Exploris learns from its mistakes

By Todd Cohen

Raleigh’s Exploris museum has been a learning lab for nonprofits.

Formed in 1999 to help children learn about the world, and boost downtown development, the nonprofit raised over $50 million in private and public funds.

But its staff lacked museum expertise, and Exploris failed to meet attendance and revenue goals.

And Gordon Smith, its founder and former chair, and Anne Bryan, its founding president, were slow to acknowledge failure.

Instead of curbing spending, Exploris built an IMAX theater, got a big bank loan without a clear repayment plan, and launched an expensive and unsuccessful crafts business.

Exploris even paid for humidity-conditioned off-site storage of wooden crates used to ship traveling exhibits that themselves did not need controlled humidity.

Exploris also had trouble defining its market, initially targeting children, and later an older audience.

And after failing to adequately thank and recognize donors, it asked them to help bail it out.

That made it much harder to keep raising money.

Exploris’ board also messed up, trusting more in Smith’s vision and Bryan’s spin than in budgetary discipline or its own judgment.

With a $4 million annual budget, for example, Exploris had no business borrowing $5 million.

And the four bank lenders simply fed the museum’s addiction to contributed and loaned financial support it had not earned and for which it had shown little gratitude or ability to repay.

Smith and Bryan finally quit, and Bonnie Hancock, a former Progress Energy executive, was named interim director in April 2005 to assess whether Exploris could survive.

Hancock, who now works at N.C. State University, cut staff and expenses, stabilized revenue and Wake County funding, landed corporate sponsorships, secured an offer by bank lenders to forgive part of the debt in return for a partial cash repayment, and instituted plans to merge with the Playspace children’s museum.

As a result, Exploris has begun to restore credibility with donors.

Its failures and revival underscore the need for accountability, efficiency, flexibility and innovation that donors and investors deserve and should demand.

To thrive, nonprofits need board and staff leaders, and donors and investors, who understand the roles they should play and the expertise they need, can exercise common sense and financial discipline, and are willing and able to recognize problems and adapt.

Todd Cohen is the Editor and Publisher of the Philanthropy Journal.

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