Anybody who is attuned to the economy can't help but notice the following:

The economy is tanking, with major equity market indices down:

4-Nov 2-Mar Perc Chg
S&P 500 1005.75 700.82 -30.32%
DJIA 9625.28 6763.29 -29.73%
Nasdaq 1780.12 1322.85 -25.69%

From finance.yahoo.com

Now for those who don't think Wall Street is the real economy:

http://www.calculatedriskblog.com/2009/ ... raphs.html

In addition, the federal (or is it feral?) government is now planning on the following changes to the tax code:

-Reduction of the maximum allowable charitable deduction to 28%. This by the way is basically a way to have Washington make decisions about what consitutes a worthy charity. I think we know where we might fall on that scale (carbon-based, male predominate industrial culture, etc) I don't see rail preservation prospering in a world where funding is contingent more on a grant statement than a good train ride.

-Increasing the CAP on the FICA tax from $106,000 to unlimited. Just less to spend

The effect will be clear: Atlas is shrugging and going to shrug more: translation rail-related museums are going to fall over time-even though I expect a minor bump in attendance this year, because a variety of entertainment expenditures (movies and alcohol) seem to be doing well (they usually do in down times)

Assume for a minute that you regard yourself as a custodian of your equipment, but more importantly, the reserve of human capital that allows the display, interpretation
operation and maintenance of increasingly archaic technology.

Mothballing equipment is relatively easy. How do you mothball skills and proficiencies?

Many mechanical arts can be lost. I think we once discussed the loss of sandcasting and other archaic techniques. Many of the mechanical arts seem to require a lot of tactile experience. We can now record things in video which allows people to see and hear things -but the feel, the smell, maybe that just has to be experienced.

If even half of what has been proposed since Janaury 20th becomes reality I fear we will be concerned with survival as individuals. I suspect that beyond the major art museums in New York, Washington, Chicago, etc. that most museums and non-government historical sites will close with very little regard to where their contents go or what happens to them. As you rightly point out we are so low on the list of charities as to not even rate an asterisk. If it is any consolation a community orchestra and a regional hospital I work with both feel the loss of charitable donations will spell the end of them. If the loss of deductions wasn't bad enough then then various carbon taxes, the prospect of hyper inflation and loss of mortgage deducts will leave little money to give anyway.

The orchestra is taking the approach of preforming until the money runs out - go out with a bang as it were and not try to keep a skeleton intact hoping for a reversal later on. I think this might sadly be the best option for us as well. Go out and run what you can so at least those around now will be left with some good memories. In 10 years there might not be anyone left who cares about historical railroads, let alone has disposable money to spend on them.

It's ALWAYS darkest just before the dawn!!! Markets ALWAYS go further than anyone thinks they will and ALWAYS look the absolute worst at or near the bottom. My guess is that we've got a ways to go yet but eventually this too will pass.

IMHO-Ross Rowland

Ironically, the typical underfunded, largely volunteer railway museum may survive any downturn better than the big traditional museums with their large overheads -- i.e. paid staff and fancy, large air-conditioned buildings that are expensive to operate. My guess is the big guys charge off much if not all of their operating costs and salaries of their full-time staff against a series of specific grants or restricted donations, just like a research university. If the stream of grants dry up, they can get in trouble in a hurry.

The typical railway museum gets relatively little in grant money anyway, and what they get seems to be for occasional big infrastructure projects (buildings) that can be deferred even longer if necessary. Overhead costs are low because the management and staff are largely volunteer, and the buildings are simple and low cost.

(One of the largest sources of capital grant funding for railway museums seems to be the federal transportation grants once known as ISTEA funds. I suspect they are recession proof. Heck, they may go up with the additional federal stimulus money!)

I suspect what is crucial to the typical railway museum is maintaining the attendance level. Admission fees and related charges probably already provide a much larger percentage of the income than they do for the typical mainstream museum.

And the for profit tourist railroads never did get any donations or grant money. They too will rise and fall on changes in attendance level.

I guess the jury is still out on whether attendance will rise or fall. But movies are having their best year yet!

Thank Heavens kids still love trains, particularly little blue tank engines!

As Pete mentioned, the blue chip museums are feeling strain, but “the rich are different than you or I.” They have more diversified revenue streams than smaller attractions and their problems may play out in slow motion. 1. Contribution revenues, to be sure, are down. Much of this, however, is obtained from multi-year grants. Particularly if the museum has borrowed against expected grants, the lender requires the donor to sign a binding contract. It will be interesting to see how many donors renege and whether the would-be recipients take them to court. Nevertheless, the full impact of the economic downturn will not be felt for several years. 2. Endowment values are down nearly 40%, but most institutions have a spend policy that distributes endowment monies as a percentage of a three-year rolling average. As a result most institutions won’t feel the cash flow pain for another year. The smart ones are significantly tightening their belts. 3. Large museums play asset-liability games that rely upon predictable spreads between endowment gains and interest on variable rate tax-exempt debt. Many have been forced out of the variable rate market into high coupon bonds, locking in losses for years to come.

The biggest immediate problem is for those museums that get a large percentage of their revenues from municipalities. When governments are in distress, they jettison the tourism and cultural programs they once relished. For example, the City of Michigan City, Indiana recently backed out of a plan to build a railway museum. IRM is the beneficiary of their South Shore line car and is seeking donations to cover its movement to Union. This seems to indicate that more artifacts will become available due to their current owners distress and/or low scrap prices. Rather than hunker down, many membership organizations will be under pressure to acquire Dear Old Number What’s-it. Unless they get restricted donations up front and the acquisition meets a definite curatorial need, they would be wise to avoid temptation in these turbulent times.

These are gloomy times, and an attitude of resignation will become a self-fulfilling prophecy. Instead, be determined to keep your rail museum vision alive. Continue fundraising with all the vigor you can muster.

There's money available, and it can turn up in surprisingly unexpected places. Be pro-active. Ask people you know to give and invite your membership to furnish leads on potential givers. People who don't look wealthy or live in humble abodes sometimes have extra money just waiting for the right charitable moment. But that moment never comes unless one asks.

And asking is easy. The hard part is finding the person with purse strings to ask. The survival of a rail museum, however, will require persistent effort to seek out funding sources. This may require some creativity for museums located in rural areas, far from significant donor pools.

Large gifts deserve a personal thank you note; not a form letter with a cavalier and impersonal scrawl across the top saying "Thanks for your generous support." An educational institution with which I'm familiar once copied a donor's check (I saw this.) and wrote on the copy: "Thanks."

Be sure, after several months pass, to ask your donor for a second gift. For those who decline, ask if your museum can re-visit later on in the year or early next year.

Believe in your museum.

Sloan

This thread is another thinly veiled attempt to bring politics into this board. Thread should be locked.

Instead of offering useless "what if" scenarios with political bent, why not offer some concrete reasoning and planning?

Rob

This thread is about the effects of the bad economy, and some of the current economic policy that is now guiding the economy. I don't see any political advocacy.

I agree with Peter; at many railway museums the operating expenses are paid largely by public ticket sales. I can only relate my experience that a tangentially related entertainment/hobby industry, model train shows, has been seeing unusually high attendance levels since last fall. I think that this may be due, in part, to two factors that can benefit railway museums as well. First, people are looking for cheap entertainment: rather than spend $50+ for the family to see a movie, people may be interested in spending an afternoon visiting the local railway museum for half the price. Second, the cost of mass-media advertising - in newspapers but most especially on television - has gone down dramatically in many markets. If your museum is close enough to a major population center to make TV or newspaper advertising realistic, this is the time to get the biggest bang for your buck and spread your message to a far larger audience than you may have been able to afford a year ago.

Well said, Mr. Hicks. There are always opportunities. There are always people with money out there. It's just going to take a different kind of hustle than what people are used to.

Besides, here in California, we may be able to finagle restoration funds by pointing out that old railcars were made for 110 mph ("high speed rail" anyone?).

"This thread is another thinly veiled attempt to bring politics into this board. Thread should be locked."

I'm sorry, I didn't mean it to be "thinly veiled". Its overtly part of what Smith, Acton & Hume would've understood to be an inseparable fusion called "the political economy".

Politics is part of life and like it or not, 501c3's are creatures of the tax code. The current tax proposals really do seem make a seismic shift in where the decision making occurs, in order to allow Washington, not donors to decide what constitutes a worthy donee. If you think the big 501c3's-the ones that hire in-house economists- aren't up late the last few nights-with smoking Excel spreadsheets, well I can't help you..

Now some may not like the mention of vulgar politics, but then again, I didn't post a stealth link to Howard Dean's website; unlike another poster did four or five years ago. That's the difference between policy analysis and political advocacy.

Oh Supe, I didn't post a stealth link to a transit advocate who was running for President, I posted a blatant link. And I was rebuked. And I realized I was wrong. And I have tried to be a good boy since then.

You and I are like oil and water on this board. In person, I'd give you a hug and buy you a beer, but online we don't mix. And I'm sorry for that. And I mention it here instead of PM as an apology to the RYPN staff and readership for subjecting them to this. I promised myself not to reply to your posts, and last night I demonstrated the falibility of humanity.

So to all, including my arch nemesis Supe ;-), I apologize.

Rob

PS: on the bright side, remember that the Great Depression spawned the modern railfan movement. What will come from this downturn that helps us for decades to come?

Trains News Wire reports freight traffic down by 14%. Could it be as traffic drops the Class 1's start to see more value in publicity surrounding steam trips as pressure to regulate increases? Mainline steam trips could also boost some museum's coffers.

Bob Bunge

Friends on the Union Pacific were telling me a couple months ago that they had over a thousand units stored and were retiring older equipment in substantial numbers. Have not checked recently to see what the total is now. Unfortunately I don't see much of anything good coming out of the present situation. There are massive additional bad debt default problems just over the horizon and the rest of 2009 looks very bleak.

PC

Could it be as traffic drops the Class 1's start to see more value in publicity surrounding steam trips as pressure to regulate increases? Mainline steam trips could also boost some museum's coffers.


No matter what the economy; there are significant impediments to running steam.

1.) Lack of supporting infrastructure. Even when water towers were gone, Ross was able to call my uncle the then eager young (asst) volunteer fire chief (late 60's) and they could bring a pumper to Penobscot. I think back then VFD's accepted donations but mostly responded as civic outreach. Today, that has largely has to be a paid service-we ask a lot of those folks, including raising their own funds and they need to get paid to turn a wheel or open a hydrant.

2.) More efficient 24/7/365 operation. Same scenario as above. Even less than 20 years removed from running steam, the CNJ was wary of steam, but could have a couple of idling Alco's ready to assist-because there wasn't as much weekend traffic. (Of course, that wasn't saying much about during the week either)

3.) Lawyers. Into today's risk (litigation risk) nobody is going to risk a huge settlement to make minimal revenues in a publicly traded corporation. Even UP limits public excursions. There's enough stuff on corporate balance sheets keeping CFO's up at night now-they aren't looking to get a call from their corporate counsel about preparing an entry to add something to "estimated litigation, claims and assessments".

4.) In a world that has beeing trained like pavlov's dogs to slobber at the mention of the word carbon and to sneer disapprovingly at any "conspicuous" polluter, right now the PR value isn't automatic and it may be degrading.