0.12 Chapter nine: the liabilities of nonprofit assets  (Page 3/5)

Such a proposition has profound implications for the collections management policies of nonprofit entities responsible for large collections. Most important, it implies that these institutions must be extremely careful about collecting items that are not centrally related to their missions. Holding peripheral collections does not add to the cultural value of the entity. In fact, because owning nonprofit assets results in a long-term financial cost, not a benefit, maintaining collections that are not directly related to an institution's mission diverts resources from the care and sustenance of the assets the institution values most.

The concept of cultural value influences not only what an institution should acquire but also what it should keep. The Society's history provides a dramatic illustration of what can happen when the relationship between an institution's mission and its collections is not carefully managed. The uncritical accumulation of materials for many, many years played a major role in creating financial obliga­tions that far exceed the Society's present capacity to meet them.

Acquisitions policy

Because cultural assets are costly, even when a potential acquisition is judged to be relevant to an institution's mission, care must be taken to ensure that resources will be available for its long-term maintenance. In some cases, it may even be pru­dent to decline to accept a gift, even if it is enormously valuable. An analogy will help illustrate the point. Suppose that a person with a modest income appears on a television game show and wins a car, a brand new Jaguar. After driving home, the contestant discovers that with the Jaguar comes a whole host of expenses for taxes, insurance, gas, and maintenance. Without the requisite income to afford the new expenses, the contestant becomes increasingly late in making house payments or has trouble paying for regular living expenses. Even a moderate unforeseen expense could drive the person into bankruptcy. In this case, the win­ner must be smart enough to know not to accept the "free" gift. The admonition is clear: "Don't take the Jaguar!"

Of course, the contestant in this Jaguar example always has the option of sell­ing the car. As has been mentioned, nonprofit institutions do not typically have that option. Consequently, when offered a gift that is relevant to its mission, nonprofit leaders should also ask the donor to help pay for its ongoing maintenance. After all, the nonprofit institution is not receiving a financial benefit from the donor; rather, it is taking on a financial obligation. If the donor is unwilling or unable to provide supplemental financial resources, the institution should either be confident that it can raise the funds in other ways or it should decline the gift.

The inherent cost of cultural assets also suggests that nonprofit managers should attempt to retain flexibility in what they do with the gifts that their insti­tutions do accept. Whenever possible, terms of gifts should be structured to be for the benefit of the institution, not to achieve a specific objective of the donor. Circumstances change, and flexibility must be retained to allow the governing board to use and deploy the institution's resources in the most efficient manner.