What's Capital Got To Do With It?
Grantmakers in the Arts started to look at how organizations are capitalized in 2010. This was inspired by member studies that reported that a majority of their grantees were under-capitalized…meaning their didn’t have enough resources, primarily financial resources, to fulfill their missions over time. Big surprise? Not for anyone working in the nonprofit world for more than six months.
This year, we’ll present seven Conversations on Capitalization and Community workshops for funders throughout the country. These “conversations” focus on the local economic situation for nonprofit art groups in specific cities and states and what funders can do either collectively or individually to mitigate financial issues.
There is a fear that this focus on finance is detrimental to small organizations or organizations and artists working in and from what is described as marginalized or under-served communities. In actuality, the driving factor behind our bringing this topic forward for funders is that if organizations are not capitalized properly, which includes having financial growth that results in long-term debt and exceeds what the local environment can support, then all funding to all sized organizations is in jeopardy. (This is when we start talking about “right-sizing” and the assessment of “legacy funding.”)
Our “conversations” will give funders an opportunity to evaluate how their individual practices are adding to the stability of artists and arts groups in their communities. Or, it will point out that there are changes that need to be made in order to support artistic endeavors that represent the demographics of the community in which the funder operates.
Bottom line, no matter how large or small the grantee or the funder, money management is important. Artistic excellence (however that is defined locally, and that’s a whole other discussion) is critical. But as critical is the ability to successfully offer that artistic programming to the community they wish to serve. This means we have to figure out how organizations function in today’s economy that gives them the greatest ability to adapt and thrive.
This is different in every community and state. We can talk in general terms, which is what GIA did with its National Capitalization Project Report that made general recommendations for funders. But, our greatest success as artists, arts organizations and arts funders, will come if we understand how our actions affect the local eco-system.
I like to use the term “eco-system” because it signifies that we work within a larger system where everything is interconnected. And indeed we do. Artists and community pass freely between the defined “boxes” that arts administrators and funders work within. The latter work in a world defined by government regulations, union requirements, and boards of trustees. But the reality is from arts in our schools, (K-12 through higher ed) to amateur community arts to the professional stages and exhibit halls of our major institutions, we are all one eco-system of artists and audience producing and sharing the product in whatever form it might take.
So the health of the eco-system is affected by any imbalance within that system. Like the rest of America, the nonprofit arts sector will be rewarded if we start thinking about the financial health and well-being of the “We” instead of the “I.” That’s what our work in capitalization is all about.