Community Meeting Notes: Capitalization for artistic and audience-oriented organizations
As part of its strategic planning process, WPF held twelve facilitated meetings, involving nearly 150 civic leaders, practitioners, public officials, and subject-matter experts in areas related to our grantmaking.
The following are notes taken at a meeting held on September 12, 2011, with organizational leaders, community members, subject-matter experts, and civic leaders to discuss how WPF should think about capitalization for audience-oriented arts groups. A similar conversation was held with another group to discuss capitalization related to arts organizations managing collections or facilities.
Individuals participated with the understanding that they were speaking without attribution, so participants' names are intentionally omitted from these notes.
In 2009, WPF along with The Pew Charitable Trusts,
commissioned TDC of Boston to assess the financial condition of
Philadelphia-area arts and culture organizations. Among other things, the report found that 77
percent of all the cultural organizations studied were undercapitalized,
meaning that they did not have the cash necessary to meet short- and long-term
obligations, weather downturns in the external operating environment, and take
advantage of opportunities to innovate. Since then, WPF staff has struggled
with how to best address capitalization challenges in the sector.
In addition, the report advised us that an organization’s
capitalization needs are informed, in part, by an organization’s business driver. While most organizations have more than one
business driver, often one is dominant.
Therefore we grouped our capitalization discussions by combining two
business drivers, in this case, Artistic Vision (an organization built around
the work of a single artist, voice, or method) and Audience- Dependent (an
organization where attendance and ticket sales are key drivers of financial
health as well as measurements of mission success).
We invited representatives of arts organizations and
financial technical assistance providers to discuss the following questions: How can we develop an effective, consistent
funding approach to help organizations become well-capitalized and more
fiscally-sound? What can we do beyond
grants that would be useful to arts organizations? What are your experiences–successful or
unsuccessful—in trying to improve your balance sheets?
Technology – overemphasis on social media as a
cure-all. Seems to be a replacement for
quality. Online work is transitory.
Everybody is trying to get younger audiences. Kids are exposed to the facsimile of the art
object in technology and art. Substitution of social media bells-and-whistles
for audience engagement.
Funding issues – no general support, most funding project
support without administrative funding.
Foundation support decreasing.
Different foundation priorities—can’t foundations talk to each other
about the funding ecosystem? Emphasis on
free-delivery of product, from social media to Funsavers to flash mobs at
Reading Terminal with idea it will build audiences but no way to quantify; a
“Groupon” mentality created-- expect free or reduced-cost programs. Fluctuations in earned income/audience
revenue are crippling for small arts organizations. Younger people tend to be one-time donors and
move on to the next thing. Hard to build
individual donor pool. Hard to
build/diversity revenue. Hard to build a reserve or get board to see the need.
Leadership/boards – need boards who are more invested,
represent community and are savvy; boards don’t understand what a well-capitalized
organization looks like. Organizations
need more infrastructure to steward board members.
Education - training of nonprofit board members on
their role. Help to identify potential
board members. Cultivate sense of
philanthropy in individual donors.
Communicate the long-term vision for the Foundation. Create a meta-analysis of how funding affects
what the arts look like.
Coordination/collaboration - support cross-conversations
among funders and break away from separate streams of funding with different
priorities. Set up a foundation
clearinghouse for those groups who have similar projects. Explore the market
for an artist incubator/manager and the idea of shared organizational
services. Facilitate collaborations
between organizations that come from the same cultural contexts.
Funding strategies to support innovation and creativity
- support professionals to create art.
Fund residency spaces such as Headlands. Funding through fiscal sponsors
would eliminate need to create so many 501(c)(3)s. Supporting fledging organizations
doing edgy work. Support general operating costs and staff positions. Provide long-term support, versus fleeting,
popular priorities. Help Philadelphia-based groups tour in and around the
region to facilitate arts and cultural exchanges (Pew sends artists around the
country/world). Provide a funding stream to help connect organizations when partnering
opportunities arise. What financial
incentives can be offered to help organizations move in certain directions,
e.g. some type of post-grant reserve funds or matching possibility if explicit
benchmarks were met?
Art and place - intersection of infrastructure,
neighborhood/place creativity, and art.
Assets and opportunity exist in the 40,000 vacant lots in Philadelphia,
about 1/3 are city-owned – identify organizations eligible to access. How can what is happening organically be
enabled? Will there be a need for a
subsidy or additional layers to increase compatibility to support asset
management with stronger infrastructure?
There exists a demand for artist-friendly and artmaking-friendly
building.