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How Library Foundations are helping Public Libraries stay open: Insight for the overall nonprofit sector

Like nonprofits, Public libraries have evolved into organizations that provide expanded services to the local community. They go beyond just books and often act as an anchor in the community, providing a full array of educational and social services.

Every year, Queens Borough Public Library has to put on a full court press to maintain its local government funding, which provides about 82% of its operating budget. The Wilmington Trust research report reviewed the public library sector and important trends it faces; it also provided some observations on library foundations. Taking a closer look at the three public libraries in New York City which include New York Public Library (NYPL), Queens Borough Public Library (QBPL), and Brooklyn Public Library (BPL), the research report highlighted their diversified fundraising plans. Library fundraising foundations are an important tool for public libraries, and they should be focused on a diversified fundraising plan that also includes strategies around major gifts, planned giving, legacy societies, and a strategic technology plan.

There are a variety of reasons why these foundations can be beneficial to a public library:

  1. Increasing Trustee Opportunities: a separate foundation creates additional board leadership and volunteer opportunities for trustees, who in turn can be substantial donors.
  2. Maintaining Focus/Control: this is a way to keep the fundraising, operations, and administration in a separate area away from the core operations of the library. It enables the trustees to be focused on fundraising rather than the operations of the library.
  3. Marketing: this allows the library to have a more focused marketing and branding strategy. Many foundations maintain a separate website page to highlight their upcoming special events as well as to communicate about different ways to give.
  4. Donor Choice/Control: separate 501(c)(3) organizations are often set up since donors prefer to give to a separate foundation versus an entity that is controlled by the local government.
  5. Provides a Financial Foundation: libraries can utilize this structure to manage and build their investment portfolios, which are often restricted endowment funds.

The use of library fundraising foundations can be beneficial to public libraries as a way to develop trustee leadership opportunities as well as to have a focused fundraising strategy. Almost 80% of public libraries (a review of the top 100 libraries) use a separate fundraising foundation. These vary in size and scope. QBPL is the only New York City library system to utilize a foundation, while Boston Public Library has three foundation entities that support its fundraising.

The research report reviewed the largest public library systems to assess their use of fundraising foundations. It found that 79% of public libraries use separate foundations and the average number of trustees was 26, with a range of 10 to 50 trustees; the Chicago Public Library Foundation has 50 trustees, which was the largest foundation board. The average foundation total assets were $12.5 million, with the San Diego Public Library Foundation at $40.7 million. The average annual fundraising for the public library foundations was approximately $2 million, with the San Diego Public Library Foundation and the Free Library of Philadelphia Foundation raising approximately $8 million and $6.9 million, respectively.

Public libraries operate as both municipal public libraries and not-for-profit public libraries. A municipal library conducts its business as a department of the local government and is not a 501(c)(3) not-for-profit entity. In New York City, we see the not-for-profit model where each public library is set up as a stand-alone not-for-profit organization. Thus, NYPL, BPL, and QBPL are each separate 501(c)(3) not-for-profit entities, and each of the library boards is com­prised of appointed trustees and board selected trustees.

New York Public Library:

The NYPL was founded in 1895 and has benefited from its long history in one of the wealthiest cities in the world. From its early roots, it was supported by the some of the wealthiest families in the city and has also benefited from the support of corporations and foundations in the city. NYPL also depends heavily on city funding, but it has been able to diversify its funding source with only 57% of its overall budget coming from New York City funding. Besides its successful annual giving program ($32 million) and annual gala, NYPL has had a very strong planned giving program which offers both bequests and a charitable gift annuity option. It also supports a robust Bigelow Legacy Society, which allows it to build and cultivate its planned giving donors.

Brooklyn Public Library:

BPL was founded a year after NYPL and is a very important organization in Brooklyn. BPL does not have the benefit of the demographics of New York City and the long support of those founding families, but has developed a strong operating and fundraising plan. It highlights its volunteering opportunities on its website. BPL has a much higher dependency on city funding, with city funding providing 82% of its total budget. At the same time, it has been able to raise $3 million to $4 million annually over the past few years. It has focused on its annual fund, corporate sponsorships, and special events, such as its annual gala. BPL has a $32 million endowment fund and does mention planned giving on its website; it does not offer charitable gift annuities. It also has a legacy society called Ingersoll. BPL had a separate fundraising foundation but decided to close it in 2007 and merge the trustees together.

Queens Borough Public Library:

Just like the NYPL and BPL, QBPL is a very important organization to the communities in Queens, and it has been around since 1896. QBPL has had a strong and consistent leader in President and CEO Tom Galante, who has been with the library since 1987. Its annual operating budget is about $102 million and it receives 93% of its funding from government sources. This allocation from government is similar to BPL. Queens Borough Public Library has an investment portfolio of about $22 million, according to its latest Form 990s, for which about 31% is restricted funds such as private philanthropy, state/ federal grants, and corporate foundation support.

QBPL reported in its June 30, 2012 annual report summary that it raised $3.7 million, which is a significant increase from the prior year. The library is very proactive with its fundraising plans and is the only library system in New York City to utilize a separate library foundation called Queens Library Foundation. The Foundation is led by Diana Chapin, executive director, and Peter Wayne, who focuses on major gifts and planned giving. Queens Borough Public Library has started a golf event this year and has been creative with its estate planning seminars at some of the library branches.

QBPL has also been strategic with its fundraising technology plans through the use of email updates to its donors. On its website you can learn more about its foundation staff of six (which includes a dedicated staff member for foundation and corporate grants), its E-newsletter, and volunteer opportunities. Diana Chapin commented: “Funders, whether foundations, corporations, or individuals, are often confused about why libraries need private support and believe that libraries are government entities. Having a separate Foundation helps make it clear that the Library is a private corporation and also provides a separate Board whose dedicated mission is to assist in garnering private support, rather than providing guidance in operational and policy matters.”

Libraries like other American nonprofits have to learn how to deal with the new government and cultural changes that are affecting the sector including new responsibilities and new finding sources for funding.

Check the bottom of this post for a top 20 ranking.

THREE IMPORTANT TRENDS

Public libraries are facing three important trends which underscore the need for enhanced fundraising:

  1. Providing services beyond just books, including : educational and social services
  2. Funding issues related to a soft economy
  3. E-Content acquisitions, especially e-books

Over the past decade, the technology in our country has changed rapidly. Libraries face the increasing demand for e-book content. According to the Pew Internet & American Life Project, 73% of Americans in the last 12 months say they visited the library to borrow print books, while 17% say they visited to borrow or download an audio book.

Public libraries will also need to diversify their fundraising plans to include a full array of fundraising channels. For example, planned giving and legacy societies are very important areas to develop. Planned giving is a way to increase endowment funds. NYPL has been very successful in building up its endowment through planned giving (bequests) over the years. Such as with other nonprofits, technology is also an important area to consider as many not-for-profits, including public libraries, are assessing how they communicate with their donors through websites, emails, and social media. This should be part of a written strategic technology plan as a component of the fundraising plan.

As we see with public community colleges facing government cutbacks and not-for-profit hospitals being impacted by The Affordable Care Act and Medicaid/ Medicare cutbacks, public libraries will continue to face budget cuts and will have to take a more active role in their fundraising plans. With the softer economy and government cutbacks, these libraries will need to consider other sources such as private philanthropy and government /foundation grants.

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How all of this can help your nonprofit:

1-Explore the benefits of a separate foundation. If you have one, explore how other nonprofits market their foundations.

2-Maintain a diversified fundraising plan that utilizes and array of donor channels from annual funds to special events.

3-Enhance your donor communications by maximizing your website and email/social media strategies.

4-Build your planned giving program and start a legacy society that connects to your donors.

Walter DillinghamThe preceding is a guest post by Walter J. Dillingham, Jr., managing director and business development officer in the Endowments and Foundations practice of Wilmington Trust, a national wealth management company whose offerings include personal trust, wealth planning, fiduciary, asset management, and family office services. You can read the full study including tables on the GuideStar website: http://www.guidestar.org/downloadable-files/2013-public-libraries.pdf.

Rank Library Name Library Foundation Name Foundation Founded Total Foundation Assets (Per IRS Form 990)
1 Lyndon Baines Johnson Library and Museum Lyndon Baines Johnson Foundation 1969 $151,401,265
2 Robert H. Smith International Center for Jefferson Studies The Thomas Jefferson Foundation 1923 $140,783,747
3 Fred W. Smith National Library for the Study of George Washington at Mt. Vernon Mt. Vernon Ladies' Association 1853 $122,258,546
4 Ronald Reagan Presidential Library Ronald Reagan Presidential Library Foundation 1985 $106,305,025
5 Seattle Public Library Seattle Public Library Foundation 1981 $53,428,189
6 George Bush Presidential Library and Museum George Bush President Library Foundation 1991 $49,739,006
7 San Diego Public Library San Diego Public Library Foundation 2002 $40,732,689
8 Free Library of Philadelphia Free Library of Philadelphia Foundation 1891 $38,294,374
9 John F. Kennedy Presidential Library and Museum John F. Kennedy Library Foundation 1963 $34,047,515
10 Providence Public Library Provident Public Library Foundation 2006 $31,820,384
11 Los Angeles Public Library Library Foundation of Los Angeles 1992 $30,221,544
12 Chicago Public Library Chicago Public Library Foundation 1986 $27,925,792
13 Gerald R. Ford Library and Museum Gerald B. Ford Presidential Foundation 1984 $23,382,621
14 Houston Public Library Houston Public Library Foundation 1977 $22,132,279
15 Indianapolis Public Library Indianpolis-Marion County Library Foundation 1969 $17,749,563
16 Queens Borough Public Library Queens Library Foundation 1988 $14,771,977
17 St. Paul Public Library Friends of St. Paul Public Library 1945 $13,510,541
18 Saint Louis Public Library Library Foundation for the Benefit of St. Louis Public Library 1989 $11,033,831
19 Nashville Public Library Nashville Public Library Foundation 1997 $11,012,541
20 Allen County Public Library Allen County Public Library Foundation 1984 $10,740,749
  Sources: Wilmington Trust; IRS Form 990s    

 

Topics: Trends Nonprofit Sector Foundations