The OAF Blog

Special events – building prospective new supporters

December 10, 2012

Supporters of arts organizations commit support in a number of different ways:

  • Purchasing tickets/subscriptions and attending regular arts programs

 

  • Volunteer support to the organization’s activities and administration

 

  • Financial support through annual campaigns, special events, and special purpose campaigns

 

Prospective New Supporters

Maintaining current records and information about supporter’s can be complicated and requires both dedicated staff resources, and often access to donor management software. I’ve heard many a discussion about the benefits of special / gala events. The gross proceeds often are large, which is wonderful. The costs and time required to plan, organize and execute leave arts administrators questioning whether this is a cost effective way to raise funds for the organization.  Michael Kaiser, head of the Kennedy Centre for the Arts in Washington, offers a non-financial perspective on the benefits of gala/special events that relates to attracting prospective new supporters to your organization.

Michael suggests that special events are excellent ways to create ‘prospecting opportunities’. Your current supporters purchase tickets or a table and bring their friends as guests. By attending the event as a guest, they become familiar with your organization and arts mission/programs. The host typically considers their guests to be people who are likely to support the organization. Following up with all guests is  an easy way to attract new donations, subscribers or volunteers.

 

LYBNTY's and SYBNT's

Our experience tells us that donors who already give to an organization are the easiest group to raise gifts and donations from. The Kennedy Centre characterizes these donors as “LYBNTY” – someone who gave Last Year But Not This Year”. Their donation is recent and you can reasonably expect that they will support you again. Donors who fall into this category can become a primary list of prospects to attend your next special event. It is a much more fertile group than the “SYBNTYS” – Some Year But Not This Year.

Tracking your donors and their frequency of support is an effective tool to where you place your resources. We can’t reach out personally to every donor or prospective donor. A simple tactic of reaching out to your organization’s ‘LYBNTS’, can save time and result in positive results for your organization.

 

Read More...

To read Michael Kaiser’s post, follow the attached link:   http://www.huffingtonpost.com/michael-kaiser/lybnts-and-sybnts_b_2190894.html

 

 

Considerations for Creating Capital and Endowed Funds

October 31, 2012

Arts managers ask us – why hold money in an endowment, where we only receive income and can never access the invested capital ? Investment returns have fallen and I’m not sure I can count on receiving income.

 

Capital Funds

Capital funds, whether endowed (income only and capital is invested in perpetuity), or a restricted fund (income and limited access to capital under certain conditions) offer an arts organization a stream of income, that through its constancy, helps protect the organization from swings naturally occurring in earned income or fund raising activities. Capital invested in this way is a source of income that recurs and is usually unrestricted – you determine how best to use it each year. You may add it straight into your operating budget, but we observe that thoughtful arts organizations use it to invest in the future – through arts education, youth programs or scholarships to support emerging talent, as well as supporting strategic investments in program/mission.

A long term fund can meet both your planning needs and the desires of your donors who want to create a personal legacy through a gift delivering a stream of income – one that sustains over time the arts they are passionate about. People of all means give time, and money to support an art form , an artist or arts organization important to them. That desire to support is usually lifelong and often is a process evolving from volunteer, to annual gifts and ultimately legacy gifts/bequests. The decision making process is unique to every person or family. Connecting to the values and interests of donors is essential to your financial stability and long term funds, endowed or restricted are a tool you should have in place to respond to different styles of giving. People of modest means can and do make meaningful financial contributions, often through a final gift or bequest.

 

Organizational Needs

When developing your mission, or implementing a strategic plan for the next five years, managers and board members will identify if the organization needs to think of capital in the short term – a board restricted fund that serves a ‘rainy day’ fund, or a plan to build capital funds that accumulate funds to create streams of future income – providing flexibility to invest in new, adapt to changing circumstances, invest in facilities or sustain the legacy of an artistic founder. Just as donors are unique, so are arts organizations. You need to ask yourself where your organization sits in its development – ask yourself:

  •         Do you have a firm grasp of your current liquidity needs – are all financial sources needed for today
     
  •         Is your organization able to create reserve funds for investment or to meet a short term funding gap
     
  •         Has your board thought about how long term gifts will help sustain your arts mission
     
  •         Can you direct long term income from gifts towards  priorities of the organization such as outreach, education
     
  •         Does your organization have the capacity, or access to expertise to manage long term gifts
     
  •         Would a long term gift that is subject to restrictions offer any risk to your organization
     
  •         Will a focus on long term gifts take away resources that are required to meet current funding needs
     

The Evolution of an Endowment

Historically, endowment meant capital was to be preserved and invested, generating a source of annual income. That often meant in ‘perpetuity – forever’ – one way to think of this or explain to a donor is a gift that will last 100 years or longer. Fewer donors think this way, and appreciate solutions that are long term, but also allow them to ‘see’ their gift at work. Endowment in this sense translates into a capital restricted fund – income is generated, but the capital may potentially be accessed in special circumstances/needs, or a fund is designed to last for a stated period – 10 – 20 years.

Understanding the demographic profile of your donors and the values important to them is important when discussing the best structure for a long term gift of capital.  It both strengthens the connection between your organization and arts program to the donor and helps create a planning result that meets your financial funding needs today and over a longer time frame.

For every person wanting to support your organization financially, there are many options to link their values and aspirations to your business needs – be they current year’s programs, or a income that supports strategic goals long term in nature. Making informed decisions, both on your part and with your donors and their advisors is most important – to ensure support sustains you today and sustains your mission for years to come – continuing to spin ‘straw into gold….”

 

 

Financial Management in the New Economic Reality

September 24, 2012

The last four years have adversely affected the ability of many arts organizations to raise funds and plan future arts programs: investment returns have been volatile, market declines impacted donations of securities, government funding is more variable and audience levels declined (and have not yet returned to pre-recession levels for much of the sector). Managing an organization’s finances in this environment is challenging, and can take time away from the key mission of delivering an organization’s arts mission.

 

Non Profit Quarterly

The Non Profit Quarterly recently published a very readable article commenting on financial management issues in an environment of lower and variable sources of public/private funding. It offers simple observations on areas to focus on to wisely to use the resources you have.

Not for Profit Quarterly:  Managing in the New Economic Reality

As an organization dedicated to managing long term capital funds (endowments, awards, scholarships), I spend time talking with arts organizations about growing existing capital funds or creating new funds. The article makes the point that endowments can be valuable assets (secure capital, steady source of income), but efforts placed on growing an endowment fund can take resources away from regular annual fundraising and capital raised for this purpose is not available in the short term. If the arts organization is facing financial challenges and needs operating cash, it is probably not a time to allocate resources/donations to endowment. Every organization will know if their financial plans can accommodate a focus on building a capital resource that delivers a stream of income to support its operations, or fund a particular outreach program.

 

Long term capital

Long term capital, held in a form of endowment fund is attractive to some donors whose personal philanthropy is long term in nature (planned gifts, special projects, legacy giving).  Opportunities for raising matching funds, such as the federal matching program through the Dept. of Canadian Heritage Endowment Incentives Program should be considered. We know that donors respond positively to matching opportunities.

In today’s environment, what is most important is that long term gifts, have flexibility so that the capital is set aside on a long term basis, but is not ‘locked away’ in perpetuity. The trustee’s or board should have discretion, in defined situations to be able to continue delivering returns, which may have to comprise both income and capital.

Arts managers are nothing if not resourceful, I’ve quickly learned, and sustainability over time is a blend of the new – public/private partnerships, collaborations, social investment, together with attention paid to balance sheet management and aligning costs with sources of revenue. The article concludes that “nonprofits that can proactively take stock, plan and respond to the changing world will have the competitive advantage, and more important, best be able to deliver on mission.”

 

 

BLOG: Return on Investments - 2018 a Challenging Year for Foundations.... Read more »