National Capitalization Project

New Conversations on Capitalization and Community Workshop

Defining capitalization as “the resources an organization needs to fulfill its mission over time,” GIA embarked on the National Capitalization Project (NCP) to seek answers to the under-capitalized tendency of the nonprofit arts field. Conversations on Capitalization and Community workshops have been held in 16 cities engaging cultural funders in a dialogue about the financial health of nonprofit art groups in their community and how funders might better support capitalization principles for their grantees. In 2015, GIA created a new workshop that includes two separate half-day sessions: one for funders and one for grantees. The new three-hour companion session for grantees looks at what it means to be a well-capitalized organization achieving financial health and vibrancy within their marketplace.

Click here to learn more about the new Conversations on Capitalization and Community workshops.

Posted on September 19, 2017 by Monica

Rebecca Thomas recently published a blog post outlining "Six Steps for Sustainability Planning."

A good financial plan plots a realistic route to fiscal health. It makes visible whether, and how, an organization is achieving its financial goals. It anticipates the goal of sustainability, but recognizes that the direction of travel won’t always be a straight line. It enables flexible decision-making by identifying targets that have been missed or exceeded.

Rebecca Thomas facilitates GIA's Conversations on Capitalization and Community workshops.

Read the full blog post.

Posted on July 6, 2017 by Monica

An article in the Stanford Social Innovation Review discusses how grantmaking policies affect the financial stability of nonprofits, as researched by Michael Etzel, a partner at Bridgespan, a nonprofit consultancy, and Hilary Pennington, a vice president at the Ford Foundation. The duo developed a grantmaking pyramid which "reframes how funders and grantees think about building organizations," emphasizing the need for "foundational" support at the base of the pyramid. This strategy is now being utilized by the Ford Foundation to examine their grantmaking portfolio.

Read the article on the Stanford Social Innovation Review.

Posted on April 12, 2017 by Monica

The Nonprofit Quarterly has published an in-depth article on nonprofit financial capital, covering various types of capital, how nonprofits obtain capital, and various methods for monitoring and financial reporting.

Grantmakers in the Arts offers workshops on capitalization and nonprofit financial health for funders and their grantees. Read more about our Conversations on Capitalization and Community workshops.

Posted on February 7, 2017 by Monica

From the blog of Rebecca Thomas, who delivers GIA’s Conversations on Capitalization and Community workshops, a new post provides an overview of risk capital and how it can be used by arts organizations:

Risk capital is unrestricted, board-designated money that allows organizations to take business risk or pursue artistic opportunities. . . . Capital for risk-taking plays an essential role as part of a comprehensive capitalization plan, which examines all priorities for cash and evaluates their importance in the context of financial, strategic and community imperatives.

Read the full blog post.

Posted on December 1, 2016 by Monica

From the Philanthropy News Digest:

Over the past decade, U.S. orchestras have relied more on philanthropic support than on ticket sales for their income, a report from the League of American Orchestras finds.

[Fourty] percent of the total income in 2014 of the sixty-five member orchestras in the study, or some $520 million, was classified as earned income, with three-quarters of that from performance and related activities; 43 percent, or $569 million, from contributed income; and 17 percent, or $229 million, from investment income. ... The study also found that the league’s member orchestras managed to contain growth in expenses during the recession, and that the share reporting deficits in unrestricted net assets fell from 40 percent in 2010 to 18 percent in 2014.

Read more.

Posted on September 13, 2016 by Monica

A new article in Nonprofit Quarterly details changes to the accounting standards for nonprofits as recommended by the Financial Accounting Standards Board (FASB). The new standards are "meant to help nonprofits to tell their story more transparently through their financials" and will take effect for fiscal years beginning after December 15, 2017. Key changes include "the simplification of the classification of net assets, the tracking of liquidity, and changes in the presentation of expenses."

Read the article.

Posted on September 13, 2016 by Monica

SMU’s National Center for Arts Research (NCAR) has released its most comprehensive report to date on national fundraising trends in the arts and cultural sector, the latest in the Center’s series of evidence-based insights on the health of the industry. It is based on 2014 data provided by over 4,200 organizations across 11 arts disciplines, with trends for a subset of over 2,700 organizations over the four-year period 2011-2014.

Read the full announcement.

Posted on July 14, 2016 by Monica

Upper Manhattan Empowerment Zone (UMEZ) has published a study with the Regional Plan Association (RPA), Leveraging the Power of Cultural Investments: A Report on Cultural Capacity Building. The study evaluates the impact of UMEZ’s cultural investment strategy by providing an in-depth analysis of 32 non-profit grantees over a 13-year period. The report reveals substantial gains for the organizations profiled, as well as their continuing challenges; it illustrates the concurrent growth of Upper Manhattan’s cultural and economic landscape; and it compares Upper Manhattan’s collective cultural assets to similar clusters in New York City’s other boroughs.

Read the report.

Posted on April 14, 2015 by Steve

Cathy Hunt, writing for The Australian Financial Review:

All those in the cultural economy experience some form of financial exclusion. As an artist, you are likely to have been supported by family or friends throughout your career and, if fortunate, to have had one small grant at some point. You’re luckier still if you’ve got through an interview at your local bank, let alone secured a loan appropriate and affordable to your circumstances. If you operate as a non-profit entity, because that is appropriate to your purpose, you will probably be unable to access a loan from a bank, let alone service one, given your limited assets and the short-term nature of any government grants you may have.

Read the full article.

Posted on March 19, 2015 by Steve

Rebecca Thomas finishes her six myths piece for Associated Grant Makers:

In my last piece for In Philanthrophy, I offered three recommendations for how grantmakers can overcome commonly held misconceptions about the role of money in strengthening nonprofit effectiveness. I encouraged funders to: support comprehensive capitalization planning, reward financial management practices that promote surpluses and savings, and consider seeding cash reserves as a source of funds for handling and taking risk. Here, I share three additional myths that get in the way of healthy nonprofit finances and suggest funder practices that, in my experience, create an environment more supportive of organizational success.

Read the full post.

Posted on March 10, 2015 by Steve

From Rebecca Thomas, writing for Associated Grant Makers:

Given the power that grantmakers have to influence nonprofit missions and finances, it’s crucial to “get capital right.” In this two-part series for AGM’s InPhilanthropy, I highlight six false ideas about money that I often hear and offer some suggestions for how grantmakers can improve how they communicate with and support the sector. While strengthening the sector’s financial health will certainly require some heavy lifting by nonprofits themselves, funders are in the driver’s seat, so change starts with you.

Read the full post.

Posted on February 6, 2015 by Steve

In 2009, TDC published Getting Beyond Breakeven, a study commissioned by the William Penn Foundation and The Pew Charitable Trusts, which reviewed the capitalization needs and challenges of arts and culture organizations in Philadelphia. This study, also commissioned by the William Penn Foundation, is divided into two major sections.

Posted on January 5, 2015 by Steve

Progress Report on GIA’s National Capitalization Project (.pdf, 316 Kb) (2014).
Helicon Collaborative was commissioned to help Grantmakers in the Arts understand the value of its local funder workshops presented in 2012 and 2013 and other GIA programs activities since we began our focus on capitalization in 2010. The results are a progress report on this continuing work.

Posted on December 28, 2014 by Steve

Lessons Learned about Change Capital in the Arts: Reflections on a four-year evaluation of Nonprofit Finance Fund’s Leading for the Future initiative, a report from Alan S. Brown and Arthur F. Nacht, takes stock of a four-year evaluation of Leading for the Future: Innovative Support for Artistic Excellence (LFF), an experimental $15 million funding initiative administered by Nonprofit Finance Fund (NFF) with support from the Doris Duke Charitable Foundation (DDCF).

Posted on November 5, 2014 by Steve

Critical Steps Toward Capital Health in the Cultural Sector (.pdf, 61 Kb) (2014).
A Capitalization tip-sheet authored by Rebecca Thomas, Nonprofit Finance Fund, and Holly Sidford, Helicon Collaborative.

Posted on September 18, 2013 by Steve

Rebecca Thomas writes for the GIA Reader:

In 2010, Grantmakers in the Arts put capitalization on the national arts agenda by starting a conversation about what funders can do differently to address the chronic financial weakness undermining the vitality of the sector. To advance this dialogue, Nonprofit Finance Fund (NFF) and our consulting partner, TDC, then went on the road with GIA, delivering Conversations on Capitalization and Community, a daylong funder workshop about the financial health and resource needs of arts and culture organizations in local communities. We convened arts grantmakers in thirteen cities around the country from 2012 to 2013.

The partners collaborating on this program define capitalization as the alignment of financial resources to support an organization’s mission for the long term. We collectively advocate for improvements to organizational capitalization because we know that stronger balance sheets enable artistic risk taking and freedom. If society demands and deserves more relevant, accessible, and dynamic art, we emphasize capitalization as the means to that end.

Posted on June 1, 2011 by Steve

Nonprofit Finance Fund has published a new series on the need for and uses of capital in the arts. The materials convey stories and lessons learned from NFF’s $15 million Leading for the Future Initiative, the first national Initiative to deploy a specific kind of investment – change capital – to help arts organizations adapt their programming, operations and finances to thrive in a changed and changing economic and cultural landscape.

Posted on January 18, 2011 by Steve

From her blog Jumper:

My dad used to keep a goldfish pond in our back yard. Without some form of population control, goldfish ponds can become overstocked, a situtation in which the fish become sick, or even die, from lack of oxygen and competitive stress.

The Kresge Foundation and Grantmakers in the Arts have recently spearheaded a funder-led initiative,“The National Capitalization Project,” aimed at addressing chronic undercapitalization of the arts sector. The report suggests we have an overstocked arts pond: “At a time of flattening demand there is increasing supply … in terms of both the sheer number of organizations and the supply of product. Neither the audiences nor the public or philanthropic sector can support this level of oversupply. Taken together, this situation is pushing organizations into hyper-competition.”

Read the full post.

Posted on December 12, 2010 by Steve

From her blog, Speaker:

When you go to the Grantmakers in the Arts website you can read two documents there that provide deep background on a conversation GIA members are having about trends in their work and how their grants shape the financial and artistic vitality of the nonprofit cultural sector. The reports posted there are the result of a literature review and then meetings to discuss capitalization in the nonprofit arts sector (and lack thereof).

Read the full post.

Posted on November 8, 2010 by Steve

Janet Brown posts to her blog:

At the GIA annual conference in Chicago, we rolled out the work we’ve done so far on capitalization. Capitalization is defined as financial, human and physical resources that lead to the fulfillment of an organization’s mission. This has been a yearlong journey that started initially as a discussion between national foundations. It quickly became evident that Grantmakers in the Arts had a responsibility to share the research, literature review and thoughtful conversations about the financial stability of the nonprofit arts sector.

Read the full post.