PMA Consulting, LLC

The Case for Change Capital in the Arts

“If arts organizations and the sector are to thrive, donors must change their funding and financing practices to support strategies that enable experimentation, build audiences, and cultivate artists.” — Nonprofit Finance Fund, The Case for Change Capital in the Arts

Nonprofit Finance Fund LogoOn January 19, 2012, PMA had the opportunity to attend a presentation by the Nonprofit Finance Fund (NFF) called “The Case for Change Capital in the Arts: Building Vibrant and Viable Cultural Organizations.” Presented by the Arts and Science Council, the session focused on the need and uses of change capital in the arts, outlining key strategies and practices to help enhance capitalization in the sector for both arts organizations and funders.

In 2011, NFF published a series of reports and videos showcasing case studies and lessons stemming from its $15 million project, Leading for the Future Initiative. The Leading for the Future Initiative is a national project that emphasizes the use of change capital to help arts organizations adapt their programming, operations and finances to thrive in a changing economic and cultural landscape. With funding from the Doris Duke Charitable Foundation, ten arts organizations are collaborating with NFF over five years to develop and implement plans for achieving this transformation. The National Black Arts Festival, Center Theatre Group, and Steppenwolf Theatre Company are examples of organizations collaborating with NFF on this initiative.

Without a doubt, NFF demonstrates passion and support for change, growth and access to capital within the nonprofit sector. Here are four key takeaways from the presentation we attended:

  • Funders and nonprofits must distinguish between revenue and capital to truly understand operating performance.
  • Funders should consider pooling Resources.
  • Nonprofits need to prepare for change.
  • Nonprofits must separate capital in financial reports.

As arts organizations contemplate issues of growth, sustainability and capital, several questions come to mind:

  • How can the sector be better funded?
  • Where can organizations obtain capital?
  • Does every organization need to be fully capitalized?

Visit the Nonprofit Finance Fund for more information.