How Effective is Your
Public-Private Partnership?
Public-private partnerships, PPP's, the Third Sector - all of these terms refer to the joint ownership and/or operation of an enterprise by government and private parties. In the case of museums and cultural organizations, a public-private partnership is most frequently defined as a publicly owned asset, such as a museum facility and its collections, being operated by a private non-profit corporation, or 501(c)(3).
Working to form and refine public-private partnerships is becoming a growing part of MMC's practice. In recent months, MMC has been retained by government agencies and private non-profits alike to help plan sustainable futures for public museums and cultural organizations. Often, MMC is brought in to examine a public-private partnership when problems arise. We would like to share what we have learned so that your organization may avoid the most common pitfalls.
One thing is clear - many local governments are trying to get out of the culture business, moving from owner, operator, and sole funder, to owner and partner with a 501(c)(3) organization. This move toward public-private partnerships has been driven by the realities of aging infrastructures and pressing human service needs which leave diminished public funds to support local cultural organizations. At the same time, local government officials understand that museums, historic properties, zoos, and cultural centers are valuable public assets that, when allowed to thrive, can play an important role in economic development.
In benchmark studies conducted by MMC comparing organizations across the U.S., we observed that shifts in governance structure from government-owned and operated to greater private support and management have enabled organizations to adapt to fluctuations in the economy by reducing the reliance on government support. Organizations also appear to flourish when the Executive Director is given clear authority to run day-to-day operations and the private non-profit partner has a stated purpose to fundraise in support of the organization. Further, while the trend is decreased reliance on public support, museums and cultural organizations able to increase earned and contributed revenue are seen as economically viable by the public partner, who is therefore more willing to invest in the partnership.
In looking at the effectiveness of a public-private partnership, it is important to ask the following questions:
- Does the written agreement directly and concisely divide the respective roles and responsibilities of each party?
- Are the parties communicating on a regular schedule, so that issues are identified and addressed before problems occur?
- Is financial reporting, both internally and externally, clear and consistent so that all parties are provided with the information necessary to determine the fiscal health of the enterprise?
- Are percentages of earned and contributed income and allocation of expenses being measured against like organizations? Benchmarking helps all parties determine the success of the partnership relative to best practices in the field.
- Is data being collected to address impact and value to the community? Attendance, membership, facility use, outreach - establishing and tracking performance measures provides a vivid picture of how a community utilizes the cultural asset, and aids in clarifying and meeting expectations.
If your organization is contemplating a public-private partnership, or if your governance and funding model need examining, we invite you to contact us at MMC. We have the experience and the ability to help you maximize the effectiveness of your public-private partnership and to help you plan for a sustainable and impactful future.
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