The OAF Blog

Ontario Arts Foundation - 2013 Was a Good Year for Investing

May 28, 2014


The Foundation holds two types of capital funds:  endowment funds where capital is held permanently and only income is available to be disbursed, and restricted funds where capital can be disbursed, depending on the agreement with the donor. Our investment objectives are long term, with the goal of achieving investment returns which allow for annual income payments to arts organizations together with preserving capital and maintaining the purchasing power of income over the rate of inflation. We strive to achieve at least a 5% real rate of return over a five year period. This allows the Foundation board to make sustained income payments each year in the range of 3 to 5 %.

Fiscal Year Ending March 31, 2014
At the end of March 31, 2014, Foundation assets under management were $67 million (subject to year-end audit review), up from $61.2 million in 2013. The asset growth is a combination of new contributions and matching funds received during the year of $850,000 and strong investment returns. This allowed us to make award and payouts and distribute just under $3 million in income to the 273 arts organizations across Ontario for whom we hold endowments for.

Over the years, the Foundation’s investment strategy has allowed for continued growth in income paid out year over year. This unrestricted income is an important resource for arts organizations in Ontario.


Strong Investment Returns
Investment returns for the year ending December 31, 2013 were very positive and the Foundation portfolio achieved 14.9% for one year. Five year returns were 10.2%,which supports our long term goal of achieving long term absolute capital appreciation, with a focus on capital preservation. Investments are made in high quality companies with trusted management teams who have a long term focus. To achieve our investment objectives, the Foundation believes it is prudent to have the assets managed by professional investment managers on a discretionary basis. Active management, where the portfolio managers make decisions regarding asset classes, industry sectors and individual security selection allows the Foundation to structure a risk managed portfolio that is expected to achieve long term positive returns.

In 2013, the Foundation employed three investment managers. During the first quarter, we consolidated investments allocated to the ‘alternatives’ sector from two managers to one, where performance results were stronger and aligned with our long term investment objectives.

What the Future May Hold
Despite considerable political uncertainty, and volatility in security markets worldwide, investments returns to March 31, 2014 continued to be positive. Investment performance for the quarter ending March 31, 2014 was 4.0%.  Although it is difficult to predict, all signs are pointing to a market correction in 2014.  Our focus will be strongly directed to managing the downside risk in the face of market instability and avoid losing capital over the longer term. 

 

 

Professional Development in the Arts

May 02, 2014

 

I read a timely blog posting that should be on the agenda of the Board of any arts organization. The thrust is that a greater focus is needed on developing the professional skillsof arts managers/leaders. It is well accepted in the corporate world that an organization’s success is tied with a continuous focus on growing the abilities and skills of today and tomorrow’s leaders. This is equally applicable to arts and culture.

Professional Development Training
Critical to the success of any business are the skills of management. Professional development training should be part of running any business entity. Arts organizations are small, and in some situations, large businesses. One of the roles a board can play is to help identify for the organization’s managers, what professional development may be most appropriate for the arts organization, what is affordable and where to source the training. This illustrates the value of a board member with human resources skills or professional development experience.

Cost?
We recognize that training has a cost attached to it, and resources are always limited. It is, an investment that can lead to a more efficiently run organization, an organization that retains/develops staff ( impacting productivity ), and one adapts to changing business/economic realities. There is a whole range of skills required to run a healthy organization. If there are opportunities to improve personal and professional skills, the more the arts organization will be positioned to meet the most complex problems. Learning is an ongoing process, both at the creative and management level. Professional development should not be a ‘nice to have’.

 

Prioritize training
The blog recommends that two things need to happen – the arts sector culture should recognize that continuing skills training is critical to survival and should be accessible throughout the organization. This should translate into a line item in the arts organizations’ budget – for board, staff and perhaps even volunteers. The budget line has to align with organization resources, but this is an investment I believe, most funders will understand, and support.

Like any business, the arts sector is experiencing the start of a transition from the current generation of arts managers to the next. Providing professional skills training is critical – be it business management, leadership skills to managing in a new economy and a changing technology environment. Sharing institutional knowledge and life experience is part of that mix.

I found the blog post compelling and a quick read – I encourage you to read it, share it with your Board and incorporate professional development as part of your organizations’ financial plan.

(Barry's Blog is a service of the Western States Arts Federation, WESTAF).

 

 

The Economic Value of Arts Education

March 20, 2014

In a recent submission to the Province of Ontario recommending re-instatement of the Arts Endowment Fund matching program, we make the argument that an investment in the arts is an investment in economic growth and job creation. Economic studies increasingly report on the positive economic activity resulting from arts and culture activity. As examples:

        • 252,000 people in Ontario are directly employed in arts and culture

        • In 2010, 73% of Ontario residents attended a performing arts event, spending an estimated $600 million

        • Government tax revenue ( from all levels ) from arts and culture spending was approx. $1.7 billion

 

Economic Benefits of Arts Education
What isn’t as commonly reported are economic benefits arising from arts education activity. A recent article in the Chronicle of Higher Education comments on the ‘economic value’ of an arts education. The study (by the National Endowment for the Arts) is interesting as it seeks to follow the relationship of arts and culture industries to GDP ( a countries’ gross domestic product ). It would be interesting to unearth Canadian data, but the summary results suggest arts education is a path that leads to greater creativity and innovation in the work force.

        • In the US, arts education added $76. Billion to the country’s GD

        • Arts education as an ‘industry’ employed almost 18,000 people

        • For every dollar spent by a consumer on arts education, an additional 56 cents is generated elsewhere in the US economy.

 

Intrinsic Benefits
Education in dance, theatre, music and the visual arts stimulates curiosity, creativity, imagination and capacity for evaluation – skills highly prized in in the work force.  An older report by the RAND Corporation ( Gifts of the Muse – 2004 ) comments on two benefits from arts participation. They were phrased as ‘intrinsic benefits’ which connect with ‘a distinctive type of pleasure and emotional stimulation’ for the participant, and ‘instrumental’ benefits, more output/quantitative oriented. The article uses the analogy of an arts festival, which creates local economic activity (instrumental) and social interactions within a community (intrinsic). Instrumental benefits have been more difficult to quantify and therefore have been reported on less, but now with this study, direct economic benefits can be articulated and measured.

It would be beneficial, if it could be universally accepted that arts education is integral to education at all levels. Being able to point to economic benefits may help promote arts education, at a time when it can be the first budget to be cut/cut back in challenging financial times. In the arts organizations we serve, many organizations direct endowment income towards arts education/arts outreach programs in their local communities. As well as instilling the ‘instrinsic benefits’ to children, youth and adults, these program employ artists. In smaller communities, arts education programs ( culture activity in general ) are important draws to professionals considering locating in a non-metropolitan community. As arts director recently stated to us – ‘The interest from the Arts Endowment Fund supports our arts education programs for students attending schools in Toronto’s priority and inner city neighbourhoods. Many of these children are new to Canada and many have, otherwise limited access to arts education experience with a talented professional artist.”


We believe strongly in arts education – it is good economics, our artists deserve it, and the kids deserve it.

For more information on the article, and the original RAND study ( it is long, consider reading the Summary section ):

http://chronicle.com/article/Who-Knew-Arts-Education-Fuels/145217/

http://www.rand.org/pubs/monographs/MG218.html

 

 

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