year, yet the gap is $400,000. More - much more - is needed.

What chair Jan Savage says: "We're doing a number of things. We're going to a whole range of funders, applying for grants and developing our fundraising strategy. We tried to develop it before, using the seven pillars of fundraising, but that was before we incorporated. That didn't go so well."

The media attention prompted further donations and life memberships, as well as offers of professional help. "It's great having that sort of exposure, so long as it comes with support."

"Incorporating, of course, was meant to be the thing that helped us with our sustainable funding so that we could apply for a much broader range of grants. But there's a cost with compliance and a cost with incorporation, particularly in the short term."

The second pillar: grants

What they had: The gallery got a reasonable amount of money from the Victorian government and some funding from the Mount Alexander Shire Council.

Why that was a problem: Most regional galleries get 20% of their funding from the state and 60% from the council. With Castlemaine, that's 35% and 5%.

The contribution from the Shire was much lower than for comparable galleries in, for example, Ballarat and Bendigo. The Ballarat and Bendigo councils, though, just served their cities. Much of the Mount Alexander Shire Council isn't based in Castlemaine, but spreads across other villages like Porcupine Flat and Welshman's Reef. Is it simply that the sturdy citizens of Porcupine Flat don't want to pay for facilities for "la-di-da" Castlemaine urbanites?

What they've done: The crash has brought to the attention of the council how much the gallery contributes to tourism in the region. This may loosen the council's purse strings - but that's yet to be seen. So far all they've offered is "in-kind support with professional services, provision of Town Hall [for a public meeting] and minute- taking." Minute taking? Get serious.

What the chair says: "Regional galleries are by and large owned by council. We're an independent organisation, a profits-for-purpose NGO (non-government organisation)".

This and the size of the shire - with just 20,000 residents - were partly behind the limited support, but nevertheless, "I would love it if they could give us more".

Ms Savage told a public meeting: "We are working ... to see how we might increase the contribution from the shire".

We think the council is basically playing a pretty dead bat, but you be the judge.

What the council says: Mt Alexander Shire Council mayor Sharon Telford confirmed that for the past ten years, the council's annual contribution to the gallery's coffers had been "nearly $26,000".

However, it also chipped in $40,000 in 2015 for a review; gave $5000 to assist the gallery's latest "business case project"; and provided "promotional support through tourism" and human resources help.

"Dedicated funding to the arts increased by about $5000 in the 2017-18 budget," Ms Telford said.

Ms Telford said the council "recognises the gallery is a valuable asset to the community and in attracting visitors to our shire".

But she also said: "Unlike other regional art galleries, council does not own the Castlemaine Art Museum. The independent museum is governed by private trustees and managed by an elected board."

Asked about how the council might help the gallery now, she said it was too early to say.

"We have not yet received any formal requests, or had the opportunity to consider any requests for additional funding," the mayor said.

The third pillar: community and business partnerships

What they had: Not much.

Why that was a problem: There are largish commercial enterprises in the shire, but they're not necessarily the kind of businesses that benefit from sponsorship. Would you be more likely to patronise a bacon factory if you knew it was a gallery sponsor?

What they've done: Still not much. It doesn't seem to come high up the priority list.

What the chair says: "We have worked to develop partnerships with local businesses and other NFPs, including the hospital, community health and schools."

Size and scale constraints - such as a small and ageing local population - were barriers to converting support into income, Ms Savage said. "This is not Melbourne, or even Bendigo."

The gallery needed a "strategic partnership" to drive its vision. "We see the benefits of tourism, but tourism development is not our core business (although it is) essential to our work".

The fourth pillar: memberships and friends

What they had: They had about 600 members, which in a city of 10,000 isn't that bad, at about $36 a pop - which comes to about $20,000 in revenue. Voluntary labour was a useful supplement to paid staff.

Why that was a problem: Voluntary labor can't substitute for the expensive bits of the art curating business. 600 members, too, while handy, wasn't really enough to provide a mass base.

What the chair says: The organisation has seen a spike in donations and life memberships. Many have come forward to volunteer professional skills in media, technology, strategy, community engagement, governance and grant-writing in response to CAM's troubles, and the organisation aims to make the most of those opportunities.

"We've got to also ensure that with people volunteering their time, we can manage it as a board. We have to do this professionally and ensure that we go through a formal recruitment process."