As arts organizations seek to manage the financial challenges they face during the current pandemic, the place an endowment holds in their financial picture is gaining attention.
Long-Term Asset Foundations are being called upon to use endowments ‘more actively’, and provide much needed cash flow and income to their beneficiary organizations. It has long been a successful model that an endowment be considered as a long term asset. The stability of a stable, recurring annual income is important to an organization’s day to day operations and financial planning. The perspective of long term investing, disbursing a portion of annual returns ( generally 3 to 5%), allows a fund to grow over time, protect that annual income against inflation and provide for increased cash flow over time. It is a model that serves the arts community through the Ontario Arts Foundation well.
Source of Additional Income The Ontario Arts Foundation has tried to address this by recognizing the need for financial support (which is now), and deciding to pay out additional income to our arts organizations in addition to the annual payout. The Board felt comfortable that the positive growth in endowment portfolio’s over time, leaves the foundation with the ability to increase current support, be confident that we can continue our pattern of stable income over time, and continue to carefully grow for the long term. That translated in May to an additional $1.0 million dollars in operating support for Ontario arts organizations.
Different Endowment Use Perspectives For a U.S. perspective, this New York Times article shows how U.S. cultural organizations are considering the use of endowment assets more broadly, more creatively in response to current needs.
In Canada, a group of Foundations, through Give5.ca, are encouraging funders in 2020 to increase the level of endowment giving to 5% of assets – traditionally the high end of range of annual payouts. The sector recognizes, that endowments have a strong role for the long-term, but can be adaptable and accessible when shorter-term needs become paramount.
Arts and Culture Organizations – Adapting for a New Environment
May 21, 2020
I’ve observed recently that Ontario arts organizations are now moving to an environment where they are trying new ways to communicate their arts mission, how best to respond to the current COVID-19 world we live in.
Plans for the future TRG Arts has produced a helpful report that may be useful as arts managers and Boards make plans for the balance of 2020, and into 2021 and beyond. It suggests that every organization consider four questions:
• What might next year look like? • What is the source of our strength? What do we do that is most meaningful and relevant to the community? • How will we manage our people and revenue propositions to confront this new reality? • When our doors reopen, where will we gather?
Helpful articles The report offers a series of discussion points that every organization can consider and apply to its own specific mandate and place in its local community. Along with the report are links to a series of related articles that can add depth to each of the questions and issues arts organizations face.
It is refreshing to see that, despite the significant challenges, arts organizations are exploring new options for presenting art and supporting our communities during this time of social distancing. This is truly an example of resilience and creativity.
Canada Emergency Wage Subsidy
March 30, 2020
During this morning’s address to the country, Prime Minister
Trudeau offered more important details on the Government of Canada’s Emergency
Wage Subsidy that was first announced on Friday of last week.
The following eligibility parameters and details were
Businesses that can show that their revenues
have decreased at least 30% since the start of the pandemic will be eligible
for the 75% wage subsidy.
The assessment of the 30% revenue drop will be
done after the fact. If the drop was actually not this low, the company will
have to repay.
The number of employees a company has will not
The subsidy will apply to non-profit and
charities, as well as companies that are both big and small (no cap).
The government will cover up to 75% of the first
$58,700 that employees earn. That means up to approximately $847 a week. This
will be backdated to March 15.
The subsidy will be a direct payment to the
company so they can pay employees.
Prime Minister indicated that there will be additional background documents and
details coming tomorrow, including the estimated fiscal cost of the new
program, from both the Minister of Finance and Minister of Small Business,
Export Promotion and International Trade.
In his remarks after announcing the new details of the
Emergency Wage Subsidy, the Prime Minister also made very clear that any
businesses that seek to take advantage of the new program, or game it, will
face strict consequences – expect those details tomorrow as well. He also noted
that should employers be able to cover the additional 25% of salaries not
covered by the subsidy, they should pay their employees that difference.