The OAF Blog

Getting Capital Right

April 02, 2015


Getting Capital Right: Six myths and Realities for Grantmakers Part 1 and Part 2
Two recent blog posts from
Associated Grant Makers, written from the perspective of a grantor/funder have insights relevant for Board members and arts leaders.

The articles resonated as recently the Department of Canadian Heritage announced the 2015 matching grants under the Endowment Incentives Component. This year, organizations who contributed to their endowments will receive matching grants of $ 0.97 for every dollar raised and contributed. This is extremely positive for those participating, but a high match also indicates that many organizations are choosing not to raise capital or endowment money. Given we all recognize the power of matching, it is a puzzle that more arts organizations in Ontario and Canada are not taking advantage of the opportunity.

Stable source of cash
While capital held in an endowment is ‘committed’, it does create stability in the production of cash income every year – a stable, reliable source not tied to a grant application process. The articles observe that most nonprofit organizations exist on one to two months of working capital.  A healthy and well capitalized organization will have both investments (endowment) as well as access to cash – to pay the bills, innovate/experiment, weather economic cycles and invest/innovate in new programs.

The articles encourage organizations to think about capital by asking – will the funding align with your organizations’ strategy and financial plan?  A business plan that supports operational stability and a capital plan that sets out goals for longer term saving and investment are two key criteria. Liquidity is of course important, but don’t overlook the opportunity to build your endowment - particularly in an environment where an active government matching program, such as Cdn. Heritage is in place.

Income with no strings attached
Every organization can, and should save, and try to manage costs in line with revenue realities. Any surplus provides you with breathing room to manage programs and take risks. One of the comments of the article, which resonated, was the reference to funders making gifts ‘with no strings attached at all’. This is one of the benefits of endowment income – it arrives each year and the organization makes the choices on how it will best be deployed.

Capital and capitalization of your organization are long term issues – your needs will evolve and change over time. Access to capital ( or the income on it ), be it from an operating reserve, or donor gifts – which are matched is critical to your long term success.

 

 

Arts Advocacy - 2015

February 23, 2015

For some time, the Ontario Arts Foundation has been quietly advocating on behalf of arts organizations for a renewal of the Province of Ontario Arts Endowment Fund matching program. This innovative program, which ran from 1998 to 2008 saw the Government of Ontario invest $60 million in matching funds for endowment. It was a compelling success story of a public/private partnership. In summary, 273 arts organizations in 75 communities across Ontario created endowments with the Foundation. As private funds were raised by an arts organization, and contributed to an endowment, the Foundation matched those contributions dollar for dollar. Since inception, the $60 million investment has grown ( through private funds raised and market appreciation ) to over $140 million. Since 1998, a cumulative $55 million in income has been disbursed, which represents an over 90% return on the provincial investment. Very few initiatives can demonstrate a similar, sustained  long term return.

Long-term giving
With funding for the arts being either static or reduced, we believe matching programs are a powerful stimulus to focus private donors on long term endowment giving. The income from these endowment programs is unrestricted – the arts organization can deploy the annual income in any way that best meets the needs of the organization – annual operations, arts scholarship, arts education in the community.

 

AEF Objectives
The objectives of the Arts Endowment Fund program are to:

  • Increase self-generated revenue and be a stable source of long term income
  • Foster artistic excellence and engagement in the arts by people living in Ontario
  • Enhance an arts organizations’ ability to create employment and contribute to Ontario’s economy

 

Ontario Ministry of Finance - Budget Submission
In addition to regularly meeting with staff at the Ministry of Tourism, Culture and Sport to sustain awareness about the program’s success and promote it, we also recently made a Budget Submission to Ontario’s Ministry of Finance promoting inclusion of renewal in the 2015 budget. We recognize that the government is very focused on addressing Ontario’s fiscal situation, but firmly believe one of our role’s is to promote this source of funding for the arts at all levels of government.

You can read the submission here.

 

What are the Policy Issues Facing Artists and Cultural Organizations in 2015

February 04, 2015

A Toronto based arts service organization The Arts Advocate provides commentary and up to date information about government policy, events and trends in the cultural sector of Ontario. At the end of December, they invited subscribers to their service to complete a short survey on the most important policy issues facing the cultural sector in 2015. We completed the survey in early January, and at that time responses showed:

Issue Responses (%)
Improved public investment through grants or tax credits       68.0%
Paying artists adequate fees        40.0%
Amending the Copyright Act to better protect creators and publishers            20.0%
Updated cultural content regulations         16.0%
Greater international presence and promotion for Cdn artists and products         12.0%
Policies and programs to strengthen audience engagement              8.0%


For more information on the survey results, visit the
Arts Advocate Blog.


Arts Endowment Fund Renewal
As the Ontario Arts Foundation actively is seeking renewal of the Arts Endowment Fund matching program, with the Ministry of Tourism, Culture and Sport, we are heartened by the high degree of support for public investment in the arts. The responses are interesting and it will be interesting as the year progresses, to see which issues continue to have profile and one hopes, a policy/government response.

 

 

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