Other Sources of Funds
Introduction
This topic looks at the vital aspect of fundraising. All nonprofit organisations across the globe need to focus a significant portion and management time and expertise in this vital area of the business. It has been noted that "Fundraising is a critical function for nonprofits. The demands on many nonprofits exceed – sometimes greatly – the resources available” (McDonnell, et al, 1999: 185). Arts organisations are no different and we can learn much from the fundraising strategies and tactics of organisations such as Red Cross or the Salvation Army. The issue of insufficient funds needs to be addressed in a strategic way and it is important for top management leadership in this area. Some approaches to fundraising covered include annual giving campaigns, major giving, special fundraising events and grants. It is important to remember that government funding is not a right, and that the competition for these funds will always outstrip the amount available. More and more will managers and leaders in the arts and cultural sectors need to be skilled in fundraising and many high level positions now require a track record in successful fundraising.
Sponsorship
As noted by the Australian Bureau of Statistics, businesses fund cultural activities in several ways with assistance usually taking the form of cash sponsorships, in-kind support (e.g. products, materials, advertising, services) or donations. For sponsorships or in-kind support, businesses often receive advertising or promotional benefits. Donations, on the other hand, are usually made unconditionally. While the donor is not repaid with any benefit or service, businesses and individuals can receive taxation benefits for donations of cash or property to organisations such as those listed on the Australian Government's Register of Cultural Organisations. (4172.0 - Arts and Culture in Australia: A Statistical Overview, 2014 )
There are a lot of myths about sponsorship and the arts in Australia. Melanie Thornton notes that:
….for corporations involved in arts sponsorship it is a mutually beneficial relationship in which both arts and business interests are developed (Thornton 1990:5)
The Australian Business Arts Foundation’s (AbaF), ‘Arts Sponsorship Outlook Survey 2009’ conducted in response to the global economic downturn highlighted the potential impacts of the external environment on sponsorship levels predicting:
- Arts sponsorship in Australia is expected to decrease in the coming months with the sharpest decline in business-arts investment expected to occur during the final quarter of 2009 and first quarter of 2010.
- Businesses that invest more than $500,000 in the arts and less than $50,000 are more likely to decrease arts-related expenditure than businesses investing amounts in-between. For all but eight per cent of businesses surveyed, a decrease in expenditure is expected to be slight rather than significant.
- Low dollar value investors are more likely to be quicker to increase expenditure again once the economy shows signs of recovery.
Whilst all levels of government actively encourage arts organisations to seek and attract sponsorship from business, it may not be the immediate salvation that one expects. Of all business sponsorship provided, only 6.3% went to arts organisations. In addition only 0.5% of all businesses in Australia were involved in arts sponsorship. (Australia Council, 2009)
In 2011 the Review into Private Sector Support for the Arts was released and one of its key recommendations was to create a new body to oversee all private support giving. This new body is called Creative Partnerships Australia and replaces the former ABAF. https://www.creativepartnershipsaustralia.org.au/
The review revealed positive growth in private sector support in Australia. It found that giving to the arts in 2004 was at a level of 2.3% of total giving, hardly overwhelming figures. What we do know is that giving to the arts has doubled in the decade to 2009-10 to a figure of $221 million of which nearly half was sponsorship. This figure represents a total resembling a little over 10% of total arts income. The growth has come significantly from philanthropic giving.
The following provides some recent statistics on sponsorship and donations in Australia:
“Information provided by the Department of the Prime Minister and Cabinet shows that the number of donations to Cultural Organisations increased from 160,805 in 2011-12 to 281,048 in 2012-13. However, the average value of donations decreased from $465 to $261. A total of $73.4m was donated by individuals, business and charitable trusts and foundations in 2012-13.
The Australian Major Performing Arts Group (AMPAG) annually surveys major performing arts companies about the corporate sponsorship and private donations they receive. According to the 2012 survey, $64.1m was given to the 28 major opera, music, dance, drama and circus companies in Australia which is more than double the revenue received in 2001 ($30.3m). Growth in private giving has been the main driver with revenue from this source increasing from $7.7m in 2001 to $31.3m in 2012. Private giving accounted for almost half (49%) of total sponsorship and donation revenue reported in the latest survey.
By comparison, revenue from corporate sponsorship has grown at a slower rate increasing from $21.7m in 2001 to $30.4m in 2012. Over this period corporate sponsorship as a proportion of total sponsorship and donation revenue has fallen from 72% to 47%. A net amount of $2.5m (4%) was received from fundraising events”. (http://www.abs.gov.au/ausstats/abs@.nsf/Lookup/4172.0main+features82014)
Smaller arts organisations find attracting sponsorship challenging in that the majority of sponsorship dollars are tied up with a small number of large firms. These firms undertake focussed sponsorship deals with clear business outcomes in mind and have the resources to attract and service major sponsors. It can be difficult for small organisations looking for sponsorship to compete with the larger, more established arts organisations that can command a greater profile for their sponsors. In addition, the majority of large firms have their headquarters on the east coast making it difficult for organisations based in other locations to attract the interest of these firms.
Tips on Sponsorship
Corporations rarely give money to the arts for altruistic reasons. They see it as another business opportunity and want to see real benefits from their involvement. They may also receive a tax deduction in the process, but they want to see their support as a marketing opportunity for their product or company first of all. The arts organisation therefore needs to be clear about what benefits it can offer the sponsor and perhaps also needs to explore some synergy between the sponsor and the arts organisation, which might promote the relationship. The sponsorship relationship is, at heart, a marketing or commercial transaction and involves an exchange of goods.
For tips on developing successful sponsorship partnerships, and crowdfunding campaigns the Queensland Government has some excellent resources. They note the importance of planning and thinking strategically. Developing a sponsorship proposal is time consuming and potentially a costly exercise so it is important to make sure your efforts count. Think about what your organisation’s values and beliefs are and what they mean. You want to find a sponsor company that shares these values and will be able to develop a mutually beneficial relationship based on them. You also need to think about what you can offer the company in return for their sponsorship dollars. In this way you can develop a specifically targeted proposal designed for that company. There is little value in sending generic proposals to a number of companies. You really need to tailor each application to that specific company and spell out the value that your relationship will bring to them.
http://www.arts.qld.gov.au/blog/index.php/tips-on-attracting-corporate-sponsorship/
Philanthropic Trusts
Philanthropic Trusts and Foundations are established by families, individuals, and organisations to manage money for the purpose of donating to particular causes or groups in the community. Each trust has its own priorities, and the publication The Australian Directory of Philanthropy has a full listing of all the trusts that currently exist in Australia and their terms of reference. So the first step in determining if a trust is appropriate as a possible source of funding is to research the terms of reference and see if the project you are developing has any synergy with the priorities of the trust. As the demand is much greater than the supply, it is wasting time to apply to a trust unless there is compatibility. Each trust is different, and the appropriate strategy to receive funding from one trust, will not be appropriate for another.
For example the Ian Potter Foundation has supported a vast range of arts projects since its inception in 1964. It has made over 700 donations worth collectively $40 million. http://www.ianpotter.org.au/arts
Individual Giving: Donations and Bequests
Individual giving is at an early stage in Development activity in the arts in Australia compared with, say, the United States of America or the United Kingdom. Large bequests are, therefore, not common and are usually confined to a few of the major arts organisations such as the Australian Ballet, Opera or the major galleries. The major symphony orchestras are looking to broaden their revenue base by focusing efforts on this untapped wealth. Clearly, this form of giving will become more common and can be seen in a pyramid pattern.
The first stage of individual giving to an arts organisation is likely to be quite small. It may be a couple of hundred dollars towards a seat in a venue or a brick in courtyard. The Migration Museum in South Australia recently began a brick scheme where individuals could buy a brick which represented their family's arrival in South Australia. Many performing venues assist the funding of their renovations by asking patrons to buy a seat. In return the patron has a seat named after them. The orchestras do the same with key positions in the orchestra.
However, the first stage of gift giving can be expanded into larger individual gifts if the individual has the means and is interested in supporting the product. Many arts organisations have individual patron schemes where in return for a donation of from several hundred to several thousand dollars, patrons receive acknowledgement in the company's literature and have special privileges such as invitations to rehearsals, meetings with stars, invitations to the opening night, interval drinks in a VIP setting, access to privileged parking and so on. This relationship with the arts organisation can then be further nurtured when the individual is wealthy and is prepared to give larger gifts and even capital or major gifts up to several million dollars. In some instances, this may mean buying a valuable piece of art for an art museum, or getting the venue named after them, such as the Smorgon Plaza at the Victorian Arts Centre in Melbourne, in return for a large financial contribution towards the building. The final stage in the pyramid might be the giving of a bequest on the death of the donor. The National Gallery of Victoria (Australia) early last century received a major bequest called the Felton Bequest that has enabled it to acquire many valuable pieces of art.
Developing relationships with givers, which result in large gifts and bequests, requires a lot of relationship building between the organisation and the donor. Usually they want something in return for their generosity, and it is finding what this might be which is crucial to developing the relationship. It is common, for instance, that they will want some recognition, whether it be in naming rights, press releases, plaques, special privileges or whatever.
Crowdfunding
Crowdfunding and Facebook funding are both held up as models for the next generation of switched-on social media users to participate in extensive donor-giving. According to the Australia Council crowdfunding platforms across the world have experienced tremendous growth in funding raised with $2.7 billion raised in 2012 (up from 1.5 billion in 2011) across all categories (including arts). For example, Kickstarter, a major international crowdfunding platform, has funded more than 20,000 arts-related projects, valued in excess of $100 million. One Australian fundraising site, Pozible, is also a significant player in this space. Over half of all projects listed were successful in their fundraising campaign. This site covers many different projects including arts, film, performance and music. From 2010 in just 3 years the site has helped fund over 1300 projects with a value of around AUD$8 million (http://artfacts.australiacouncil.gov.au/overview/support-15/ov-fact87/)
Additional Resources
Included with this topic are the following additional resources:
- An interview with Liz Hawkins, Director of Programming and Development from the Adelaide Festival Theatre discussing sponsorship and philanthropy
- Link to Creative Partnerships website for successful sponsorship ideas
- Link to website with resources on attracting sponsorship and other fundraising ideas
- Link to case studies on successful sponsorships and partnerships
- Arts philanthropy report for Australia
References
Australian Bureau of Statistics 2014 '4172.0 - Arts and Culture in Australia: A Statistical Overview, 2014 '
Australian Business Arts Foundation 2008 ‘AbaF Survery for Private Sector Support for the Arts – Key Findings’
Australia Council, Crowdfunding viewed September, 2014 http://www.australiacouncil.gov.au/resources/reports_and_publications/subjects/funding/crowdfunding
Creative Partnerships Australia, viewed September, 2014. https://www.creativepartnershipsaustralia.org.au/
Cultural Ministers Council Data Online 2008 ‘Cultural Funding in Australia Three Tiers of Government 2006-07’ viewed June 2009, http://www.culturaldata.gov.au/publications/statistics_working_group>
Harrison, P 2004 Sponsorship - Cutting Back through the Hype, Research Hub, Australia Council viewed June 2009 from < http://www.australiacouncil.gov.au/research/arts_marketing/fund_development/sponsorship_-_cutting_through_the_hype>
Ian Potter Foundation viewed September, 2014 http://www.ianpotter.org.au/arts
McDonnell, I, Allen, J & O’Toole, W 1999, Festival and Special Event Management, John Wiley & Sons Australia, Queensland. pp. 181–188.
Mitchell H (2011) Building Support: Report of the Review of Private Sector support for the Arts
Thornton, M 1990, 'Arts sponsorship in Australia', Australian Journal of Arts Administration, vol. 2, no.1, pp. 5–11.