The OAF Blog

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.”

 

 

World Cities Culture Report 2012

September 10, 2012

A very readable report on the role of culture in a select group of cities across the world was recently published by the City of London. The paper World Cities Culture Report 2012 is a detailed analysis of a select group of world capitals, with a goal of demonstrating the role culture plays in urban life and economic vitality.

As well as providing some interesting facts (Johannesburg has 943 rare and secondhand bookstores, Tokyo has 681; Berlin apparently has only 4), the report explores attitudes towards cultural policymaking. There is much information we can translate ‘locally’ about culture as a driver of economic growth. The creative industries represent a large and rising share of urban economies – a thriving cultural sector is important to a city’s being attractive to residents, visitors and the businesses who employ them.

Canada is a young country, yet our cities face the challenges described in the 9 cities profiled – balancing modernity and tradition, linking cultural participation and existing infrastructure – developing audiences and attracting visitors, workers and businesses.

The report can be found at http://www.worldcitiesculturereport.com/.

 

 

Arts and Business Exploring Collaboration “In Kind”

August 27, 2012

Since joining the OAF two years ago, I’ve constantly been impressed with how creative and entrepreneurial arts organizations are in managing sometimes ‘scarce’ resources as they deliver creative and outstanding programs.

 

Culture Professionals Network

The Guardian in the UK publishes an interesting blog:  Culture Professionals Network .  A recent update (13/08/12) describes how UK arts organizations are being entrepreneurial in other ways, by exploring collaboration with business beyond the purely financial. As an example, a theatre company secures reduced rent for their office needs, and occupy otherwise unutilized office space. That  collaboration might see the arts organization delivering arts programs, or workshops to the business’s employees. Space and infrastructure are secured in exchange for providing arts education and programming to the staff. It is one more way to develop future audiences and arts supporters.

The collaboration can create a sense of community and a commitment to helping each other out, thereby building a stronger, deeper relationship with an organization. The arts organization can use the opportunity to stage performances, installations and deliver community projects. It isn’t a substitute for financial support, but can be one way to expand an arts organizations ‘reach’, grow audiences and through the collaboration, cost effectively manage part of operating expenses. 

 

 

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