I’ve observed a rise in published materials and articles on the intersection between the arts and the areas of aging, healthcare and wellness. The driver may be the “Boomer” generation, who as they retire seek to keep active, learning and finding a place for the arts in their lives.
Pre-War Generation When you consider that one of the most active participants and financial supporters of the arts are the ‘pre-war’ generation, this is important for arts organizations to incorporate into arts programs. It seems clear there is a general recognition that the arts ( in all disciplines ) benefit older adults emotionally, cognitively and socially. A number of research initiatives indicate that participating in the arts is good for the body, psyche and brain and warrants investments to enable participation.
Arts Integration Integrating the arts with this age group is increasingly moving beyond a ‘nice to have’. Providing culturally enriched programming enhances quality of life, engages this sector and sustains deeper relationships with arts and culture organizations. We know this manifests through volunteerism by retirees who have time, energy and experience to bring to an organization. It also reflects in current and legacy financial support.
This is a great opportunity for arts organizations to review programs, community engagement and education activities to more broadly include and appeal to this age group. It is an opportunity to be more intentional in providing culturally enriched programming for this age cohort.
Blog Posts & Video Two recent posts I read provide interesting background on the topic – a series of conversations organized by Barry Hennius and a Huffington Post commentary on a US conference organized by Aroha Philanthropies. There is a particularly charming short video clip titled ‘The Wall’ on the Aroha Philanthropies website.
This intersection between aging and the arts can be a a great opportunity for arts organizations and the patrons who participate, attend and support. As one of the posts concluded –..”Happily, growing older is looking a lot more promising, interesting and even exciting.
2015 Federal Budget Measures Affecting Charities
May 04, 2015
A measure Canadian charities have long lobbied for was recognized in the 2015 Federal Budget announcement on April 21st. An exemption from capital gains tax will be available to certain disposition/sale of shares of private corporations and real estate. It will apply to dispositions made after 2016 and the tax exemption will apply to:
The cash received from the disposition of shares of a private corporation or real estate where the proceeds are donated to a qualified charitable donee within 30 days of the sale transaction and the shares or property are sold to a buyer who deals at arms length with both donor and qualified charitable donee
The amount of the capital gain to be exempt from tax will be based by reference to the proportion of the cash donated to the total proceeds of sale ( i.e. not all of the proceeds are donated to the charity )
This has long been sought for by Canada’s large charities, but can benefit all charities where a donor wants to provide financial support, but a significant portion of their personal wealth is held within a private business.
Limited partnerships A more ‘technical’ measure will now provide that a registered charity will not be considered to be carrying on business where it acquires or holds an interest in a limited partnership. This expands investment opportunities for charities, where the investment is intended to be a passive investment, and the charity does not hold more than 20% of the interests in the limited partnership, and the charity deals at arms length with the general partner.
Canada 150 Community Infrastructure Program A new program – the Canada 150 Community Infrastructure Program will provide funds to support the expansion and improvement of existing community infrastructure, which may provide towns and cities will resources to include cultural projects as well as those supporting tourism, sport and recreation. To help celebrate Canada’s 150th anniversary, $210 million will be funded over 4 years to support community events to recognize this milestone in Canada’s history. This funding has been much awaited by the arts sector and hopefully details arising from the budget will make clear how the funding can be put to work. Funds will be invested over 4 years, starting with $24 million (nationally) in 2015.
As always, the devil will be in the details of the budget measures and how this will be implemented. Happily there were no new measures adding compliance requirements to be imposed on charities.
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.