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Oregon Arts Commission Making Grants Easy For All

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A professional grant writer had a piece on the Oregon ArtsWatch website where she expressed her disbelief at the Oregon Arts Commission’s (OAC) new grant guidelines.

But it was all in a good way. Claire Willett writes that not only did they make the process simpler, they also made the use of the money flexible and unrestricted. For years now there have been calls for funders to support operational and administrative expenses rather than excluding them as permitted areas. Oregon Arts Commission is allowing funds to be used for that or pretty much anything else.

OAC also simplified the process significantly. Willett said she would typically write 7-10 pages of narrative for her clients. This year OAC’s goal is to make the application process simple and accessible for organizations who don’t have the capacity to hire a grant writer.

Apparently they made great progress in this direction:

….the week the new system went online, a friend texted me, “Um, I just logged in to look at the new OAC streamlined process and instead I just filled it out and submitted it in less than ten minutes???” 

Source

They also eliminated grant review panels. The grant staff at OAC Willett spoke to said that they instructed panelists to focus on the quality of work being done rather than the quality of writing, but they were concerned an unconscious bias toward those who could afford a professional grant writer might exist.

They also eliminated the long narrative sections from the application. (Personally, I was excited to learn they had allowed 5000 characters given most applications ask for a comprehensive review and allow 500 characters. But on the other hand, not having to write a comprehensive review in the first place is awesome.)

Three narrative blocks of five thousand characters each is an intimidating hurdle for applicants facing barriers of education, language, literacy, or simply lack of experience in this specific form of writing, which could mean that really exciting artistic work wasn’t getting taken seriously. The shift, then, was twofold: simplifying the form itself to something anybody can do without professional assistance, and moving the decision-making process in-house to focus on strengthening relationships between the OAC and the organizations they fund. 

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The OAC sees many of the changes they have made as moving toward the goal of developing and strengthening trust with groups throughout the state. They have even removed the requirement to operate two years as a non-profit from the eligibility criteria for a smaller grant program in recognition of how lengthy the IRS non-profit application process can be.

Varying How You Make Donation Appeals

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Short, interesting piece in the Chronicle of Philanthropy discussed research that found when non-profits varied their messaging on Facebook, they received more donations.

They are careful to say that these results may only hold true for Facebook as a social media platform and that they didn’t factor in other fundraising activities like direct mail.

They looked at 752 organizations which participated in a one day Omaha Gives fundraising events in 2015 and 2020.

The types of messaging the researchers categorized were:

Beneficiaries: Explaining how the group helps people.

Goals: Encouraging donors to help reach a fundraising goal.

Gratitude: Thanking donors for their gifts.

Mission: Focusing on how the organization helps people.

Social media engagement: Asking donors to share the post or change their profile picture to boost the campaign.

Solicitation: Asking for donations.

[…]

In addition to determining that using different types of messaging works best, we found that when nonprofits frequently share messages of gratitude or that highlight progress toward their goals, they tend to raise more money than if they just ask for donations.

Source

Obviously your mileage may vary as they say. Similar efforts on Facebook may not yield the same results in 2025. Five years is an eternity in social media years. Also the fundraising dynamics in Omaha may not be the same in other regions of the country.

One of the theories the researchers had was that varying the messaging helped reduce donor fatigue by not always using the same appeal language in every post.

New Compliance Requirements For NEA Grants

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There appear to be some significant changes in the grant procedures for the National Endowment for the Arts. In addition to the end of the Challenge America grant program American Theatre Magazine reported changes in the compliance rules that have been recently added.

After listing the Civil Rights Act of 1964, the Americans With Disabilities Act, the Age Discrimination Act, and Title IX, the page includes the following new requirements:

The applicant understands that federal funds shall not be used to promote gender ideology, pursuant to Executive Order No. 14168, Defending Women From Gender Ideology Extremism and Restoring Biological Truth to the Federal Government.

The applicant will comply with all applicable Executive Orders while the award is being administered. Executive orders are posted at whitehouse.gov/presidential-actions.

The applicant’s compliance in all respects with all applicable Federal anti-discrimination laws is material to the U.S. Government’s payment decisions for purposes of section 3729(b)(4) of title 31, United States Code, pursuant to Executive Order No. 14173, Ending Illegal Discrimination and Restoring Merit-Based Opportunity, dated January 21, 2025.

The applicant will not operate any programs promoting “diversity, equity, and inclusion” (DEI) that violate any applicable Federal anti-discrimination laws, in accordance with Executive Order No. 14173.

Source

The National Endowment for the Arts will be holding a seminar to discuss these changes and answer questions from 2 pm- 3 pm EST on Tuesday, February 18, 2025. The link to the Microsoft Teams Meeting may be found on the webinar page. If you miss the meeting, a link to the recording will be available on that page as well.

While it is for a different program, news sources are reporting a list of words that will trigger a manual review of papers and other documents submitted to the National Science Foundation and Centers of Disease Control.

Many of the words are ones that arts and cultural organizations have been using regularly for years like advocacy, barrier, biases, community diversity, cultural differences, cultural heritage, disabilities, diverse communities, equity, female, gender, inclusivity, historically, marginalize, sense of belonging, underserved, women.. That’s about 1/10 of the words on the list.

One City’s Cultural Budget Cut Exceeds Actual Culture Budget Of Multiple US Cities

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A story I was watching throughout December was the threat of Berlin cutting its funding for arts and culture. Right before Christmas, the city did indeed cut funding by $130 million which represents 12% of funding.

A lot of arts professionals in the US are probably thinking their city’s arts and culture budget isn’t anywhere near the $130 million being cut. In fact, many would feel blessed if their city had $1.3 million culture budget. So to a certain extent arts and cultural funding in Germany may still be the envy of much of the world.

This said, a lot of employment contracts aren’t being renewed and exhibition plans are being scrapped in Berlin. The laws associated with funding in Germany don’t allow private support to make up the difference.

German museums without private funding face particularly steep challenges, with fixed costs around operating collections consuming around 80 percent of budgets in many cases, leaving many exhibitions and auxiliary programs vulnerable to cancellation.

Some experts have pointed out that public museums in Germany aren’t legally able to rely on private philanthropy the way peer organizations in the U.S. and other parts of Europe do, making their futures, compared to international creative hubs less certain.

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An article earlier in December on Deutsche Welle looking at the impending cuts in Berlin raised the same question about whether Germany would be home to creative hubs any longer even as the city of Chemnitz, a 2025 European Capital of Culture, face budget cuts.

The eastern state of Saxony also faces a critical budget situation, with serious consequences for the cultural landscape of museums, theaters and orchestras. Hillmann said the theaters in Zwickau, Freiberg, Annaberg-Buchholz, Görlitz-Zittau and even Chemnitz — which will be a European Capital of Culture in 2025 — fear for their existence.

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Much as in the US, the chair of the German Stage Association, Lutz Hillmann, cites the work theaters in Germany are doing in the public sphere, moving beyond just presenting performances to become public gathering spaces and provide services to youth. Likewise, the role of culture in promotion democratic discourse in a time of divisive social dynamics was also raised.

Olaf Zimmermann, managing director of the German Cultural Council, takes the same line. “Right now, cultural venues are urgently needed to debate current issues, to offer places for democratic discourse, to stimulate reflection or simply to create cohesion,” Zimmermann wrote in the most recent issue of the association’s publication.

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Need More Education And Time To Absorb It

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Today I am following on yesterdays post about the National Endowment for the Art’s report on a dozen listening sessions they conducted this past spring and summer, Defying Gravity: Conversations with Leaders from Nonprofit Theater.

Yesterday, I focused on theater leadership’s perception that they didn’t have enough time to digest research on promising practices* and a desire to have access to big thinkers on systemic change from outside the theater world.

The sense that theater managers were feeling lost and unsure about how to tackle the challenges they were facing seemed to be the subtext of the responses the listening session participants provided. On an individual basis, I am sure these professionals generally felt they are competent at their jobs and secure in the knowledge they possess. In aggregate the responses almost painted a picture of a group that is struggling and didn’t feel equal to the task.

While the image of a harried, overworked staff has been a stereotype for theaters for decades if not centuries, some of the quotes the report includes about needing to have good manners when speaking with donors doesn’t do theater professionals any favors. I hope it was taken out of context.

As one participant said, “We’re finding it difficult to keep up with foundations or our state agencies and what their requirements are in terms of changing what panelists are looking at.”

Similarly, there was a recognized need for financial consultative services in many topic areas. These areas included how best to use existing funds, how to become financially stable, and how to price services or tickets. “Perhaps an area of expertise that we’re struggling with is that we are quickly having to learn how to be a single ticket shop,” one participant said. Another remarked: “It would be nice to also get funding for support in terms of financial advisement.”

…“If you’re asking people for money, you … have to have the good manners to speak their language,” one participant noted, “that’s something that would be helpful … if you can help teach or give our organization resources on the language that you need to keep your donors and your boards happy.” This service might help theaters to become transparent about their financial needs and current fiscal standing and, therefore, to communicate more effectively with employees, donors, boards, and other funders.

….Participants proposed using technological tools such as AI, electronic tip jars, ticketing apps, management apps, and fundraising software to help theaters increase and manage their financial resources.

…“We want investment from the tech sector to fix this, one participant said. “I wish we could do better because it’s hard enough … even to get working internet in our theaters so people can check the QR codes that we’ve given them already.”

Defying Gravity, PDF pgs 8-9

As I mentioned in my post yesterday, there are already people addressing many of these issues but there is definitely a need for more robust and widespread education and resources on finances, ticket pricing, technology, communication, programming design and philosophy etc., in order to effectively respond to trends and expectations.

But again, as I suggested yesterday, does the availability of these resources do any good if those who might benefit most don’t feel they have the time and bandwidth (and money) to receive and use them?

*Want to give credit to Anika Tene from CreativeWest for introducing me to the term “promising practices” instead of best practices. Although it was a quick mention in a webinar she was leading, I immediately realized that the term relieves pressure on organizations to immediately implement new practices at the most effective level. Also, there is a suggestion in promising practices that these practices are not one size fits all organizations. They may be beneficial, but the value may not manifest in the same manner or degree for everyone.

NEA Report Suggests You Won’t Have Time To Read And Digest It

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This morning the National Endowment for the Arts (NEA) released Defying Gravity: Conversations with Leaders from Nonprofit Theater. The result of the report are based on conversations during 12 virtual listening sessions the NEA conducted with non-profit theater staff in spring and summer 2024. The composition of each of the listening session cohorts may be found on PDF page 27 or in the image below.

Among them were freelance artists, journalists, Theaters for Young Audiences, Leadership Alumnae and Interim Managers, Black, Indigenous and Theaters of Color. Perhaps most interesting and most appropriate given the recent theater operating environment was a session composed of Recently Close Theaters. The report authors cite the responses of the recently closed theater participants with some frequency.

The image below gives a sense of the operational challenges focused on by each of the 12 listening session cohorts

The report is only 28 pages, but I intend to highlight different topics over a couple days to keep things bite size. I am also going to largely skip over discussion of issues that seem widely known like financial difficulties, diminishing donations and ticket sales for some more focused and nuanced observations. I encourage readers to take a look at the full report if they want deeper insight.

While I often encourage people to read research and highlight how short the document is and/or how easy a read it is, we all know that arts professionals rarely can find the time to do so. And that comes up in the NEA’s report:

One participant referenced a bandwidth issue, saying, “The ability to monitor, intake, synthesize, regurgitate, [and] present on data is just something that always moves to [the] sidelines.” Research investments should include supporting the personnel required to conduct and translate it.

Another type of investment is to bring in voices from outside the theater industry to help address larger issues facing organizations. One participant said, “I would love if there was a way to bring some brilliant systematic thinkers in … who are not involved necessarily in theater, but who are working with extreme systematic change.” This approach could afford theater organizations the opportunity to engage with a more objective, external view on how to address challenges.

Listening session participants wanted to know what is or has been successful for other non-theater art forms to see if those practices could transfer to theater. As one participant asked, “What are the opportunities that are seeing dramatic growth beyond our discipline? And what might this mean?”

Defying Gravity, PDF page 17

I almost feel like there is self-reinforcing vicious circle here because there are a number of people talking about systemic change from outside the arts using frameworks and terminologies that make the concepts relatable to arts professionals. But I am aware of these people because I read a lot of research and discussion where others haven’t created the bandwidth to do so.

Even if these arts insiders discussing these non-arts industry concepts aren’t able to provide the guidance for full extreme systemic change the listening session participants ultimately seek, they can probably provide a transitional frame of reference that would allow arts professionals to more effectively translate this change into theater practice.

Seems Like The Kitchener-Waterloo Musicians Deserve A LOT More Credit Than First Appeared

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A few weeks ago I wrote about how the Kitchener-Waterloo Symphony appeared to have found a path to return to activity, albeit tenuous, after the musicians were blindsided by a bankruptcy announcement.

In my post last month, I cited the board chair as saying the musicians invested a lot of effort in helping to save the symphony.

But let me tell you, after reading an additional piece in The Globe and Mail, I think that may have been an understatement. From the account on the newspaper site, it sounds like not only did the musicians raise $500,000 to support the out of work musicians and put on their own concerts, they also did the research and formulated the plan through which the symphony could be restored.

{French horn player Kathy] Robertson and a group of other musicians began to wonder what was salvageable from the original orchestra. If very few potential creditors would get paid from bankruptcy proceedings given the multimillion-dollar shortfall, the musicians reckoned it wouldn’t affect creditors too greatly if they avoided bankruptcy entirely and still didn’t get paid.

So they went to the Canadian Federation of Musicians, who connected the musicians with lawyers – who in turn confirmed that if they could find a way to satisfy creditors, it might be possible to save the orchestra.

Source

New board members contributed expertise and represented the orchestra in negotiations with creditors, but it sounds like the musicians provided the impetus and significant amounts of sweat necessary to get things back to a tentative footing. I am not sure what the laws in Canada allow, but it seems like the new Kitchener-Waterloo Symphony should be constituted as something of an employee owned and operated entity.

Good Sign When Funders Reflect On Their Programs and Practices

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h/t Artsjournal.com which posted a story about the Greater Pittsburgh Arts Council’s (GPAC) heartfelt admission that it hadn’t been an effective administrator of arts programs.

CEO Patrick Fisher — while acknowledging that his group has done much good over the years — writes that “regardless of intentions, the Arts Council has caused harm by being inconsistent, unresponsive, or culturally inept.”

[…]

Fisher said it has sometimes been through poor planning and management of initiatives like the Disabled Artists Creative Cohort and the Black Arts Action Committee. GPAC “over-promised and under-delivered” on these underfunded attempts to increase opportunities for disabled and Black artists and left behind disappointed constituencies, he said.

Other programs that initially served a purpose failed to change as needed. One, Fisher said, was Art on the Walls, which at first addressed a very real lack of exhibition opportunities for emerging and mid-career artists. But it also kept diverting resources from more urgent projects even after other opportunities for such artists emerged, he said.

Likewise, certain grant programs for local artists ran out of money, leaving artists in the lurch.

Last April I wrote about the group, Crappy Funding Practices, which has been calling attention to onerous requirements and problematic expectations that funding entities have for grantees. The ultimate goal has been nudge funders to engage in the sort of self-examination that GPAC has undertaken.

As far as I recall, GPAC hasn’t been a subject of a post by Crappy Funding Practices, but some of those mentioned by the group have revised their practices when it has been called to their attention. It is to their credit that the CEO and members of the arts council have engaged in a listening tour, solicited feedback, and made changing some of these practices part of their next strategic plan.

National Dance and Theater Projects Sunsetting Soon

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There was some disappointing news a week or so ago when the New England Foundation for the Arts (NEFA) announced the sunsetting after 28 years of the National Theater Project and National Dance Project due to a priority shift by the Mellon Foundation.

Across the course of my career, I availed myself of the opportunity to present dance companies supported by the National Dance Project. The support helped to cultivate an audience for dance in a couple communities in which I worked. The funding helped remove some of the risk inherent to introducing dance to communities who had low to no familiarity with the art form.

The deadline for the last phase of the National Theater Project is in October and the final iteration of the National Dance Project will be in Januar/February.

The preliminary application for the final NTP grant cycle in its current form opens on September 6, 2024, and closes on October 10, 2024.
The preliminary application for the final NDP grant cycle in its current form will open in January 2025.

The statement released by NEFA says the following about the Mellon Foundation priority shift:

…Mellon partners as they do the important work of aligning their resources to best serve social justice in the performing arts for future generations

My first impression was that they would be supporting internal capacity of arts organizations to be more equitable and inclusive along the lines of creating a better working environment by establishing fairer pay and work hours. But as I re-read the statement I realized it encompasses one of ten thousand different options. I guess we will see when Mellon chooses to clarify their new goals.

Small City Or Small Arts Org, Getting Grants Is Tough

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According to a recent piece on CityLab, smaller cities and towns have much in common with smaller non-profits when it comes to applying for grants.  They both have great need but lack the staff and resources to effectively compete for grants.

Citing the case of Jackson, MS which has been in a state of distress since 2022 when their water infrastructure failed due to flooding, the article quotes the former chief administrative officer, Robert Blaine about their lack of capacity to secure grants:

Robert Blaine, now at the National League of Cities, said one of many issues that impeded the city’s efforts to fix its water crisis was its inability to compete for and win grants due to a lack of staff to complete applications. “We really, really needed the funds, but we didn’t have the competency, we didn’t have the capacity to be able to apply for it,” he told Streetsblog in 2023.

The article mentions there is a lot of funding available from the federal government that isn’t getting spent due to this lack of capacity. Many non-profits are stepping up to help by offering training to cities about how to go about securing grants, most of which require a lot more data than most non-profit arts and cultural organizations are required to gather. Some non-profits have assembled former employees of different federal agencies or former municipal grant writers to provide advice and read drafts of grant proposals.

Additionally, the Inflation Reduction Act provided funds for technical assistance to help states and municipalities complete grants including funds to gather the required data in addition to writing the grant proposal. Since it benefits states to have their cities secure funding for projects, some states also provide technical assistance.

Though it sort of sounds like the “you need experience to get a job, but you can’t get experience without a job,” paradox to be required to write a grant to get the funding to hire people who are good at writing grants. I did appreciate the flow chart on the Colorado grant writing assistance program that shows that if your application is denied, you can modify and resubmit. Also, they appear to commit to reviewing applications within 14 days so cities will be able to maintain some momentum. I think a lot of non-profit cultural entities wish that sort of do-over opportunity was available to them with their own grants.

According to a staff member of one of the non-profits helping cities write grants, there is a similar situation to arts and culture non-profits where those with the most direct interaction with communities in need of assistance are often those without the capacity to secure the grant funding they need:

“I always look at the grant world like a spectrum,” said Relf. “At one extreme, you have organizations that know how to write grants, and they win grants, but they’re not really in the community doing the work. And then you have these organizations that have a heart for the community. They’re there every day. They just don’t have the capacity to write the grants.”

Donors May Be Adding Inefficiencies To Fundraising

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Seth Godin recently made an interesting post about non-profit fundraising, in particular the inefficiencies that exist in the process that can’t be fixed by technology, because it can, but rather the expectations of the donors.

Along the way, it’s not unusual for a nonprofit to spend 50% of the money they raise on the expense of raising more money. That’s not because they’re inefficient, it’s because we are.

We demand a gala, or an emergency, or artfully written fundraising letters. Donors want personal attention from the folks who are ostensibly doing the front line or strategic work of the nonprofit, and treat regular donations as an exception, not the standard.

When the internet arrived, it dramatically lowered the transactional costs in a wide variety of industries. You can buy an airline ticket yourself faster and with less intervention than through a travel agent. You can buy stocks for transaction fees that are a tiny fraction of what a broker used to charge. But creative and effective nonprofit fundraising has been stuck in a cycle of risk, galas and uncertainty.

This reminded me of a letter that appeared this summer in the Chronicle of Philanthropy where a donor said he was going to stop giving because he wasn’t getting the communication and attention he expected. He made a follow up post this February which contains a link to the original letter. The original letter garnered a lot of pushback from the non-profit community, including some satiric criticism written by Vu Le While the donor says in his follow up he has learned more about the challenges non-profits face in regard to fundraising, he still seems to expect a lot of what Godin says keeps fundraising costs high for non-profits.

There Is A Group Naming Names And Advocating For Better Funding Practices

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Around the start of the year, the group Crappy Funding Practices was created on LinkedIn. Vu Le who writes the Nonprofit AF blog had started calling out the problematic practices of funders on Twitter a few years ago, but with the help of some volunteers, they decided to expand the scope of their activities and started to solicit submissions of bad practices non-profit staff have run up against.

A lot of what they call out are things like onerous reporting requirements or twenty page applications requiring world changing results in return for $5000 grant or prohibitions on fundraising for a quarter of the year. And even an instance where you had to pay $100 to attend a luncheon to learn if you received a grant.

One of the very worst examples were the requirements from a foundation supporting classical music.

The team also praises some positive funding practices like the Minnesota Council on Foundations which offered tools for other funders to use in order to reduce barriers for grant seekers. The Fairfield County Community Foundation got a shout out for acknowledging that they listened to feedback from grant seekers and had revised their processes.

Even though the page has only been operating for about four months, a writer from Inside Philanthropy took notice and reported on the page, the problems it was addressing, and the change that is slowly taking place as a result.

I expect that the profile of the group will continue to rise over coming months and years. Hopefully that will result in some industry wide changes that will make the process easier and more equitable for grant seekers.

As the article mentions, none of these problems are new. They have been acknowledged as hurdles in the granting process for years and years, but most funding organizations haven’t really worked at making changes to remove barriers for applicants. Vu Le started calling people out by name out of frustration. The group of volunteers behind Crappy Funding Practices has helped expand on this effort out to act as an advocate for non-profit grant seekers rather than out of spite. Though I imagine there is some angry frustration at the base.

I post about this not so much to encourage people to submit funders you dislike as to let people know that there is an organized effort to advocate for better conditions on your behalf. That said, if there are organizations whose practices and requirements are burdensome, you may want to consider completing their submission form.

Examples of Great Funders can be submitted here.

Benefits Of Incorporating Your Arts Career

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h/t Artsjournal.com for linking to a really valuable article on Observer about considering creating a limited liability corporation (LLC) if you are an artist.  I recently created a post on ArtsHacker summarizing some of the ways in which an LLC protects artist’s personal assets in the case of lawsuits and in some cases, divorce proceedings.

This excerpt from Observer article summarizes how an artist would operate after forming an LLC:

….but most artists operating as one-man shops set up limited liability companies, according to Powers, where the LLC is the employer and the artist is technically the employee. When a sale or commission is made, the money is paid directly to the corporate entity, which then pays the artist, either in a lump sum or in increments (as a salary), and the artist pays taxes on that money as ordinary income. But not all the money transfers directly through to the artist. The corporate entity retains some cash to purchase art supplies, health insurance, workmen’s compensation to protect employees who may get injured during transit or installation, commercial premises and liability insurance—and, assuming the artist is successful enough, to hire employees or consultants.

The article discusses a number of legal scenarios an artist might find themselves in which the buffer of an LLC would be beneficial. More than just providing legal protection, they also note that forming an LLC would allow the artist to solicit investment to support their work.  Take a look at the ArtsHacker post or go straight to the article to learn more.

 

Should Your Work Be Protected By An LLC?

Guaranteed Basic Income Programs Seem To Benefit Those With Concrete Goals

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Long time readers know I tend to pay attention to news about guaranteed basic income programs, particularly those that have artists as a target group. Thanks to a CityLab link to a story on Los Angeles’ recent foray into providing guaranteed basic income, there is more data about what approaches are most effective. This program didn’t target artists as a group, but it has some good insights.

Like most stories on the subject, there were many heartening stories about the successes people had and continued to experience after the program ended. However, this article also mentioned those who were doing well while they were receiving the $1,000 month funds, but once the program ended found themselves faced with living in their cars. Anecdotally, at least those who had problems after the funding ended weren’t spending that much differently than those who continued to thrive. (i.e. the biggest spurge spending was on rather modest once a week meals)

What seems to be the differentiating factor is whether people had concrete goals they wanted to achieve prior to receiving the monthly payment:

Participants that do achieve a measure of economic mobility, she said, are those who already had concrete goals or plans.

“What happens with guaranteed income is that it smooths that income volatility … and it creates predictability,” Castro said. “When you have that floor, that scarcity starts to go away. And we know that it calms the mind, it calms the spirit, and it creates space for people to re-imagine an alternative future, or to maybe take steps toward a goal that they’ve always had but have not been able to actualize.”

Abigail Marquez, general manager of L.A.’s Community Investment for Families Department, which ran BIG:LEAP, called guaranteed income “one effective strategy” for ending generational poverty in L.A. Such programs must be paired with workforce development, economic development and housing strategies, she said.

Knowing this, one concern I would have is that guaranteed basic income programs not gradually evolve guidelines similar to foundation grant programs where candidates for receiving the money have to provide evidence of having goals they are pursuing and just need a little bit of help gaining stability. Unfortunately, it is easy to imagine this happening because the folks putting up the money want to hear success stories and know their funds are being used effectively. Little by little, the unrestricted use nature of guaranteed basic income can become a little more restricted.

On the other hand, I feel like guaranteed basic income for artists becomes an even better idea since artists generally always have projects in mind they want to pursue. Though I am sure there are some who would say some of those projects aren’t as practical as the goals people in the L.A. Times story were working on.

A Flip Of A Coin Is More Likely To Correctly Identify Your Org As A Non-Profit Than A Recent Visitor

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Another post I wanted to make to get people thinking and doing things differently for 2024 is based again on research Collen Dilenschneider and the IMPACTS team have done. As I mentioned in my post yesterday, they provide a lot of worthwhile data.

As with yesterday, this topic deals with how your organization is perceived by the community. In this case, it is people’s ability to correctly identify your organization as a non-profit to which they might donate.

While you might already acknowledge that not everyone knows your organization is a non-profit, it might surprise you to learn just how few people are aware your organization is a non-profit.  According to Dilenschneider, even those organizations enjoying the highest level of awareness don’t break 50% (subscription required).

Overall, only 38.6% of US adults believe that nonprofit exhibit-based organizations are nonprofits. This number considers visitors and non-visitors alike and the weighted attendance distribution of each organization type in the US.

Nonprofit performing arts organizations are in a similar situation: Fewer than half of recent patrons correctly identify them as nonprofit organizations. Nonprofit live theaters and live theater organizations are least likely to be accurately perceived as nonprofit organizations, and nonprofit orchestras are most likely to be perceived accurately as nonprofit organizations.

What is actually successful according to Dilenschneider, is emphasizing your organizational mission. She cites data that people who are unable to discern an organization is non-profit are frequently “cannot name a single meaningful achievement associated with the organization in question, despite being aware of or perhaps even visiting that organization.” She says making people aware of “unique meaningful achievements and missions” increases the likelihood that people can correctly identify an organization as a non-profit. Instead of continuing to mention that you are a non-profit, she advises emphasizing the “perceived values and impactful initiatives that an organization brings to its respective communities and constituencies.”

I go into a little more detail in my ArtsHacker post from October. If that piques your interest, check out Dilenschneider’s original post for more charts and data.

 

No One Knows You’re A Non-Profit (Sometimes Even After You Tell Them)

Always Good To Vet Before Giving And Be Wary Of Stolen Non-Profit Identity

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As we move through the middle of the holiday season, it seems like a good opportunity to remind people to do a little due diligence so they don’t fall prey to some charity scams.  Back in September For Purpose Law Group posted about a case of stolen non-profit identity that was exploited to make a lot of money.  PetCo Park in San Diego, like many athletic venues around the country, allows charities to staff concession stands in return for a cut of the revenue.

When a group known as “Chula Vista Fast Pitch” wound down their operations and filed a dissolution notice with the state, two guys basically assumed the organization’s identity and applied to participate in the charity food service program at PetCo Park and then subsequently at other athletic venues.

While it was something of an open secret that the charity didn’t really exist, it was able to continue operating for years, reapplying to the program multiple times. It took reporting by the non-profit news organization, Voice of San Diego, to finally close the whole scam down.

Something else that doesn’t seem to exist at our baseball stadium is any meaningful vetting process for organizations applying (or reapplying each year) to participate in this coveted program. See Monday’s VOSD article along with: The Fake Charity at Petco Park Has Also Been Working at Snapdragon Stadium  (August 29, 2023); Fallout Over Fake Nonprofit Continues at Snapdragon Stadium and Petco Park (August 30, 2023); and More on that Fake Charity that’s Been Raking in Cash at Petco (August 31, 2023).

It was a years-long lucrative fraud perpetrated in plain sight. But it was exposed and shut down in less than a week.

[….]

“At Petco,” Will Huntsberry points out, “Chula Vista Fast Pitch brought in $3.7 million in net sales over a five-month period earlier this year, according to receipts obtained by Voice. Charities generally get roughly 10 percent of their net sales at Petco. Ten percent of $3.7 million is $370,000.”

Extrapolating these figures over nine full years, at multiple venues, and including special events, Chula Vista Fast Pitch likely took in huge sums of money that should have gone to a local charity in good standing and operating for the benefit of the community.

Everybody wants to operate on good faith and believe that charitable organizations are benefiting worthy causes. Scams like this place a greater burden on other charities who operate legitimately and have to make additional efforts to prove it to funders. There are tools out there like Pro Publica’s Non-Profit Explorer potential donors can use to do some preliminary vetting of non-profits to which they intend to donate.

NPR’s Fortunes Changed By Billions And Billions Sold

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Last month there was an interesting story in the Washington Post about the $220 million bequest left to NPR 20 years ago by Joan Kroc, widow of former McDonalds CEO Ray Kroc.  What I found interesting was that while the money helped to expand NPR’s capacity in a very real way, it has also been something of a double edged sword when it comes to additional fundraising.

NPR spent some of the money, but put about $194 million into an endowment from which they have drawing off the interest. However, because NPR constantly expresses their gratitude for a gift which significantly impacted the direction of their organization, 20 years later people think Kroc is continuing to give money and there is no reason to make a donate themselves. Similarly, Congress cites the gift, questioning why NPR continues to need money.

“Kroc’s bequest has also periodically been invoked by congressional Republicans and conservatives intent on cutting the federal government’s annual outlay to public radio and TV. Most of those funds go to member stations; NPR receives almost no direct federal support. But that nine-figure gift from a multibillionaire remains a politically potent talking point.”

It raises something of a quandary about how do you appropriately acknowledge the generosity of a large, but one time gift, without dissuading others to donate as years pass. Perhaps somewhat ironically, Joan Kroc herself could have potentially been dissuaded from making her gift if she learned another had made a significant donation because she shared a common confusion about NPR’s identity.

Ken Stern, a veteran public radio executive who once served as NPR’s chief executive, wrote in 2013. Joan Kroc, he wrote, “frequently confused NPR (as many people do) with other public media organizations ranging from PBS to BBC to other public radio producers.”

Indeed, Kroc had apparently intended to make a donation to PBS, but her staff couldn’t ever get someone on the phone so she instructed them to move on.

As you might imagine, the NPR staff thought fondly of McDonald for a time after receiving the gift. The last line of the Post article says they enjoyed Big Macs on the day they announced receipt of Joan Kroc’s gift back in 2003.

Competition Among Donor Advised Funds Is Constricting Charitable Giving

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I am always interested in news about how donor advised funds (DAF) are operating. On the whole, their use hasn’t gone as intended and they have reduced, rather than increased or incentivized charitable giving.   A few weeks ago Vu Le linked to an article that examined how the differences in the way DAFs are promoted is an indicator of whether they are distributing or sequestering funds. (emphasis original)

National sponsors that spend more time talking about donor benefits on their websites have more assets, take in a much higher proportion of noncash contributions, and pay out grants at much lower rates than sponsors that spend more time talking about charitable giving.

[…]

But our analysis predicts that a hypothetical national sponsor with a strong emphasis on charitable grantmaking on their website would pay out at 53 percent, while a hypothetical national sponsor with a strong emphasis on donor benefits would pay out at just 2 percent. And those lower payout rates have ripple effects when it comes to the buildup of assets: Our model predicts that the highly charity-focused sponsor would have assets of just $34 million, whereas the highly donor-focused sponsor would have assets of $2.7 billion.

Something to note is that the analysis focuses on national sponsors of DAFs rather than regional and local sponsors. The author of the piece, Helen Flannery, notes that since national sponsors tend not to have the specific focus, whether it be geographic region or cause, they often need to work harder to make a case for people to arrange their giving through them. Flannery seems to suggest that the those that tout financial benefits to the donor are able to make a more compelling case than a more charitably focused sponsor without a specific focus.

Flannery calls for a more specific evaluation and regulation of DAFs on an individual basis rather than looking at the aggregate giving of sponsors since the really generous ones tend to make the parsimonious ones look better due to averaging.

The analysis we present in our paper quantifies this phenomenon. It measures the degree to which sponsors have financialized what was originally intended to be a nonprofit instrument, and it measures just how intense the competition has become among the very largest DAF sponsors in this country.

Bad Enough Having Computers Making Hiring Decisions, Are Grants Awards Next?

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A couple weeks ago Vu Le wrote about how useful AI can potentially be in the process of writing grants. So often granting organizations essentially ask for the same information, with some variation in what they want answered when and the word/character limits they have set for each response.

Given that grant awards can tend to favor organizations with the resources to employ a professional grant writer who knows how to employ terminology and language that funders seek, under resourced groups and those who are not comfortable or facile at employing the preferred vernacular could benefit from the use of AI.

Unfortunately, Le notes, some funders are using AI to detect if an organization is using AI to write their grants. Le writes:

“Grants are not college essays or news articles, where it matters who actually does the writing. Grants are a tedious mechanism for delivering answers about an organization and its work. AI just makes it less tedious. Punishing nonprofits for using AI is petty and paternalistic.”

He also says some funders are moving toward having AI evaluate the grant proposals which is even worse for a number of reasons.

“Funders who use AI to write grant RFPs, read proposals, eliminate applications, come up with a list of grant finalists, or whatever, should be aware that AI engines, which are mostly designed by white dudes, will likely favor white-coded proposals. It will be interesting to see the dynamics between AI-generated grant proposals and AI-supported grant review and selection. To keep it from reinforcing inequity, both funders and nonprofits need to be aware of biases that are built into these tools.”

For years there have been conversations about the job seeking process and how dispiriting it is to have a computer program evaluate your resume and cover letter before summarily rejecting those materials before a human ever gets to see them. Many have discovered how to game the system by using keywords in their materials, sometimes resulting in stilted or nonsensical content which nonetheless sees their application advance.

The grant application process is bad enough as it is without incentivizing cynical attempts to game the system. What would it say if an AI awarded a grant to an AI constructed application that no one ever seriously evaluated over an impassioned application written by a human? Should funding for homeless projects be determined solely by algorithms conversing with each other?

If funders are trying to detect grants written by AI out of concern about possible fraud, that is certainly valid. But that is also an indication that funding decisions should never be entirely made on the basis of polished prose. Vu Le suggests that just as AI can free applicants up to concentrate on delivering their core services, so too can it free funders up to focus on more directly interacting with those they fund to learn more about the work they do. Likewise, they can work on re-evaluating the criteria and processes they employ as part of their funding decisions.

There is an opportunity to double check the AI. Are its recommendations poor to middling in quality? Are those it rejects doing a better job than the AI indicates?  AI can certainly be useful in removing some of the subjectivity a person brings to information, but for every example of how it is better than humans, there are examples of gaps, some times so glaring a five year old would have avoided them that AI fails to fill.

Another Effort At Efficiently Crunching 990 Data

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Thanks to the Non-Profit Law Blog’s weekly curated link list, I learned that there is a new collaborative working on a way to provide a clearinghouse for raw, clean, and standardized nonprofit tax data gathered from Form 990 filings.

While that may not sound like it is relevant to your daily life at all, being able to easily access that day will make researching non-profits much easier, hopefully resulting in data which will support better decision making.

Drew McManus painstakingly extracted data from 990 filings from 2005 to 2022 for his annual Orchestra Compensation Report project on Adaptistration. He would frequently grumble about the fact that the data was not available in a machine readable format that would make that data so much easier to process and shift through. If I recall correctly, his go to source was the Pro Publica Non Profit Explorer which is contributing their data to this new clearinghouse.

Having good data about things like compensation can help advance equity and inclusion goals. The Association of Performing Arts Professionals (APAP) is engaged in an Art Compensation Project for some of these very reasons.

Better data crunching capabilities can also facilitate the study of differences by region and discipline for revenues, expenses, impact of private vs. public & government based grant making, etc.

Given that there have been so many groups who have attempted to serve as a clearinghouse for 990 data, the biggest question perhaps is whether this new collaboration can make it work better than in the past.

Is Bottom Up Funding Of The Arts The Next Business Model?

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There was another editorial about how the arts should be funded that is getting a lot of notice this week. You may recall I had posted about Isaac Butler’s editorial in the NY Times a couple weeks ago calling for greater public funding of the arts.  This week novelist, playwright and screenwriter Monica Byrne advocated for a bottom up funding model in the Washington Post.

She notes that the artists often get short shrift when it comes to attention and funding. When organizations get funded, it is often administrators and buildings which benefit before the artists do. She doesn’t specifically call for increased federal funding. Given that the culture wars of the 80s basically ended NEA funding of individual artists, that is probably a non-starter. Instead, she is advocating for the creation of works to be driven by artists who decide where to site their performances rather than the venue deciding what they want to do and then contracting artists.

For theater, as we know it, to have any future at all, a new economic model must take its place, founded on a simple principle: fund artists directly. Then let the artists produce their own work, rent their own venues and pay their own collaborators.

[…]

It’s true that scaling down would mean prioritizing certain kinds of theater over others. But this is the case in every era: Some aesthetics thrive while others die out. Instead of a world in which you pay astronomical prices to see another tired revival from the mezzanine, imagine there are a dozen theater cells in your area, performing new work in backyards and parks and city squares and empty storefronts. Art that is fresh, fluid, immediate, accessible and affordable — to make and to see — all because we collectively decided to fund the artists directly.

Is there any place for existing nonprofit theaters in this model? Sure. Reshape them into direct granting agencies and public resources somewhat like libraries, offering artists and companies production slots on a lottery basis…It would also mean that existing artistic directors understand that, not only are they not the ordained curators of culture, they are only useful to the art form insofar they serve artists — the creators of the form.

Anyone have any thoughts on this? The idea of turning theaters into public resources like libraries is interesting on paper. If non-profits were in a place to provide advice and support about audience cultivation and marketing practices attuned to the local conditions, that could be a valuable resource. Though my concern would be that we might end up having the same conversations we currently are about funders having priorities that are out of synch with the changing needs of the operating environment. It may not start out that way, but I could see things creeping toward “arts need to be run like a business” as staff turned over, etc.

What Donors Want Vs. Org Capacity To Provide

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Today Margy Waller posted a link to an opinion piece from the Chronicle of Philanthropy with that comment that the piece was not satire. While the piece was apparently posted in June, a version of it appeared in print last week.  Yesterday Vu Le made a post that was indeed satire as it poked fun at the opinion piece without naming it directly. I just happened to see both pieces within minutes of each other.

In the original, Why I Stopped Donating to Your Organization Theodore Wagenaar makes various criticisms about how slowly organizations respond and acknowledge donations. In one case, he suggests an email immediately upon receipt. He also says groups are slow to respond when asked about how money will be used.

In his post, Why I’m no longer donating to your no-good, very bad nonprofit, Vu Le basically says given the lack of resources and personnel, effectively delivering services to those in need and handling donor communications and paperwork are close to mutually exclusive.

I have been very disappointed to say the least. Some nonprofits don’t respond at all. Some wait excessively long periods of time before getting back to me. One time I had to wait a whole month like an animal for a handwritten thank-you note. Another organization received a huge grant from another donor, and I expected them to know immediately how that money would affect their operations, and more importantly, how it would affect me.

[…]

Be prompt in your responses: Whenever you get a donation, make sure to immediately stop whatever you’re doing, such as helping a child find food during the summer or saving democracy or whatever your mission is, and make sure the donor feel properly thanked.

[…]

Be transparent how you use donations: Every donor has a right to know down to the penny how and when their money was used and toward what end. What percentage of my donation was used on electricity? Did some of this money go to staff pay? If so, which staff, how much, and what did they spend this portion of their wages on? I hope it’s not caviar or fancy CD players, because I don’t want my money going to those things.

That first paragraph above was in response to the following in Wagenaar’s piece:

For example, one of the organizations I support received a multimillion-dollar donation from MacKenzie Scott. I expected some information about the award and how the organization would use it. I wanted to know if I should redirect or reduce my contribution to ensure it did the most good or went where the need was greater, but nothing materialized. I contacted the director but never heard back.

Six months later, I shared my disappointment with the director and said I would temporarily stop donating. That led to a discussion about the reasons for the delay, why it was important to share this information with donors, and a resumption of my support. Had I not followed up, I would have likely stopped donating.

The next few parts of Le’s post that I quoted seem aligned with this:

Be transparent about where donations go. Donors want to hear how their funds will be used. Share immediate plans for the donation when it’s received, and later explain where it ended up and the impact it had. This might include information such as the number of meals delivered, types of assistance provided, how many schools received funding, and more…

I fund several college scholarships for low-income students. I want to know who received the scholarships and the amounts. I don’t want my donation to displace financial aid that the college would have already given. I’d rather my money provided additional aid beyond what the school allots, and I’ll donate more to scholarships that do that. I cannot, however, make that decision if the colleges don’t supply the relevant data.

Clearly, Wagenaar is deeply invested and engaged in making sure the funds he provides are being used to degree he feels is effective. He wants a degree of granularity that other people would flip past in an annual report. Some of his concerns have some validity. A lot of state lotteries were sold to citizens as supporting education, but the reality turned out to be that the lottery funds replaced what the state legislature was providing rather than being on top of state funding. He seems to have similar concerns regarding scholarships. Similarly, some non-profits are really organized in sending out their appeals on time, but aren’t as diligent with the follow up communications, even after a significant time has past.

But as Vu Le suggests, organizations don’t often know exactly how they will employ funds the moment they come in and often have a broader view of how the funds can best advance the organization’s work than donors do. As a student, yes I would have loved to have more scholarship money on top of what the school was providing. But the school can see an opportunity to provide funding for an additional person they couldn’t have before.

More Funding, But For Status Quo Or Difficult Change?

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There was a lot of chatter on the Twittersphere last week (which I guess is the X Corp-sphere now?) over a NY Times editorial that Isaac Butler wrote advocating for the federal government to do a big bail out of theater in the face of so many theater organizations failing.

While a lot of the comments on the NY Times article basically said theater is boring, too expensive and good riddance, folks who are more inside the arts either praised Butler’s proposal or suggested propping up a flawed business model would just perpetuate a bad situation. There were many such threads. Here is one:

 

Somewhat loudest among those opposing perpetuating the business model was Scott Walters whose thoughts you can see in that thread. He also wrote a piece on Substack expounding on his thoughts. While I don’t agree with everything Scott says, it will come as no surprise I do fall into the camp of feeling that arts organizations need to do a much better job of listening and cultivating better relationships with a broader segment of their communities. Scott suggests money be put into researching a variety of new business models, but there probably also needs to be a corresponding long term marketing campaign to normalize those approaches so that inertia doesn’t keep the non-profit model as the only acceptable one size fits all default in the minds of donors and possible funding sources.

Similarly, there should probably also be funding for consultants, partnerships, etc., which facilitate cultivating better community ties. Again that would need to be varied in application. In the last community in which I worked, funding would be useful in one way, but in the community in which I currently work, it would be better used strengthening an organization with good connections, but few resources. The stronger they got, the better position they would be in to facilitate the conversations and relationships I need to have with the community.

All that takes a lot of funding so obviously I am with Butler in calling for greater amounts of funding for the arts in general. I didn’t particularly like his comparison the funding levels in England because I have seen so many stories about that becoming increasingly restrictive over the years. I saw a tweet over the weekend from someone suggesting while England was funded the arts at a higher level than the US, it was a bad example because their per capita funding practices were pitiful compared to the rest of Europe. Butler replied that he felt he had to use England as an example because no one would believe him if he cited Germany’s numbers.

Will Airline Fraud Provide Impetus For Google To Stamp Out Clone Ticketing Sites?

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About a month ago, I wrote about the Fix the Tix Coalition which is advocating for laws to change exploitative ticket practices. Among the practices they were trying to change is websites masquerading as the official ticketing site of different venues.

Speaking from personal experience, the venue I run has a ticketing service that took out a Google ad smack in the middle of our venue listing on the Google results page.  Even though there is a button labeled for our website, we have tons of people that follow the fake link, buy tickets for many times the list price and swear up and down they bought them from us.

Well it seems scammers are doing a similar thing with the Google results for major airlines. According to an NBC News story, scammers have managed to change to list different telephone numbers for the airlines.  When people call to make or change reservations, they end up giving their credit card number and personal information to a thief.

Instead of reaching a Delta employee, Evers said he spoke to a man with a thick accent who hung up and called him back from a different number. That man then asked for payment to book a rescheduled flight. Evers recognized it as a scam and scrapped his trip.

He then went on to document six other airlines, including American Airlines, Southwest Airlines and Air France, that had incorrect numbers served up by Google.

[…]

A Google spokesperson said in an emailed statement that the company does “not tolerate this misleading activity.”

“Our teams have already begun reverting the inaccuracies, suspending the malicious accounts involved, and applying additional protections to prevent further abuse,” the spokesperson said.

The spokesperson refused to address questions about how long the problem persisted, how many airlines were successfully impersonated, or why there weren’t better protections in place for major companies like the airlines.

Google has struggled to counter scammers who have learned how to get fake contact information to show up when users look up a company on Google Search or Maps.

While I would hope Google would take steps to eliminate ticketing fraud when they find a way to effectively stamp out the efforts of the folks masquerading as airlines given that they can see what a big problem it is, I suspect performance venues are too small an industry and the ad venue too enticing to inspire them to implement similar measures.

Will Lunch Conversations & Bespoke Experiences Replace Fundraising Galas

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A post by Jason Lewis who writes The Butterfly Effect on substack suggests taking a donor to lunch is going to be a much better investment of time and resources when it comes to doing a better job fundraising than taking a webinar on the topic.

If you really want to understand why giving is down, instead of signing up for a webinar promising an in-depth analysis by a panel of fundraising wizards, how about taking a lapsed donor out to lunch? If doing that is all but impossible because you’re too afraid to pick up the phone, you’re overwhelmed with the amount of data you’d have to sift through to identify that donor, or your boss has you panicked about tablecloths and wine for the fall gala, anything you’re going to hear in that webinar isn’t going to help.

What Lewis essentially says is that like arts and culture audiences, donors are less interested in taking a passive role with their giving and want to be more interactively engaged. An increasing number of people don’t view themselves as socialites who attend big galas and would instead like to have a closer view and relationship with the causes they are being asked to support.

The effect is an irrevocable shift from a broadcast model in which a relative few control the message to a democratized model where the message is co-created. Shirky’s insights about what it means to live in the twenty-first century is why we encourage our clients not to see themselves as master technicians attempting to manipulate and control their donor’s experience and, instead, engage their donors in ways that allow them to play active roles in creating meaningful experiences for themselves.

[…]

Our donors want to play an active role in determining what their giving experiences are; and they, more so than anyone else, are best qualified to explain to us what those experiences might look like. Arguably, the lunch table is one of the best places for having these kinds of conversations.

Based on the plug at the bottom of the post, it appears Jason Lewis is a member of a company that promotes responsive fundraising which presumably advocates for this sort of approach as part of their consulting practice.

Water, Water Everywhere, But Not A Drop To Drink

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A public radio station’s report on the Oregon Shakespeare Festival’s (OSF) finances is a good illustration of how restricted endowments can imperil the health of a non-profit organization. OSF recently had to make an appeal for $2.5 million in order to keep their doors open. This despite the fact the organization has $96 million in assets.  About $32 million of that is in property and equipment which are generally illiquid assets. Of course it would be difficult to mount of festival if they sold off all the property and equipment.

The crux of the problem for OSF is that only 15% of the approximately $39 million endowment fund is unrestricted which is roughly $5.8 million.   The remainder of the assets totaled around $25 million in cash and equivalents, but their annual expenses are around $18 million. Their business model has been to make about 70-80% of revenue from ticket sales according to the article. That worked well enough until Covid hit and audiences were subsequently became less willing to attend as restrictions eased.

While being able to access more of their endowment wouldn’t completely eliminate their woes,  the combination of lower ticket revenue and an inability to access more than $5.8 million from their endowment for unrestricted use have been contributing factors

 

Getting Away From Treating People According To Their Donor Level

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Vu Le made a thought provoking post with suggestions to make fundraising events more community-centric. The subtext of his thoughts is essentially to avoid valorizing donors and literally marginalizing the presence of volunteers and clients during these sort of events.  It occurred to me that the environment at these events may be reinforcing the sentiment that non-profits need to run themselves like a business by positioning non-profits as hapless and helpless without the assistance of donors.

Many of his suggestions focus on making fundraising events more inclusive financially, physically and socially for all members of the community being served. He lists 14 in total, but here are a few highlights:

Mix up your seating arrangement: seats are usually reserved for major donors and sponsors, with the top tiers going towards those who contributed the most financially. This just reinforces the message that the more money you have, the more special and important you are. That’s silly. Mix up your attendees. Seat clients at the front. Or randomize it.

Treat volunteers thoughtfully: While donors of money are worshipped, donors of time are treated like an afterthought. “After you finish setting up all the centerpieces, feel free to scavenge through the dumpster for your dinner, since we reserve the gourmet food for guests.” OK, I exaggerate a bit, and volunteer food (usually pizza) is not bad. But if we’re going to be community-centered, then volunteers are an essential part of the community, and should be treated accordingly.

[…]

Skip the tiered sponsorship levels: Yet one more way we perpetuate the idea that people and corporations should be treated based on how much they contribute financially. The sponsors at the “higher” levels get more marketing, better seats, more recognition, etc. Let’s move away from this. Here’s a great article on this topic from our colleague Phuong Pham.

[…]

Be considerate how you use clients’ testimonies: There’s been the trope of having a client, often a person of color, go on stage and tell their painful story, often to a room of mostly white donors. Fortunately, I’ve been noticing a trend of this happening less frequently as nonprofits become more thoughtful. Ethical Storytelling is a good resource, along with articles like this one by Nel Taylor on the CCF website.

Not all his thoughts are applicable to events that arts and cultural organizations may host, but many are. Some of what he says dovetails closely with the sort of changes arts and cultural entities have been encouraged to make as part of their regular business activities such as pricing, dress code, engagement of diverse participants and suppliers of goods and services.

Near the end of his list, he encourages people to clearly and specifically discuss the intentional changes you have made.

Be transparent and direct about the changes you’re making: Before, during, and after the event, talk about why you’re doing some things differently. It’ll help guests think about things they may not have considered before. “Last year, while it was nice to see everyone dressed up in waist coats and monocles, we realized that it excluded many people from our community. This year, please dress in whatever makes you feel comfortable, within reason.”

Australia’s Last Poet Laureate Was A Convict?

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Big news out of Australia where the first national arts policy since 2013 was announced.  In addition to commitments of funding to specific entities and organizations, arguably the most significant element of the policy is a commitment  “….to protect First Nations knowledge and cultural expressions, with a particular brief on cracking down on fake art that plagues the $250m-a-year Australian Indigenous art market.”

Other elements of the plan include the establishment of a poet laureate position which last existed during the country’s convict era,  a state of the arts report to be issued every three years, and the establishment of  “a quota for expenditure on Australian content by multinational streaming platforms such as Netflix and Stan..” The amount of this quota is rumored to be about 20% and The Guardian article quotes people who are concerned streaming platforms may pull out of the country if they are required to produce Australia based content.

It happens that I saw a piece on Vice last night before I saw The Guardian article. Vice asked Australian artists what they thought about the plan.  Many felt the money was going to the usual suspects and advocated for a universal basic income plan for artists.

Others felt that the arts were unfunded in proportion to their footprint:

“The arts sector will get $286M over four years, or $72M a year. The fossil fuel industry gets $11.6B a year in government subsidies. Australia’s arts sector employs about six times as many people as the fossil fuel sector.

The requirement for locally generated content was cause for hope for some:

“I started to lose hope in local content knowing that reality TV filled up much of our “Australian” quota on broadcast networks. The possibility of streaming services now being made to spend 20% of their budget on original, local content honestly makes me feel hopeful and excited to pursue my career on my home turf.”

A Look At Who’s Managing Foundation Funds

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For the third year in a row, the Knight Foundation has conducted a survey of the top 55 charitable foundations with the intent of measuring the diversity of those managing the assets. Of the 50 eligible to be measured, (five do not have funds under active management or engage in other approaches which don’t meet study criteria), 15 declined to provide a response to the survey.

Knight Foundation was disappointed in the lack of transparency. I had written about the problem of donor advised funds essentially sequestering charitable gifts with no obligation to to distribute them. Some of those on Knight Foundation’s list of non-responders are set up in this or similar arrangement.

Knight Foundation had examined their own practices about 12 years ago and appalled by what they found, set out to diversify the companies that handled their investments.  Reading the report, you may be disappointed to learn that 81.9% of the top 50 charitable foundations funds are invested with firms primarily owned by white men. However, at 18.1% charitable foundations are veritable role models in the investment world at large where the industry average is 1.4% invested with diverse owned firms.

Knight Foundation isn’t simply pursuing this policy to provide a fairer distribution of assets under management to diverse owned firms. They have seen that diverse owned firms engage in more diverse investment strategies avoiding “group think” approaches which may result in unhealthy concentrations of assets in problematic companies and industries, but this investment approach by diverse owned firms is no more risky than non-diverse owned ones.

That study, and the two in the series that proceeded it, found no statistically significant difference in risk- adjusted returns between diverse-owned and non-diverse-owned asset management firms. Put another way, despite no performance advantage, firms primarily owned by white men manage 98.6% of the over $80 trillion under management in the United States. And that $80 trillion represents more than three times the entire GDP of the United States.

 

IRS 990 Backlog Hampering Non-Profit Giving and Transparency

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ProPublica recently reported that the IRS has yet to release nearly a half million non-profit tax records. You may be wondering why that is something you should be concerned about. In fact, the lack of records release has some pretty significant implications for transparency and charitable giving. Drew McManus has been painstakingly combing through records since 2005 to assemble his annual Orchestra Compensation Reports.  I believe among the reasons why he didn’t have a 2022 edition examining the impact of the pandemic during the 2019-2020 fiscal year was partially due to the lack of 990 filings available for review.

Additionally, many individuals, corporations and foundations use the filing data to make giving decisions.

“This is having an impact on nonprofits, fundraising, donors … and charity regulators,” said Cinthia Schuman Ottinger of the Aspen Institute, who coordinates a group of practitioners who work with nonprofit tax data (ProPublica is a part of this group). “The whole ecosystem suffers when there are delays of this kind.”

Michael Thatcher, the CEO of Charity Navigator, said the end of the year is a crucial time for charitable giving.

[…]

And, he said, “it’s not just the donors that are upset by this.” Many organizations want their latest information out there as well, especially if their finances have improved or they’ve done significant work in recent years. “They want to show that to the world, and guess what, when you go to Charity Navigator, you’re seeing two-year-old information.”

Many of the missing filings could help shed light on how organizations — and the nonprofit sector as a whole — have fared during tumultuous years marked by a pandemic, economic upheaval and large infusions of federal relief dollars.

Courtney Aladro, a charity regulator for the Massachusetts attorney general and NASCO board member, said that regulators across the country use the IRS repository of documents to confirm or corroborate the information that charities submit to their states….

“Those are some pretty important years because of some of the difficulties over the last few years,” Aladro said. “The use and expenditure of COVID relief funds, for example. It’s pretty important for charity regulators and law enforcement to monitor that, and not having that information will make it more difficult.”

The IRS has been hampered by underfunding and understaffing which has lead to both delays in release and embarrassing release of tax information that was not supposed to be released. A recent bill passed by Congress will seek to modernize systems and hire more staffing, but it could be years before the problems are ironed out.

Donating At Check Out, Legit or Shady?

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An interesting situation has arisen in connection with at check out donation solicitations. Credit to Isaac Butler who retweeted a link to a post about a man who brought suit against drugstore chain CVS claiming the check out solicitations were a reimbursement for a $10 million donation obligation CVS had made to the American Diabetes Association.  In November, CVS asked for the case to be dismissed based on their claim that their agreement was only to make up the difference between what customers donated and $10 million.

Emma van Inwegen who linked to both articles in a Twitter thread helpfully added a link to a third article by the Tax Policy Center that answers the question about who gets the tax benefit when you donate at checkout.

According to author Renu Zaretsky there are a lot of Tiktok videos out there that spread incorrect information about the transaction. She says her children have forbidden her to post a video on the site refuting the misinformation. (my emphasis)

To start, keep in mind that there are two ways charities can benefit from point-of-sale donations. The first is where the store donates a share of its sales. That type of donation is deductible by the business but not by its customers. The second way is where customers add something to their bill at the register with the extra amount going to charity. Customers can claim those amounts donated as deductions on their individual income tax return, though almost nobody ever does.

She goes on to explain that when you donate at check out, the business receiving the funds on behalf of a charity is only acting as the collection agent and does not get any tax benefit.

Zaretsky says the problem with giving at check out is that most people won’t get credit for that, or any other donation they make, because they don’t itemize deductions on their taxes.

Even with a receipt, more than nine out of 10 taxpayers won’t deduct this—or any other– charitable donation from their federal taxable income. That’s because they do not itemize their deductions.

When the Tax Cuts and Jobs Act effectively doubled the standard deduction, the number of households claiming itemized deductions fell from 46.2 million in 2017 to 16.7 million in 2018. Most of those still itemizing their deductions are higher-income households. Those making more than $3.3 million annually get more than one-third of the federal income tax benefits from charitable giving, and few of these households are likely to do much of their giving at the grocery checkout counter.

Success Attracts Success

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I was interested to see there was some research conducted with some of the earliest recipients of MacKenzie Scott’s unrestricted gifts to various non-profits between 2020 and 2021. The median of the grants she distributed was $8 million as compared to a median of $100,000 given by larger funders in recent years.

To be clear, some of the organizations Scott targeted in the first few rounds of giving didn’t sound like they had been getting anywhere near $100,000 grants. The biggest finding of the study was that the Scott grants weren’t just transformational for organizations, they were equally transformational for leaders who found they no longer had to lay awake at night worrying about keeping doors open. Now they not only felt secure in knowing existing programs could be executed, they began to dream about what else it might be possible to accomplish.

In interviews, more than three-quarters of leaders discussed the shift in their thinking that accompanied the receipt of this gift. A scarcity mindset was replaced with an opportunity to pursue transformational possibilities, as leaders were able to reimagine their organizations “in the ideal way to achieve the biggest impact that we could have.”

Close to two-thirds of interviewed leaders described a sense of relief and breathing room after having received their grant. Many told us of the opportunities to innovate and take risks that their grant has afforded them, knowing their organizations are now more financially secure. “It’s an opportunity to be innovative and creative because we have more foundational support,” said one leader. Another said, “For us to have money to pilot something to see how it goes is just a miracle from heaven.” Other leaders put aside a specific portion of the gift specifically for bold or risky ideas.

The most striking response for me was a leader of color talking about how she felt affirmed and vindicated after worrying her presence was a liability to the organization:

I’ve been told about two million times that organizations led by women of color get less than others,” one leader told us. “So, I was nervous about this because I’m thinking, man, I hope that who I am doesn’t cheat this organization out of opportunities, you know? And that’s a sad thing to even admit to you, but I did think that.” The grant from Scott was powerful for this leader because, as she put it, “it positioned being a woman of color as an asset, not a liability.”

What was also encouraging was that the concern others funders would reduce their support of recipient organizations was unfounded. In many cases, the organizations reported an increase in overall fundraising after receiving MacKenzie Scott’s gifts.

Is It Better To Give Or Receive?

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I saw a tweet by Maria Popova linking to a piece she wrote about the philosopher Seneca’s thoughts on gratitude and thought it might make an appropriate post for Thanksgiving. Seneca was a proponent of the idea that giving should be done for the sake of giving, not receiving anything in return.

There is not a man who, when he has benefited his neighbour, has not benefited himself, — I do not mean for the reason that he whom you have aided will desire to aid you, or that he whom you have defended will desire to protect you, or that an example of good conduct returns in a circle to benefit the doer, just as examples of bad conduct recoil upon their authors, and as men find no pity if they suffer wrongs which they themselves have demonstrated the possibility of committing; but that the reward for all the virtues lies in the virtues themselves. For they are not practised with a view to recompense; the wages of a good deed is to have done it. I am grateful, not in order that my neighbour, provoked by the earlier act of kindness, may be more ready to benefit me, but simply in order that I may perform a most pleasant and beautiful act; I feel grateful, not because it profits me, but because it pleases me.

I happened to click a little errantly and saw Popova’s most recent post quoting John Steinbeck who felt it was more virtuous to receive well than to give.

It is so easy to give, so exquisitely rewarding. Receiving, on the other hand, if it be well done, requires a fine balance of self-knowledge and kindness. It requires humility and tact and great understanding of relationships. In receiving you cannot appear, even to yourself, better or stronger or wiser than the giver, although you must be wiser to do it well.

It requires a self-esteem to receive — not self-love but just a pleasant acquaintance and liking for oneself.

In fact, Steinbeck apparently had felt a degree of disdain for wealthy philanthropists who gave large sums after engaging in extractive and exploitative practices, a situation to which we may have circled around to again by some measures.

Writes Steinbeck:

Perhaps the most overrated virtue in our list of shoddy virtues is that of giving. Giving builds up the ego of the giver, makes him superior and higher and larger than the receiver. Nearly always, giving is a selfish pleasure, and in many cases it is a downright destructive and evil thing. One has only to remember some of our wolfish financiers who spend two-thirds of their lives clawing fortunes out of the guts of society and the latter third pushing it back. It is not enough to suppose that their philanthropy is a kind of frightened restitution, or that their natures change when they have enough. Such a nature never has enough and natures do not change that readily. I think that the impulse is the same in both cases. For giving can bring the same sense of superiority as getting does, and philanthropy may be another kind of spiritual avarice.

Questioning Capacity Building

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Over the last few months, Non-Profit Quarterly has run a series of pieces on the topic of capacity building. In particular, the authors have challenged the notion that current capacity building efforts are healthy for non-profits given that the definitions of capacity building and effectiveness are made externally by funders rather than internally by the non-profit entity.

Particularly because these definitions tend to hew closely to commercial quantitative metrics which aren’t particularly valid when it comes to organizations dealing with homelessness, drug rehabilitation, domestic violence, etc., where low numbers served can mean the organization needs more capacity or that they ARE being very effective in achieving their goal.

Additionally, as Marcus Littles points out in his piece, there are entrenched issues facing Black and Brown lead organizations which impede their growth in ways consultants can’t fix:

…A board development training plus a communications audit does not equal sustainability in seven months. A technology plan combined with an organizational culture audit does not equal organizational resilience in a year. Why? Because on their own, competency building and skill development do not enable Black and Brown leaders and organizations to overcome the structural inequities that make it difficult for them to thrive.

In surveying a group of leaders at Black-led community-based nonprofits, Littles notes a distrust of capacity building programs, not only because of a perception that they “perpetuate white-dominant norms of effectiveness,” but also that they signal a lack of commitment to the success of an organization by funders:

The first: “Capacity building is the consolation prize money that foundations offer when they are willing to pay for us to get advice, but they aren’t willing to resource us to help our people get free.” The second quote resonated with most of the folks we interviewed: “When I think of capacity building, the first thing I think is that capacity is the wrong word.”

Capacity is a tepid word. Once an organization’s capacity is built, what does it become? Capable? Sufficient? Competent? Capacity building is a process without a tangible aspiration. It is an investment with an unambitious return.

These perspectives made me stop to think a bit more about the idea of capacity building. The idea of capacity building as a consolation hasn’t necessarily been true in my experience since I generally have applied for separate monies to support a specific goal rather than having someone say, we won’t fund X, but we would like to offer you funding for capacity building. Though up until recently when funders began to allow funds to be used for operational expenses, it could be difficult to answer questions about how the increased capacity would be sustained in the future if the capacity wasn’t going to directly result in increased earned or unearned revenue or be volunteer supported.

So in that context, I can understand the feeling that capacity building programs can feel a little hollow without an interest and commitment to an organization to provide some sort of support over multiple years if required.

How Are You Philanthropic Rather Than How Much

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Last week Vox had a provocatively titled article saying “Why fewer Americans are donating to charity.” Rising to that provocation, I read the fairly lengthy piece that essentially said that giving isn’t really down, but that the ways in giving is measured and defined are no longer as valid as they once were.

While billionaires are getting a lot of attention for their donations, even if the funds are placed into somewhat controversial donor advised funds, giving to political campaigns and issues groups, crowd funding efforts, mutual aid groups and in amounts of less than $25 are not being counted.

The reason people are choosing to give through these other channels is due to a perceived distrust of large institutions as well as the sense that your donations are having a more direct impact than if made to a large entity.

It’s easy to see the psychological draw of such person-to-person giving. You know to whom your money is going. It can feel more immediately impactful. You might also feel that your dollar is going further than when you give to a big cause…that already receives millions of dollars every year. That’s not to say giving to an online crowdfunding campaign is actually more impactful than giving to a nonprofit, but there’s a growing perception that it is, especially among younger Americans. According to a 2022 study by Independent Sector, a coalition of philanthropic nonprofits and corporate giving programs, 57 percent of Gen Z believe that giving directly has more impact than giving to nonprofits.

There is also a sense that by focusing on the singular act of check writing as a metric, a lot of charitable activity is being missed. (my emphasis):

In 2019, she [Lucy Bernholz] conducted a national study of 33 focus groups, asking hundreds of Americans not how much they gave or why they gave, but how they gave to make the world a better place. Their responses showed that giving money is only one small part of what philanthropy means for Americans. Giving time was just as frequently mentioned as giving money. Everyday acts of charity, such as sharing skills, giving items, and doing acts of service for neighbors and other community members, were very common.

These conversations also revealed participants’ uncertainty around whether some of their acts of generosity even counted as “giving.” Participants weren’t accustomed to thinking about or talking about how they gave, or discussing the definition of giving. It shows that the understanding of philanthropy is ambiguous, not fixed — and perhaps can evolve to be more inclusive.

The national organization behind GivingTuesday is apparently trying to adjust to the shifting sense of what constitutes philanthropy and attempting to measure all the ways in which people give to make the world a better place rather than focusing on how much people gave.

Comp Tickets Are Not Cost Free Transaction

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Last month Drew McManus had box office manager Tiffin Feltner make a guest post on his Adaptistration blog on the topic of comp tickets.   It has taken me about three weeks to stop grinding my teeth long enough to make a post of my own on the topic.  You will see a lot of posts about optimizing ticket prices based on various criteria and I think those assume people have a handle on their comp ticket policies. But let me tell you, in my experience there are a lot of people out there you think would know better who have absolutely bonkers approaches to comp ticketing.

Feltner notes that about 40% of comps go unused. I wondered if that is a nationwide statistic or just what they have observed in terms of the venues they serve. Reports I have pulled from my ticketing system often show much greater rates than that.

Organizations I have worked at have ticketed events for rentals of our own venue as well as served as a community ticketing hub providing service to other organizations at their venues. Many times they are not only comping tickets for individual events, but providing comp subscriptions which results in a large number of empty seats for the entire year.

There are so many issues that arise because of comp ticketing decisions. First, because organizations like to comp tickets and subscriptions to important guests, they place them in large, consecutive groups in the closest rows. Which means if people don’t use the comps, you can have a nearly sold out event where the first 10 rows are virtually empty and those in attendance are packed like sardines in the back of the venue.

Then there are other cases when the event is sold out in the ticketing system and the client can’t get a special last minute guest in because they distributed the house seats held back for this purpose days earlier. Then of course, when the show starts there are a bunch of empty seats because so much of the house had been comped.

We have run into situations where the client decides a ticket holder has forfeited their seat by not showing up five minutes before, without ever having communicated that policy. (Because it didn’t exist until just now.) Sometimes the ticket holder shows up to find their seat occupied, sometimes that bullet is dodged.

Then there have been times the client tells us they have confirmed a ticket holder is not attending, asked us to assign the ticket to someone else, and then put a sign on the seat reserving it for a third person.

Not only are poorly considered ticketing policies bad optics and create poor customer relations, most of the time the ticketing staff ends up as the target of blame for these bad decisions–often by the people responsible for making these bad decisions. This is what makes me grind my teeth because all these bad feelings and awkward situations could be avoided with a little forethought and policy discipline.

In their guest post, Feltner suggests using a card that can only be redeemed on the night of the show as a solution to the comp issue. That is similar to an approach my staff has used with clients where we suggest unassigned blocks of seats strategically placed in places with good sightlines. These blocks can be assigned as needed when it is known what VIPs will be attending. This allows for better placement and assignment of seats prior to an event date.

However, there needs to be strong comp policy guidelines in place so that there isn’t a gradual creep back to 1/3 of the seats being comped well in advance.  If your venue scans tickets, you are probably able to pull a no-show report broken down by ticket category that can provide insight into how many of the comps are being used which can inform tweaks to the ticketing policy.

While I am advocating for a robust comp ticket policy, this is not to say that you shouldn’t be offering comp tickets. There are a lot of reasons why free admission is a bad idea, but it can be useful to achieve targeted goals. As Feltner mentions, it is important to have some sort of tracking mechanism in place to evaluate whether you are achieving those goals.

One thing to consider if you are offering comp tickets as a sponsorship or donor benefit is to ask the recipient if they plan to use the tickets. In my experience, a fair number of people provide support because they believe in the organization’s work, but don’t necessarily intend to redeem the benefits that come with the support.

Not only does that allow those seats to be filled, but it also allows a greater portion of their donation to be credited as tax deductible because they are not receiving material benefit. However, this benefit needs to be refused immediately at the time of the donation. You can’t ask people in December after you have had 8 events occur and then retroactively provide credit for unattended shows. If they do decide to attend one event at a later time, you can always comp them in then and make an appropriate adjustment to their donation credit.

More Europe Performing Arts Orgs During Covid

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Last week German arts administrator Rainer Glaap made a Facebook post linking to the first ever study of theatres across the European Union (EU).  Additionally, some of the survey participants were non-EU members of the Creative Europe program.  Readers may recall I had made a number of posts looking at how various governments across Europe were providing financial support to artists during the height of the Covid pandemic.  So I was interested in seeing what this report had to say.

One of the biggest difficulties faced in putting the study together was all the differences that exist between European countries in terms of number of theatre, definitions of performing arts activities, funding policies, training practices, etc. There were numerous times the report noted the difficulty in making and apples to apples comparison.

However, there were a number of interesting things I pulled from the report. For instance, apparently France and Germany are the primary models for presenting/touring versus producing.

The so-called ‘French oriented system’ is based on productions, touring and selling plays to other venues making international co-production easier to fit in a programme. In a ‘German oriented system’ whereby theatres operate as production houses with in-house established ensembles, international co-production is less natural since the programme is set for the season.

Since the degree to which European governments subsidize the arts is a frequent topic of conversation in the U.S., having a EU-wide report on this number is obviously of some interest (recall this is an average from 39 participating countries):

“ticket sales in public funded theatres usually amounts to about 25% of the theatre budget. Commercially-oriented private theatres and independent companies however rely mostly on revenues generated from the box office and other commercial activities. Among the surveyed private theatre venues and companies, revenue from sales (tickets, admissions) constituted around 40% of their budgets before the COVID-19 pandemic.”

During Covid, many of the measures taken in European countries were similar to those in the U.S. Many shifted to streamed live or archived performances, with results ranging from innovative to downright disappointing. Others found ways to perform in outdoor or non-traditional spaces. Companies in a number of countries started working with hospitals, retirement homes, schools and universities to offer performances. Some organizations experimented with the drive-in theatre experience where people remained in their cars. There was an account of a festival in France which replaced the cancelled Avignon Festival which provided press exposure to smaller arts organizations which normally wouldn’t get it and apparently enabled the organizer, Theatre 14 to reach audiences not used to attending theatre. I am not sure how it was organized to encourage that. I assumed it might be outdoors in public spaces, but it appears the performances were held in physical performance spaces.

There were examples of efforts to provide better support for artists, both in terms of government policy:

Good practices are emerging, such as negotiating a minimum wage for artistic work in the theatre, also for people working on other terms than an employment contract e.g. in Austria or Finland. In some countries, such as Poland, new legal acts and wide-ranging regulations are created to support this professional group. In Belgium, the situation of artists resulting from the pandemic pushed the creation of a new type of ‘fair trade’ contract, in order to improve the contractual relations between artists and cultural operators. As a result of such a contract, a play can either be postponed or cancelled, but in the latter case part of the fees must be paid to the artists.

[…]

….The project was funded via the European Commission’s DG Employment and Social Affairs budget line for Information and Training Measures for Workers’ Organisations. It helped the unions to train and put in place a strategy in relation to organising, with a focus on freelance, self-employed and otherwise atypical workers in the Media Arts and Entertainment sectors.”83

As well as acts of solidarity:

Nau Ivanow, a cultural residence space in Spain that has a venue, decided that all income from ticket sales during the COVID-19 pandemic will be given to the performing companies and artists.
Also, since the beginning of the COVID-19 pandemic they decided to offer their two rehearsal spaces for free for the interested artists/companies.

[..]

Some of the [Romanian] public cultural institutions (National Dance Centre, National Heritage Institute, Clujean Cultural Centre, National Museum Complex ASTRA Sibiu, Studio M Theatre in Sfantu Gheorghe) announced that they did not attend this funding session in order to show their solidarity with the independent cultural operators, whose resources have been drastically diminished, and who were less eligible for support than state funded institutions.

The report also made some recommendations for the future which I will probably cover in my post tomorrow.

Strong Opposition To Warehousing Charitable Funding In DAFs

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A few weeks ago, I wrote a post about how donor advised funds (DAF) had surpassed charities like the United Way as recipients of charitable giving.  I noted this is a problem because unlike foundations and other grant making institutions, DAFs have no obligation to disburse the funds they hold. The donors get the tax benefit, but the funds are not being employed for a charitable purpose.

The good folks at the Non-Profit Law blog recently shared a link to a June 2022 Ipsos poll showing public sentiment is against such arrangements. Not only do they feel DAFs should be required to distribute the funds they hold, they feel foundations should be required to distribute twice the amount they are currently.

  • With more than $1.2 trillion in charitable contributions currently sitting on the sidelines, 69 percent of adults surveyed support a 10 percent payout requirement for foundations (up from the current 5 percent) and for DAFs (which currently have no payout requirement), even if this reduces the amount of money in foundations and DAFs in the future.
  • 73 percent support requiring DAFs to make grants within 2 to 5 years of receiving donations.

The biggest impediment to generating general will toward making these changes is lack of knowledge about the situation. Of those surveyed, only 17% were aware that the tax code is structured to allow tax exemptions for charitable giving while allowing so little to be distributed to non-profit entities. Once people become aware of this information, there is bi-partisan support to make changes that will see non-profits receive a greater amount of funds sooner.

Specifically, respondents across the political spectrum expressed a strong discomfort with taxpayer subsidies allowing donors to set up perpetual foundations, with conservatives objecting to such subsidies even more strongly than liberals. What is more, both liberals (74 percent) and conservatives (70 percent) favor increasing foundation and DAF payouts to 10 percent, even if it would reduce foundation assets in the future.

Arts Orgs Are Shifting Approach Post-Pandemic, Will Grantmakers?

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A link to a video presentation about a study the Michigan Arts and Culture Council commissioned of SMU DataArts popped up in my feed last week. I am not sure what inspired me to listen all the way through because I am glad I did. There were some small unexpected revelations that popped up.

For instance, right around the 30 min mark director of SMU DataArts Zannie Voss discusses how Michigan arts organizations have a higher median working capital than the national median, however the average working capital was quite a bit lower than the national average. (Reminder of median vs average) But both the median and average were close together which Voss says is unusual. After some investigation she found this was due to Michigan arts organizations having smaller budgets than the national average.

This carried over to organizations who primarily served BIPOC communities versus those who did not primarily serve BIPOC communities. Overall BIPOC serving groups in MI had the same liquidity as non-BIPOC serving groups in MI, whereas nationally BIPOC serving groups are more liquid than non-BIPOC groups.  This is due to the fact that in MI the budget size of both groups are closer to each other than their peers nationally.  Generally smaller organizations tend to be more liquid than larger ones.

Voss delves more deeply into this factor by noting that smaller BIPOC serving organizations especially tend not to grow large because there is a lot of unrecognized sweat equity being invested by people. This is one of those “you have to have money to make money” situations. If an organization can’t show a cash expense because so many people donate their effort, they don’t meet foundation/donor funding thresholds to receive more money.

She the moves into recommendations for funders as organizations try to recover from Covid restrictions. The first one is to “support grantee defined strategies for recovery and adaptation” and to “place bigger bets on BIPOC serving organizations who have been disproportionately by the pandemic and racial injustice” on the scope of decades rather than a couple years.  Another is to provide capacity building by supporting salaries and benefits for staffing and other operational expenses.

Specifically she encourages funders to focus on capacity building over organizational growth.  Instead of pushing organizations to add programs, granters should encourage organizations to set down deeper roots to ensure stability.

Likewise she advocates for the exploration of different business models, multi-year grant commitments and encouraging arts organizations to build cash reserves.

None of these suggestions are particularly new, but the pandemic reignited the discussion of many of the issues and created a context for implementing policy changes going forward.

Donor Advised Funds Receive More Giving Than Public Charities

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Earlier this month Vu Le of the Non Profit AF blog linked to a piece reporting that Donor Advised Funds (DAF) had surpassed charities as recipients of charitable revenue.  The problem with this, as I have previously written, is that unlike public charities which are required to spend at least 5% of their funding each year, donor advised funds have no such requirement but the donor gains the tax benefit of making a donation.

In other words, the government is subsidizing giving that is not necessarily providing any charitable benefit. From the Inequity.org article:

Of particular concern are DAF sponsors that are affiliated with for-profit Wall Street financial corporations. As we have documented, these commercial DAFs provide enormous publicly-subsidized tax benefits to their high-rolling contributors while actively encouraging the warehousing of charitable wealth. And commercial DAFs have been growing explosively.

In fact, the largest commercial DAF sponsors now take in more money each year than our largest public charities.

The article has an animated graphic illustrating how over time DAFs have occupied six of the top ten recipients of charitable revenue, displacing United Way Worldwide from its top spot to number four.

There has already been some discussion about how the required minimum 5% annual distribution by charities was a low bar to meet, especially since some of the charity’s administrative expenses and activities can count toward the 5% expenditure rather than purely distributed as grants.  So the fact that so much more money is being directed toward DAFs than ever before with no requirement that it be distributed is of growing concern.

So You Want To Name A Stadium…

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Via the Marginal Revolution blog I came across a piece analyzing the economics of stadium naming.   The basic conclusion was that if you see a corporation buying naming rights for a stadium, you should sell your stock because most of the time the company ends up under performing.

What got me to read through it was the promise that by the end  I would know:

How to decide whether a company you run or advise should buy the naming rights to a sports venue (e.g. high school stadium, college stadium, major league stadium, etc).

I was hoping there would be some differentiation between the benefits of sponsoring a high school or college stadium vs. major league stadium which might point to a possible benefit to a company for sponsoring performing arts venues and interior spaces. Unfortunately, the article only deals with major league stadiums and doesn’t cover college or high school at all. There is a promise of a more detailed analysis if you subscribe to the author’s newsletters.

Overall the analysis is interesting to read due to the context of why different company’s stocks under performed. Banks and financial institutions were bailed out by the US government. Energy companies profiled were involved with all sorts of scandals or were part of a sector that just broadly under performed.

There were two examples of companies that beat the overall trend and did better:  Qualcomm which stepped in when San Diego was desperate for funding to complete a stadium expansion. As a result, Qualcomm paid much, much less than they might otherwise have.

Target was the other example. Their deal apparently included additional enhancements that sponsorships generally don’t. Among them were appearances of NBA players at stores and potentially merchandise deals.

I have never really paid much attention to stadium naming news, but the insight the article provided about some of the arrangements and how beneficial it has been to the company stock† sheds light in an easily digestible format into an area which isn’t widely reported on.

†Since I frequently mention that not all measure of value are relevant, I feel I should point out that just because the stock for many of these companies didn’t do well doesn’t mean the naming arrangements weren’t valuable to the companies in other ways.

Difficult To Heed Polonius’ Advice These Days

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Some notable news via American Theatre, for those who have found it difficult to heed Polonius’ advice of “neither a borrower nor lender be.” (aka pretty much all of us)  The Acting Company has created a program to pay off up to $10,000 of student loan debt for any actor that is cast as in their 2022-2023 touring company.

The loan payment is made directly to the lender at the end of the repertory season. There is language about the available grant funds being split equally between all the actors, up to a maximum of $10,000 which makes me wonder if this is funded by an endowment whose value may fluctuate due to the stock market. Or perhaps they are projecting a set number of actors will have student loan debt and if the number exceeds their projections, the share of the pool will be less.

In addition to receiving the debt relief, the website says the actors will have the opportunity to:

  • Participate in a financial literacy seminar designed to ensure their understanding of the financial impact of grant funds, and to provide overall guidance on financial management and self-advocacy for theater artists. The Actors’ Funds, Artists’ Financial Support Group, or a similar organization will be engaged to conduct a program specifically for our actors.

  • Participate in teaching artist training sessions led by TAC teaching artists and education consultants. This will add to the pool of qualified alumni available to lead The Acting Company’s education programs and provide a potential new source of income to the actors.

  • Complete a season-end survey documenting their experience with the program and its impact on their artistic, professional, and financial wellbeing

Companies have long offered to pay the tuition of employees in order to help with their career advancement. The fact that The Acting Company is offering student loan debt relief is a reflection of national conversation about student loan debt. It will be interesting to see if the tuition payment benefit is replaced or joined by debt relief as an employment benefit.

I suspect it may not be offered to the degree college tuition is. Not every employee will be interested in attending college, but a large percentage of employees may be carrying student debt.  But companies seeking skilled labor may choose to offer debt relief in order to remain competitive.

 

Spend, Not Give Donations?

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The folks on the Non-Profit Happy Hour Facebook group posted a link to a Ohio State University (I’m sorry, THE Ohio State University) post which claims that charities should not use the word “give” when requesting donations.

They say it is a matter of feeling in control of how a donation is used. According to an analysis of the responses by 2700 people who participated in seven studies, people would rather give their time rather than money. This conflicts with charities’ general preference for monetary donations.

Overall, the study found that people prefer giving their time to nonprofit organizations rather than their money, because they feel more personal control over how their time is used, according to Malkoc.

“It is not possible to separate ourselves from our time, the way that we can from our money,” she said. “When you give your time, it is still a part of you. You are still living through it.”

The suggestion they make is that using the word “spend” provides people with a greater sense of control and therefore makes them apt to donate greater amounts.

People approached for a financial donation offered more than twice as much when they were asked to “spend” their money ($94) than when they were asked to “give” their money ($40).

And here’s why: Participants were asked several questions that measured how much control they would feel over their donations. Results showed that people who were asked to spend their money reported feeling more control than those who were asked to give their money.

[…]

When given control, people were nearly equally interested in giving, whether it was time or money.

“If nonprofits gave more control over how donations are spent, or made donors feel like they were spending their money rather than giving it, that may alleviate some of the disconnect people feel about financial gifts.”

Having read this, I believe there would have to be a good deal more work done on messaging and terminology employed to give people a sense of control rather than using a term like “spend.” The sense of donations being a transactional relationship is already a big problem in terms of the belief non-profits need to be run like a business; conceiving results achieved in terms of return on investment; large donations providing access, perqs, influence, and naming rights; the last of which many organizations have been trying to disentangle themselves.

Not to mention the growing prevalence of donor advised funds which provide tax benefits and a high degree of control without the obligation to disburse.

It seems like employing terms like “spend” will only exacerbate current problems and serve to entrench the use of restricted giving. While there are ways to give donors a greater sense of control over how their money is spent and technology available to facilitate the process, I would be concerned that this would mean staff would be further diverted from providing core services to underserved communities.

The model the study seems to be suggesting feels like it would be along the lines of the ubiquitous TV ads that told you that for $4/month you could purchase a meal for a child and that you would receive a packet with updates about the child. As a donor to this program, you feel a high degree of control over how your money is being spent.

The better solution is probably to employ broader, more consistent messaging emphasizing unrestricted giving without the expectation of expensive benefits. People absolutely do deserve a sense of assurance and control. You don’t want to give to con artists who are going to run off with your money. But that can come from providing easier access to information attesting to the legitimacy of the charity.

While there are websites that provide that sort of analysis, people aren’t widely aware of them as resources. The metrics these sites have traditionally employed have been problematic. There has been a tendency to focus on overhead ratio as a measure of effectiveness. There are probably a lot of diversity, equity and inclusion issues with what data is used and how it is analyzed too. Ultimately, a complete overhaul over a long term will be necessary.

Inheriting Your Great-Great Grandparents’ Investment In Your Future

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Early in April you may have seen that Yellowstone National Park is celebrating its 150th Anniversary by offering an Inheritance Pass for $1500 with the catch that it can’t be used for another 150 years.

Well, actually while the pass isn’t usable until 2172, purchasers get a complimentary annual pass good for a year after the first use.  I am calling attention to this not to suggest this as a possible program, (I mean right now how many of us can guarantee access to our programming in 10 years much less 150), but rather to point out that there is often at least a small niche interest in bespoke arrangements. In this case, the target is families committed to conservation.  It can be worthwhile to be flexible about exploring those opportunities.

Their hope is that the Inheritance Pass—a campaign created by advertising agency Havas Chicago— could create an important legacy among families that are committed to conservation.

Those who choose to invest in the Inheritance Pass will receive it as soon as August of this year. It will feature the name of the donor on the back. Yellowstone Forever says that the money it raises through the campaign will go toward supporting scientific studies, trail maintenance, and wildlife conservation, among other projects.

I tried to find out how many people might have taken advantage of this program in the few weeks it has been available but couldn’t find any information. 

Quite honestly, even though they promise to keep track of the ownership of the passes, I think purchasers have to acknowledge buying the pass is tantamount to making a straight donation to the park. Will there even be websites and email addresses by which to contact Yellowstone Forever to retrieve a lost pass in 150 years?

In terms of my earlier reference to donor programs with niche appeal, the pass one receives is a physical token to accompany the concept of investing in the park to benefit future generations. It would be great if families actually retained the pass across five generations (based on a generation being about 30 years), and presented it for redemption. But the pass is just an appealing prop in a conservation donation campaign.

I would be interested in knowing how they calculate the tax deductible portion of the pass. Do they use $1500 less the current cost of an annual pass to figure out the received benefit value vs. the donated portion? Or will it be the cost of the pass in 150 years which may exceed $1500?

(Actually, given that the person making the donation will receive no benefit, I would assume the whole amount is deductible if they refuse the complimentary annual pass available in 2022.)

People Fund People Not Organizations, So Maybe Do That Even More?

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Last month Marginal Revolution blog posted an excerpt of a piece by Adam Mastroianni about how grant funding is broken.  I immediately hopped over to see what he had to say. While his post was mostly focused on grants funding science and the Rhodes scholarship process, there were a lot of common elements that are likely to be familiar to all who apply.

One of the first observations Mastroianni makes is that it is very easy to hack the grant process thanks to relationships you have. This both confirms that people give to people and organizations and that groups that may really need the funding but lack access to guidance, resources and insiders often get locked out.

For instance, most Rhodes selection committees include a cocktail party as part of their interview process. This is a pretty bad way of judging whether someone is a good person, but it’s a pretty good way of judging whether they are pleasant to talk to at a cocktail party, and so Rhodes Scholars are often charming conversationalists and sometimes bad people (see: Bill Clinton, Bobby Jindal, noted anti-vaxxer Naomi Wolf).

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For example, the Rhodes Trust probably hopes that by picking the most accomplished college seniors and giving them a super prestigious prize, they will encourage the youngsters to do lots of brave and risky things. Instead, the most popular destinations for my Rhodes cohort were top-tier medical schools, law schools, and PhD programs (guilty), as well as a handful of consulting companies––exactly where we would have gone if we hadn’t gotten the scholarship.

Generally, Mastroianni’s criticism is that most grant programs reward people who are already successful to the detriment of those they say they wish to help.

Mastroianni’s suggested solution is to take advantage of the flaws in the system to force it to reach into the underserved cracks and crevices. His system, which he refers to as “Trust Windfalls,” essentially allows one to provide a benefit to friends–but only once.

But isn’t it unfair that a bunch of money should go to my friends? Also yes. That’s why, if I was an Agent, I should only get one turn at awarding Windfalls. Then I’d have to pass on the responsibility to someone very different from me who I trusted to give out the second round. If I did it right, Trust Windfalls would eventually find their ways into corners of the world that conventional grants could never reach. Just a few trusted links away from me might be a Botswanan ichthyologist or a trucker smuggling medical supplies into Kiev––people who may not speak English or know the right things to say on an application or even realize there are grants they could apply for in the first place. Making Agents temporary also prevents the Trust Windfalls from being hacked: once people know you’re an Agent, every interaction with you becomes a grant application.

If people hate conventional grant funding so much, why haven’t they tried something like this? Honestly, I think it’s because trusting people seems a lot scarier than it really is. Funders have to trust Agents. Agents have to trust their grant recipients, and they have to trust the person they nominate as the next Agent. (We should maybe call the organization that oversees all this the Trust Trust.) Anybody could betray the trust put in them, which would be a huge shame and very embarrassing.

While this is an interesting idea in theory, I think it is overly idealistic in terms of thinking that people will pass the baton on to people outside their own peer group in any great numbers. Funds may be sent to a biologist studying the ecology of a Latin American country or an aid worker in Ukraine, but is the money going to a life long resident of that country or the sister of a person the Trust Agent went to college with who is working for a university program or an NGO with roots in the US? Certainly Mastroianni alludes to the fact something like this could happen.

I think the structure he suggests has a better chance at providing an equitable distribution of funds than the current system. I like the idea of leveraging the problems of current practice into a solution. But the funding source would probably need to be plugging detailed data into relationship mapping software to ensure that the 4th or 5th recipient in the chain not have multiple common ties with the 1st and 2nd people in the chain.

I guess the fact I can identify a flaw and potential solution so easily indicates it is possible to refine his proposal into something workable.  Take a read of his proposal and see what you think.

All That Is Philanthropy Is Not Gold

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I have been following Lucy Bernholz, a self-described philanthropy wonk, for ages it seems. She writes the blog Philanthropy 2173 and is a senior researcher at Stanford’s Center on Philanthropy and Civic Society.  When I saw an interview with the AP about a how philanthropy isn’t all about money, I took a closer look.

And before I get into my post proper, if you are interested in hearing more, she is participating in a Zoom conversation on the topic on November 4 @4pm ET

Basically she says that there is more to philanthropy than giving money, though you wouldn’t know it from the way the news outlets and most non-profits focus on what billionaires are doing with their money. Or for that matter, the round up requests you get when you buy your groceries.  The result is that our understanding of non-monetary methods of philanthropy are pretty much stifled. Alternatives aren’t just volunteering and donating blood and organs. It can be donating genetic material for disease research or giving photographs to organizations which document historical events like the Japanese internment during World War II.

When Bernholz was asked about how tax law has impacted philanthropy, she gave the following response:

A: It never came up in our conversations. Only when we brought it up. What’s fascinating about that is only 8% of Americans bother to take the charitable tax deduction on their tax return. Now, tax policy is pretty much the only policy idea the philanthropy industry has any interest in. They’re serving 8% of the population. And I know that 8% is not Mark Zuckerberg. It’s not Pierre Omidyar. It’s not Laurene Powell Jobs. They’ve all said: “We don’t care about the tax benefit. We’re gonna do an LLC, because that gives us more control and more anonymity.” So there’s some 8% who care. In poker, they’d call that a tell. If and until the nonprofit and philanthropic industries start advocating for really rich people to pay their taxes, I think the view of that whole industry as a wealth preservation mechanism is quite justified.

It was surprising to learn that only 8% of Americans take the deduction. Gallup polling has shown about 80% of Americans donated every year pre-Covid. Granted, not everyone may donate to a level at which it makes sense to claim the deduction, but surely more than 8% donate above that threshold.

We frequently hear that the U.S. government subsidizes non-profits by allowing that deduction, but it appears the subsidy isn’t as great as we may think if so few claim the deduction.

Bernholz mentions that many wealthy people have eschewed tax deduction and formed LLCs to distribute funds to maintain tight control. But there is also increased prevalence of donor advised funds (DAF) which do provide a deduction without any mandate to distribute the funds to charities, and therefore an heightened level of control as well. If you consider that a portion of that 8% claiming deductions may have never reached a charity because it is parked in a DAF that hasn’t distributed, the government is subsidizing non-profits even less than we might imagine.

How Arts Orgs Used Relief Funding Is Beginning To Be Examined

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A couple weeks ago Hyperallergic had an article that was a critical of museums who had received Paycheck Protection Program (PPP) funds meant to keep people employed, but instead ended up laying off large numbers of people. They particularly noted that the Museum of Science Boston initially didn’t qualify for the program due to employing more than 500 people, but were later able to apply for funding after laying off more than 300 people.  The article also suggested that while some institutions needed the money to survive, some of those at the top ended up in almost better financial shape.

It found that out of $1.6 billion given to about 7,500 cultural institutions that qualified for PPP loans, nearly half of the money ($771 million) went to just 228 recipients. These same 288 institutions collectively laid off more than 14,400 employees, or at least 28% of their workforce.

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However, AFSCME’s report found that not all museums faired that poorly during the pandemic. In fact, an analysis of 69 cultural institutions with available financial data revealed that 67% of them ended fiscal year (FY) 2020 with operating surpluses.

The Museum of Contemporary Art, Los Angeles (MOCA), which received $3.3 million in PPP loans, laid off 97 workers during the pandemic despite ending FY 2020 with a $2.3 million surplus. Nearby, the Natural History Museums of Los Angeles County ended FY 2020 with a $23.9 million operating surplus after receiving a $4.8 million PPP loan. And yet, it furloughed its 127 part-time employees from March 2020 until the end of December 2020.

Not to excuse the act of laying off people after accepting money to keep staff employed, the fact that institutions ended fiscal year 2020 with a surplus may not be indicate they profited off of layoffs. Many non-profits have a July 1 -June 30 fiscal year so if the organization was doing well from July 1, 2019 through March 2020 when the pandemic started, losses of the three months from March-June 2020 may not have moved them into a deficit. The PPP program started in April 2020 with a deadline of June 30, 2020 so organizations may not have received the funds until their 2021 fiscal year.

It has been generally acknowledged that a lot of those who applied for the PPP program didn’t have the severe financial need the program was intended to serve. Determining whether museums used funds meant to stave off layoffs to achieve better financial footing should be examined, but it isn’t clear from the information provided here. The full report can be downloaded on the AFSCME website. I haven’t downloaded the report at this time because the registration form indicates they and others may use the information to solicit and lobby me.

It will be interesting to see if a similar examination is conducted of performing arts venues which largely fall under the Shuttered Venue Operators Grant (SVOG) program, something most museums were not eligible due to the fixed seating requirement for that program.  From what I have seen, the administration of that program is still plagued with errors which they are trying to resolve for adversely effected venues, but that raises concerns that there was opportunity for inappropriately granting funds as well.

Your Programming Is More Inclusive, But What About Giving Opportunities?

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Hat tip to Artsjournal.com which featured an article that seems to indicate it is better to diversify the donor base rather than continue to ask the same pool of donors to give more.  The article discusses giving to public radio stations which have a slightly different appeal process than most non-profits and more closely tie donating to membership than many performing arts organizations.

The piece uses the example of WABE, located in Atlanta, GA which upon noting that the average donation amount made by all listeners was $14/month decided to ask their existing monthly donors to increase their giving to $15/month.  This ended up backfiring on the station.

But the $15 ask turned out to be “too high,” Barasoain said. Though the team was happy with the total revenue the drive brought in, the bigger gifts came at the expense of suppressing the number of donors by an estimated 12%–16%, he said.

During WABE’s previous two fall drives, on-air pitches requested gifts in any amount. The total number of pledges for the fall 2019 drive dropped 34% compared to fall 2017 and 20% versus fall 2018.

In the 2019 drive, “we were tapping the same group of donors to give more and more money to the station,” Hyman said. “And it’s just not sustainable long-term.”

The station immediately pivoted and lowered its pledge-drive asks.

In fall 2020, the team pitched gifts of $10 per month. The number of pledges increased 11%, and revenue decreased less than 2% from fall 2019.

The station has since expanded the ways in which they solicit support to include telemarketing and direct mail as a way to supplement their on-air fund drives.

The article discusses the efforts of WFAE in Charlotte, NC and KEXP in Seattle, WA which have removed minimum monthly giving levels for the sustaining member category to create a sense of participation. There is evidence that the monthly giving helps keep people feeling engaged on an ongoing basis and improves retention.

KEXP in Seattle prioritizes “participation first,” said Erin Lightfoot, director of annual and digital philanthropy. “We’ve always really highlighted … ways that everyone can participate in supporting the station no matter what their financial capacity is, and also being extremely grateful for that.” During on-air drives, pitch announcers vary the requested giving levels.

“We do try to vary it a lot in order to make sure that we’re really inviting everyone in no matter what their capacity or their comfort level is with gift-giving,” Lightfoot said.

Something to think about in terms of making giving feel more inclusive as a complement to programming feeling more inclusive.

Advocacy Gameshow Is Now Documentary, But Will People Still Think Of Fundraising As A Competition?

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You may have seen last week that CBS quickly shifted directions when their planned show to pit activists against each other in a game show like competition drew extremely negative responses from the general public.  Now the intent is to create a documentary around the work the six contestants do.

According to reporting by Salon, part of what would determine the winner was the social media responses each contestant engendered among viewers:

A press release written up by Deadline includes the details:
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Activists go head-to-head in challenges to promote their causes, with their success measured via online engagement, social metrics and hosts’ input. The three teams have one ultimate goal: to create impactful movements that amplify their message, drive action, and advance them to the G20 Summit in Rome, Italy. There, they will meet with world leaders in the hope of securing funding and awareness for their causes. The team that receives the largest commitment is celebrated as the overall winner at the finale, which will also feature musical performances by some of the world’s most passionate artists.

There is so much about this process and how much the creators of the show actually know, or think they know about how non-profit fundraising works. Not to mention what sort of impression people will get about what organizations should be doing in order to garner support from them. The articles I linked about each have examples of things people tweeted in response to the planned show, comparing it to the Hunger Games. Others mentioned that in many places, activists are jailed or tortured in response to their advocacy.

According to Salon:

…more than 70 progressive groups and activists signed an open letter to CBS and Global Citizen critiqueing the premise.

“Pitting activists against one another upholds the ‘oppression Olympics’ and perpetuates the belief that justice issues must fight over ‘breadcrumbs’ supplied by those with power, resources and large platforms,” the letter states. “Ultimately, this results from the very oppressive systems which we are trying to dismantle. Our lived realities, struggles and traumas are not games, nor competitions for the consumerist gaze.”

If you are thinking you may have read about something similar not long ago, I did indeed cover a similar, though untelevised, funding opportunity the Morgan Stanley announced in May which similarly has applicants working with experts to hone their pitches to funders.

Considering Appropriateness of Funding Set-Aside Practices

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Washington Post reported an interesting development in the Washington, D.C. arts and cultural environment last week. The D.C. Commission on the Arts and Humanities asked the D.C. Council to end the practice of setting aside approximately $7 million in guaranteed funding to a group of established city arts organizations.

That money, which averaged a bit more than $7 million a year, now goes into a general fund of more than $33 million — and anyone can compete for a piece of it. The more money there is at a community level, the more likely some of the city’s grass-roots talent will be discovered.

To their credit, the big-time beneficiaries of the old set-aside did not fight the change. Rather, they explained the economic rationale for bypassing the arts commission and lobbying the D.C. Council to give them special dispensation. They acknowledged that the funding program may have unintentionally added to arts funding disparities — with residents living east of the Anacostia River getting far less than Whites in more-affluent areas.

The article mentions this was a particularly productive development for the Commission on the Arts and Humanities which had been viewed as so dysfunctional over the past year, members of the DC Council overseeing the commission were considering whether it should be dissolved.

The article raises a good issue in raising awareness of set aside programs where many of the most affluent and prestigious arts organizations in a municipality or state are guaranteed a certain level of funding while all other arts organizations are forced to compete for the remaining funds. This isn’t on the case in the US, back in March I cited a work that discussed how powerful arts organizations were making an end run around the Australian Council for the Arts to secure their funding directly from the government.

I’d be interested to know what economic rationale the D.C. arts organizations cited to justify circumventing the arts commission and lobbying the DC Council directly. In any case, I suspect we may see more of these set aside arrangements come under scrutiny as possibly perpetuating  funding disparities within the greater community.

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