Fundraising

It’s Not A Genius Grant. It Might Actually Be Much Better

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I just got around to reading up on some of the new granting program initiatives the Doris Duke Charitable Foundation has recently announced.

In the interests of correction right from the start- Contrary to what I retweeted last week, the Doris Duke Leading Artists program is not their version of the MacArthur genius grants. Program director Ben Cameron explicitly makes that point. Sorry about that.

There were a number of things Cameron wrote that I was pleased to see a major foundation acknowledging (my emphasis):

Does project support force an artist to follow through with the production of a work that may be, after exploration, of less interest or less feasible than originally envisioned? Do regrant programs by their very nature favor projects that can garner consenus from a panel (a sort of comfortable middle) and disadvantage less conventional, more extreme or riskier work that an artist might wish to do? How can programs encourage more artistic risk while still acknowledging and supporting “failure” or “dead ends” that can be celebrated for their lessons, without necessitating further investment of production resources? With so many grants offered at nominal levels, how can an artist piece together a life of economic dignity? And now, with so many artists approaching their latter years, financially unprepared for retirement, have we been derelict in not supporting longer-term artist life needs and more aggressively helping artists prepare for this phase of life?

In an earlier paragraph, he acknowledges that foundations often establish long term relationships with organizations, but infrequently with artists, even those who are well established. In a later section, he refers to the amount of gratitude artists exhibited upon receiving an additional $10,000 no strings attached grant as “frankly, depressing in the knowledge that an unrestricted grant of $10,000 could be both so extraordinary and so life-changing for so many.”

One of the problems that I and other blogs have frequently discussed is that grantees often feel like they have to report everything turned out as good, if not better than anticipated in the grant proposal. If only grants did have the magical power to contravene the effects of real life, they wouldn’t be needed as frequently and in as large sums as they are. I was pleased to see a funder say they realized what the reality was. Overall, I was happy to see that they had decided to make a commitment to bolstering support to artists into their retirement.

The only thing that gave me pause was that the foundation decided to select recipients of support in their Doris Duke Leading Artists program from the pool of past grantees. Given that they had started to wonder whether their past selection process might reward mediocrity over risk taking, it seemed a slightly flawed approach. But honestly, there isn’t much alternative to deciding to how to make the awards. Besides, Cameron never suggests that the artists being awarded grants might be lacking in talent, only that the granting process encouraged highly talented people to moderate their ambitions.

The Leading Artist program is the one that most excites me, even though I won’t be remotely eligible. Even though the grant is for less money and there are more requirements for how it is used than the MacArthur genius grant, my claim that it might be much better stems from the potential change it represents in the approach to supporting artists. If successful, this program might become a model for other funders much as the programs of other foundations have provided the inspiration for the three that Cameron introduces.

It may also engender the idea that a healthy artistic practice involves some investment in one’s work, some effort in audience development and some investment toward retirement. (my emphasis)

“Recipients will receive an unrestricted grant of $225,000 over a three to five year period—a schedule to be determined by the artist recipient. An additional $25,000 will be available to the artist specifically to support work around audience connections or development. And a final $25,000 (which must, however, be matched by the artist) will be available for retirement purposes, bringing DDCF’s potential investment to $275,000 per artist.

We’d like to make clear that there are things these grants are not: They are not life-time achievement awards. They are also not “genius” grants, nor are they project grants. They are investment grants, designed to offer support with minimal administrative burden to exemplary professional artists who are dedicated to work in the nonprofit sector and with maximum flexibility and empowerment for the grantees.”

The second program is Doris Duke Performing Arts Fellows “these awards acknowledge that there are artists who have yet to achieve the same level of recognition as their colleagues in the Leading Artist category, but who nonetheless might have significant impact on their fields.” These people will be chosen by anonymous nomination with 20 grants awarded annually for each of the next five years. The awards are scaled down in both time and amount, but are meant to be used for the same purposes – creation, audience connections and retirement.

The third program is somewhat intriguing to me as well. Doris Duke Artist Residencies is meant to address a perceived adversarial relationship between artists and arts organizations by providing funding to essentially find a better way to do things.

“…All of these organizations can create residencies for artists, not only from within their fields but for artists from outside their disciplines. While a theater can clearly request support for a playwright or actor, a dance company can request a dancer or choreographer, and a jazz organization can request a musician, a theatre could instead request a dancer, a dance company could request a playwright, or a jazz organization could request a videographer. This flexibility allows for the possibility of important, cross-disciplinary learning.

…Ours is instead about supporting a partnership between an artist who wishes to explore and reimagine institutional life and behavior, and an organization willing to open itself to that exploration. It is also about reimagining how an organization and an artist connect to their community and supporting a pilot effort to behave in new ways. And, they are about the creative engagement of audiences in ways which give the organization and artist an equal stake.

As such, we recognize that these residencies will not be of interest to everyone. Those looking for a traditional artist in residency program will inevitably be disappointed that this initiative does not support those efforts, even while we support them through other initiatives in our grant portfolio.”

What I appreciate about this program is that it appears to be trying to give artists and organizations some breathing room and security to experiment as partners some new ways to engage audiences. This program will be open to applications some time in Spring 2012.

Crowdfunding Become Crowdinvesting?

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In the “stuff you aren’t supposed to do” theme of yesterday’s post, is a piece from Slate about legal restrictions on crowd funding.

While thousands of people can donate to your cause via sites like Kickstarter, SEC rules prevent those same people from investing in your company. If you figure people will donate to people in return for tshirts or other small thank you gifts/services, there is probably a fair bit of potential in getting people to invest in the same project with the possibility of financial return. But the rules say no way.

“Under current law, that is often illegal. A longtime Securities and Exchange Commission rule, designed to protect unsophisticated investors, limits the number of stakeholders certain private companies can have. If you hit 500, you often have to go public. That means opening your books to additional scrutiny and your business to the whims of the market. And being public is just not a feasible option for a tiny business looking for start-up funding. Thus, an artist can receive thousands of $5 donations on a site like Kickstarter, but an incorporated farmer cannot accept investments from thousands of interested small-timers.”

These are some of the same rules that govern investing in Broadway shows and are meant to prevent people from losing large amounts of money because they were not entirely aware of the risks of investing. There is certainly some wisdom in having them.

There are some moves to change this situation. President Obama included such a revision in his American Jobs Act. Even though the act failed to pass, the basic idea has bi-partisan support and some law makers are asking the SEC to change the rules. One petition to the SEC asks for an exemption for investments made in $100 increments as a way to prevent people from losing their life savings. Given that the exemption would mean less oversight of the activities, there is good potential for unscrupulous operators to take the money and run.

Laura Horton at the Legality website has a post that discusses all the legal issues and the efforts to change the rules at length. She reports that the legislation being introduced in Congress, (as opposed to the petition for a rule change to the SEC), would allow a business to raise “$5 million in capital, with a limit on individual investments of the lesser of $10,000 or ten percent of an individual investor’s income.” Horton notes that these companies would be exempt from some of the usual reporting. Hopefully at $10,000 a person, they wouldn’t be exempt from as much as a company getting funded $100 at a time.

Crowd funding at these levels could open the doors for a lot of possibilities, including starting an arts related business. This model might provide a viable alternative to the non-profit structure. It could provide the tools to not only to get an organization started, but also to sustain it over time.

As for how fraud will be prevented, Horton says,

“those in favor of crowdfunding find that investor protection rests on a fundamental aspect of this financing, opening it to lots of people for investment. This “crowd” aspect creates transparency, which may temper the effects of deregulation. There is also a stronger sense of community support through this style of investing. Crowdfunding makes venture capital accessible to small-scale business owners.”

I have to confess some skepticism about this approach being viable in the long run. A crowd can provide good oversight in a small geographic community or when it is performed by investing clubs who meet to research and decide who to fund. My suspicion is that if this type of investment is going to reach any sort of scale, people are going to be doing it over the internet and will rely on Amazon.com type reviews to make their decisions. Presumably, the rating mechanism will be a little more rigorous and have better protections against those who might try to game the system than most online rating websites. It is still likely the system will still be vulnerable to some degree of subversion.

But who knows, it may create a burgeoning industry of companies who meet those soliciting funding and perform objective evaluations and audits. They could post all their findings online accompanied by video interviews, photos of operations, etc for investors to use in their deliberations.

Are We Being Nudged Toward Partnerships

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I have started to wonder if there is going to be an increased emphasis on partnerships and perhaps even mergers in the non-profit arts. I often read about mergers by non-profits outside of the arts. Although the presenters consortium upon whose board I sit is in the middle of conducting a merger with a sister organization, I don’t hear about arts organizations doing it that often.

However, the Mid-Atlantic Arts Foundation has recently announced a new granting program, Southern Exposure, which will support the presentation of artists from Central and South America. (By the way, you don’t have to be located in the Mid-Atlantic States to apply.)

Most of the program isn’t outside of what you might expect of such a program except that it will “support projects that are developed collaboratively by presenter consortia based in the United States and its territories and ensure that engagements take place in at least three different cities or towns.”

The Western State Arts Federation (WESTAF) used to have a similar program termed “hub grants” as part of its TourWest grant program up until a few years ago. From what I have heard (which may not be accurate) they discontinued it because of lack of wide spread participation. (We actually participated in a couple years.) But now that times are financially a little tighter, will arts organizations on a national level be more amenable to partnering?

But really, back to my original question of whether a trend might be developing in which organizations are encouraged to partner. One cause of my speculation is that this summer I saw a grant program sponsored by the National Endowment for the Humanities for community colleges that required recipients to involve up to 12 other campuses.

Looking at the Mid-Atlantic Arts Foundation website, there are signs that they might be going in the direction of encouraging arts organizations to partner more often.

“Over the last five years, MAAF has built a core of program initiatives designed to address specific issues of regional arts support. The work of the Foundation has been focused on:
[…]
-Developing an infrastructure for touring and presenting
-Making connections beyond the region
-Developing partnerships
-Strengthening existing networks
[…]
-Exploring sub-regional initiatives and collaborations with subsets of MAAF state members
[…]
“

Now granted, the Southern Exposure initiative might have just fit their pre-existing efforts. Given that it does fit into their plans, if Southern Exposure proves successful, they may start to encourage similar collaborations more often.

Hawaii has an active presenting consortia (as do our brethren in the 49th, Alaska) so we are thrilled because this program plays to our strength. Plus, there is a project involving a group from South America we have been kicking around for a couple years. I will be the first to admit, this sort of cooperation isn’t easy to arrange and manage. It helps to have a little incentive. It would be great to see other groups adopt this practice. (Especially if you want to bring me out to consult with you! 😉 )

Possible To Cultivate New Funders Motivated By New Mandates?

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You may have read about the report the National Committee for Responsive Philanthropy released at the Grantmakers in the Arts conference noting the disparity in foundation support for arts organizations.

According to the report,

“the largest arts organizations with budgets exceeding $5 million represent only 2 percent of the nonprofit arts and culture sector. Yet those groups received 55 percent of foundation funding for the arts in 2009. Only 10 percent of arts funding was explicitly meant to benefit underserved populations.”

Most of this money is going to large organizations patronized by a shrinking wealthy white audience during a time when people are orienting toward community based arts groups.

As I read this, I recalled Scott Walters’ discussion of the difficulty his small arts organization had meeting the deadlines for the Our Town grant process and the questions he raised about the appropriateness of the criteria being employed. I suspect there is something of a feedback loop inherent to foundation grant programs in that they are structured to the needs of the organizations they serve and those they serve tend to be organizations with the resources to meet the criteria of the grant programs.

Foundations may have to expand the number and types of organizations they serve, as the report suggests. But I strongly suspect they will have to also institute changes in their process to better accommodate those with fewer resources than those with whom they currently deal. Otherwise, they probably won’t have very strong participation from a larger, more diverse group.

Of course, most foundations, whether they have an arts focus or not, were set up to serve the interests of their founders. It appears that this has been rather successful. The greatest success in securing support for under served populations may end up being best realized by cultivating/encouraging individuals and groups from those communities to develop their own funding structures whether it is foundations or cultural hui.

The article mentions that current funding practices originated in an 19th century need to prove America was on par with Europe culturally. That need has passed and a new set of practices based on different motivations are required. Existing foundations may end up doing a lot of good after shifting their priorities, but in attempting to overlay new priorities on their founding purpose they may never be as effective as organizations that structure their approach around a mandate to support the arts and culture of under serve communities from day one.

Cultivating a sustained culture of support in areas where it is not currently practiced won’t happen overnight, but aided by technology it may not require 100 years to take root either.