College and Research Libraries Financing New Technologies, Equipment/Furniture Replacement, and Building Renovation: A Survey Report Gary M. Shirk This survey describes the methods that large academic and public libraries use to finance the implementation of new technologies, to replace equipment and furniture, and to renovate buildings. The range of methods used by libraries and the factors leading to their use are inves- tigated. Approximately twenty different financing methods are used, but no library uses more than nine of these for any one area of expenditure. Operating funds are the principal source for capital expenditure. · ew librarians would deny the importance of financing capital expenditures in libraries. Con- structing buildings and filling them with library materials are, afterall, prerequisites for providing a full range of library services. However, in recent years as building programs become more diffi- cult to initiate, libraries have become more interested in and concerned about the fi- nancing of other areas of capital expendi- ture, especially new technologies, equip- ment and furniture replacement, and building renovation. When the discussion among library managers and fiscal officers turns to financing new technologies such as cable television, satellite communica- tions, microcomputers, etc. or more mun- dane projects like reupholstering furni- ture or adding air-conditioning to a nineteenth century building, more ques- tions than answers are generated. What methods do similar libraries use to finance these areas of capital expense? How do they determine which method to use? Are some methods better suited to one of the areas than to others? Published literature on library financing yields few answers and the search for in- formation is difficult and often unreward- ing. Although access may be possible through subject terms such as ''account- ing and bookkeeping" or "grants-in- aid,'' the researcher must access the litera- ture through more general terms such as "automation," "information networks," ''building for the handicapped,'' ''tax or building campaigns," and "cable televi- sion.'' General sources for information about capital financing and fund-raising in li- braries surface readily. The Bowker Annual usually includes a section on legislation, funding, and grants. This section reports the library use of LSCA funds, qeneral revenue sharing, and block grants. There Gary M. Shirk is director, Approval Plan Division, Yankee Book Peddler, Contoocook, New Hampshire 03229. Formerly, Mr. Shirk was head of acquisitions at the University of Minnesota. 462 are also several accounts of federal sup- port for libraries. 2' 3' 4 In "Extra- institutional Funding: Management and Strategy for Survival,'' Boaz provides a brief introduction to fund-raising, particu- larly grants seeking. 5 Other sources such as Boss/ Corry/ and Waters8 also provide valuable fund-raising insights. However, the literature does not report how libraries finance important, but not particularly newsworthy, capital expenditures. This paper attempts to fill the gap by re- porting the methods used by a selected group of large North American libraries to finance capital expenditures. Specific ob- jectives of the survey were: 1. To provide a list of financing meth- ods used by different types of libraries for three areas of capital expenditure: new technologies, equipment and furniture re- placement, and buildirlg renovation. 2. To describe the factors which deter- mine the financing method chosen. 3. To describe the methods most fre- quently used by different types of libraries for each of the three different areas of capi- tal expenditure. The survey describes the methods used by the responding libraries; it does not provide data to be generalized for all li- braries. Any differences noted are there- fore real differences among the reporting libraries. Hence, participating libraries can compare their financing methods with similar libraries. To permit comparisons among peer institutions the participating libraries are listed by group in Appendix A: Public, University-Private, and University-Public. Results for individual libraries are not presented. METHODOLOGY Survey packets were sent to 102 large li- braries in the U.S. and Canada listed in the LAMA/LOMS Budget, Accounting, Costs and Finance Committee's 1980 pub- lication Library Business and Fiscal Officers Directory. Each packet consisted of a cover letter, 2 pages of definitions, and a 2112 page questionnaire. The questionnaire was designed to be self-administered in approximately ten minutes by an in- formed library administrator or fiscal offi- A Survey Report 463 cer. The primary task of the respondent was to indicate all the financing methods that had been used in the past five years to finance new technologies, equipment and furniture replacement, and building reno- vation. To assist the respondent, the ques- tionnaire listed eighteen potential meth- ods and provided space for listing others. The respondent was also asked to indicate the type of library, the most frequently used methods for each of the three capital expense areas, the library's total annual budget, its equipment and furniture budget, and its building maintenance and repair budget. Lastly, space was provided for additional comments. Seventy-seven of the libraries re- sponded and the rate of return was high for all three types of libraries. Upon re- ceipt, the questionnaires were coded and keypunched. Because inferential analysis had not been planned and could not be supported by the methodology, only sim- ple tables were required. The Statistical Package for the Social Sciences was used for generating base tables. These were fur- ther summarized so that the results for each area of capital expenditure could be compared visually. Comments were sum- marized manually. RESULTS Generally, the survey instrument posed few difficulties for the respondents. How- ever, two problems emerged. First, de- spite the inclusion of brief definitions for most of the terms used, some respondents (Canadian librarians in particular) found some of the wording unusual or ambigu- ous. Second, the complexity and variety of financial reporting systems made com- parisons based upon total annual bud- gets, equipment and furniture budgets, and building maintenance and repair budgets virtually impossible. Neverthe- less, the comments suggest that building maintenance is usually included in the parent institution's budget while equip- ment repair is usually the responsibility of the library. Financing Methods Used All eighteen financing methods listed in ~ a"\ ~ ("') ~ TABLE 1 n> (JQ n> FINANCING METHODS, BY TYPE OF EXPENSE AND TYPE OF LffiRARY ~ N~ni~~chnolo't~v: EO~~ent/Fifrnn:e Building Renovation ~ Public n> Public Public Univ: Univ: C/l Lib. Pub . Priv. Total Lib . Pub. Priv. Total Lib . Pub. Priv. Total n> Method (%) (%) (%) (%) (%) (%) (%) (%) (%) (%) (%) (%) ~ n Operating funds 95.2 89.7 52.9 83.1 90.4 92.3 52.9 83.1 76.2 71.8 29.4 84.4 :::- Special state or federal ~ ,... 'Jeprop. 19.0 30.8 20.8 19.0 17.9 5.9 15.6 14.3 25.6 5.9 18.2 o-... Fe eral grants 52.4 33.3 17.6 35.1 57.1 17.9 24.7 23.8 2.6 6.5 ~ State grants 42.9 10.3 16.9 23.8 12.8 13.0 9.5 5.1 5.9 6.5 ;· Private foundation ~ants 28.6 17.9 52.9 28 .6 28.5 12.8 29.4 20.8 9.5 2.6 17.6 7.8 C/l Special purpose tax evies 4.8 1.3 2.6 1.3 Publicly solo bonds 9.5 2.6 3.9 14.3 5.1 6.5 19.0 5.1 5.9 9.1 User fees/charges 14.3 35.9 35.3 29.9 23.8 15.4 23.5 19.5 14.3 5.1 11.8 9.1 z Libr~fines 14.3 5.1 11.8 9.1 38.1 5.1 11.8 15.6 23.8 17.6 10.4 0 Gifts, equests, < 32.5 19.0 41.2 22.4 n> endowments 23.8 15.4 58.8 27.3 38.1 23.1 47.1 15.4 ~ Depreciation reserve 17.6 3.9 5.1 17.6 6.5 4.8 7.7 5.9 5.2 Land/buildin~ sales 4.8 2.6 2.6 4.8 2.6 2.6 4.8 2.6 2.6 n> ... Equipment s es 4.8 7.7 5.9 6.5 4.8 12.8 5.9 9.1 4.8 2.6 2.6 )ooool I.C Book sales 4.8 2.6 5.9 3.9 23.8 5.1 17.6 13.0 4.8 11.8 3.9 QD Loans from parent ~ institutions 4.8 5.1 7.6 7.8 4.8 2.6 29.4 9.1 5.1 11.8 5.2 Loans from others 4.8 2.6 2.6 4.8 2.6 2.6 4.8 1.3 Lease/payback plans 4.8 5.1 3.9 7.7 11.8 6.5 Coop. purchasing 7.7 11.8 6.5 2.6 5.9 2.6 Other 9.5 10.3 41.2 16.9 19.0 10.3 35.3 18.2 14.3 10.3 47.1 19.5 Re(N'rting libraries umber) 21 39 17 77 21 39 17 77 21 39 17 77 the questionnaire had been used by some libraries in the past five years. Over 80 per- cent used operating funds for all three ar- eas of expenditure, and approximately 25 percent reported using gift funds for each of the three areas. Other financing meth- ods are used with less frequency and vary by expenditure type (table 1). While 35 percent reported use of federal grants for new technologies, only 25 percent used this source for equipment or furniture re- placement and just 7 percent used it for building renovation. The usage of founda- tion grants paralleled federal grants: 29 percent, 21 percent, and 8 percent respec- tively. User fees, a very different source of funding, followed the same distribution: 30 percent, 20 percent, and 9 percent re- spectively. Public and private institutions use some funds differently. For example, in new technologies and equipment and furni- ture more than 90 percent of public li- braries and public university libraries used operating funds while only 53 per- cent of the private university libraries did. On the other hand, almost 60 percent of private university libraries used gift funds for new technologies while less than 25 percent of the public institutions used this source. This difference in the use of gift A Survey Report 465 funds can also be observed in the areas of building renovation and equipment and furniture replacement. Public libraries and university libraries, both public and private, differ in their use of financing methods. Forty-three percent of public libraries used state grants for new technologies while only 10 percent of the public university libraries did. How- ever, 35 percent of the university libraries used user fees for new technologies, but just 14 percent of the public libraries did so. In building renovation and equipment and furniture replacement there are no clear differences between public and uni- versity libraries. Roughly 17 percent of all libraries used methods not listed in the questionnaire. A list of these methods is presented in table 2. Although generalization is risky, pri- vate university libraries seem to rely upon more entrepreneurial sources than the public institutions; and public university libraries appear more entrepreneurial than public libraries. Frequency of Method Use Operating funds are clearly the most fre- quently used source for all three expendi- ture areas by all types of libraries report- ing: 73 percent for new technologies; 79 TABLE2 OTHER FINANCING METHODS USED, BY TYPE OF LIBRARY Public Library Unrestricted five-year tax levy Friends of the library pur- chases City capital outlay fund appro- priation (equipment for new buildings only) Special county appropriations University: Public Capital grants from provincial government Gifts/purchase of surplus in- ventory Campus wide competition for special equipment funds Plant funds (rented mineral rights) Sale of university owned utili- ties Capital funds raised by the umversity through private subscription University : Private Special church appropriations Non-recurring allotments from university for capital expense Fees from other institutions for providing shared access and other services Photocopy income University physical plant funds through planning pro- posals Special University funds for specific purposes Capital improvement reserve ~ 0\ 0\ (') 0 = TABLE 3 ~ (JQ ~ FINANCING METHODS MOST FREQUENTLY USED, BY TYPE OF EXPENSE AND TYPE OF LffiRARY ~ NUni~~chnoloifi~v: E0~~ent/FUUru~e Building Renovation ~ Public Public Public ~ Univ: Univ: Cll Ub. Pub . Priv. Total Ub. Pub. Priv . Total Lib . Pub. Priv. Total ~ Method (%) (%) (%) (%) (%) (%) (%) (%) (%) (%) (%) (%) ~ n Operating funds 75.0 85.7 47.1 73.0 75.0 91.7 52.9 78.7 66.7 65.6 28.6 59.1 ::::' Special state or federal r"4 .... Teprop. 5.0 2.9 2.7 5.0 2.8 2.7 18.8 9.1 0'" lot Fe eral grants 10.0 2.9 4.1 5.0 1.3 5.6 1.5 ~. State grants 5.6 3.1 7.1 4.5 ~ Private foundation ~ants 11.8 2.7 5.0 11.8 4.0 14.3 3.0 Cll Special purpose tax evies Publicly solo bonds 5.0 1.4 5.0 1.3 11.1 3.0 User fees/charges 2.9 5.9 2.7 z Libr~fines 7.1 1.5 0 Gifts, equests, < ~ endowments 5.0 5.9 2.7 11.8 2.7 21.4 4.5 ~ Depreciation reserve 5.9 1.4 3.1 1.5 Land/buildin~ sales ~ lot Equipment s es """" 1.0 Book sales 5.9 1.4 2.8 1.3 ~ Loans from parent institutions 2.9 5.9 4.1 Loans from others Lease/payback plans 5.9 1.3 Coop. purchasing Other 2.9 11.8 4.1 5.0 2.8 17.6 6.7 11.1 9.4 21.4 12.1 RelNrting libraries umber) 20 35 ' 17 74 20 36 17 75 18 32 14 66 A Survey Report 467 TABLE 4 FACTORS DETERMINING CHOICE OF FINANCING METHOD, BY TYPE OF LIBRARY Public Library University: Public University : Private Availability Availability Availability Operating budget level City, county policies Amount required Univ. admin. policy Type of project Amount required Univ. admin. policy Fund-raising success Operating budget level State laws and regulations Amount required Type of project State library priorities Probability of approval Operating budget level Eligibility U.S. government grant policy Probability of approval Source interest in the project Restrictions on funds percent for equipment and furniture re- placement; and 59 percent for building renovation funds (table 3). Within ex- penditure types, a lower percentage of private university libraries cite operating funds as the most frequently used source than do the public counterparts. Five financing methods (special pur- pose tax levies, sales of land/buildings, sales of equipment, loans, and coopera- tive purchasing) were not cited as ''most frequently used'' by any library. Private university libraries use more finandng methods. Choice of Method* The availability of funds was the most frequently cited factor by all types of li- braries for the choice of a particular financ- ing method (table 4). Three other factors emerged as important for all types of li- braries: (1) city, county, or university poli- cies, (2) amount of funds required for the project, and (3) operating budget level. The type of project was cited as important by university libraries but was not men- tioned by public libraries. Not surpris- ingly, state laws and regulations appeared frequently to affect the choices for public university libraries but were not critical factors for either public libraries or private university libraries. Range of Methods The range of methods used by any one library to finance the three types of capital expenditure is limited. No library used more than nine of the nineteen financing methods for any area of expenditure in the past five years (table 5). Over 60 percent used no more than three of the methods. The average number of methods used drops from over 3.0 for new technologies and equipment and furniture replacement to just over 2.0 for building renovation. In all areas of expenditure, the average num- ber of methods used was highest for pub- lic libraries and least for public university libraries. CONCLUSION This paper has reported the results of a survey of financing methods used by · seventy-seven North American libraries. Although the methodology chosen for the survey does not permit conclusions about libraries generally, we can draw conclu- sions about the responding libraries, and we can compare one library's situation to the group of institutions listed in Appen- *Respondents were asked to list the factors which determined their choice of financing method for any of the three areas of capital expenditure. The author standardized the terminology for the factors, divided them by type of responding library and listed them in order of frequency of citation. 468 College & Research Libraries November 1984 \OLr)J:-.. ('f') dix A. Four general conclusions can be ns~ 0 ~~ f'i.q;ct) c--i \0 reached: ,....; t-- t-- 1. Approximately twenty different fi- N nancing methods are used by the report- -l~ -~~ \0\0 ,....; ing libraries to finance new technologies, r-.:o c--i t-- ~;:JO...~ rlt-- ,....; equipment and furniture replacement, 0 1: and building renovation; but no library -< cant obstacles to the array of financing I:Q 1=0 < o' ~.o- 000,....; 0 methods that libraries have available to E-t 0 I:.Ll ~;J~ o\ct:ir' .q; ,....; them. CJ) rlNLrl N ;::J These are reassuring conclusions if the CJ) Cl traditional sources of library income, op- 0 0\ \0 t.n ['-. erating budgets in particular, become in-::r: «l~ ,....; 0~ ct),....;.q; ~ \0 f-< E-<~ ("<") \0 ['-. sufficient to fund new technologies, ~ equipment and furniture replacement, C) and building renovation. If you are a li-z ("<")['-. 0\ 0 -~ ·~ ·~# N brary administrator or fiscal officer, you Lt).q; ~ ['-. z ~o...~ ("<") \0 ,....; may have more financing alternatives --< 0 1: z -5 than you thought . Ask yourself: If peer li- rx:: Q) .__, ~~ rlt-...-.:t<..-