Cultural funding challenges and new fundraising strategies
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Cultural funding challenges and new fundraising strategies
- 1. Governance and strategy in cultural firms and institutions Chiara Berera - 1346170 Maïlys Dalle-Mourey - 1631498 Lavinia Enea - 1334077 Irina Gurova - 1237833 Paola Miatello - 1385137 June, 5th, 2012 Reduction of public funding & new challenges for fundraising
- 2. Agenda Our topic: “the drastic reduction of public funding to creative productions/cultural institutions and the need to find new ways to nurture creative effort and to select it” Part I – Fundraising Part II – Italian funding Part III – US case: Washington National Opera
- 3. Part I - Fundraising
- 4. Players involved In order to manage efficient fundraising activities, there is a list of various players to which we must pay attention to for doing the campaign: various arms of government local communities and civic groups private corporations private individuals. IMPORTANT GOAL: CREATE STRONG RELATIONSHIP Classification of techniques according to the types of potential contributors: Sources Techniques Individuals (major gifts) Personal solicitation Individuals (small gifts) Direct mail Individuals (bequests) Phonathons Foundations Proposals Corporations Joint ventures Civic groups Raffles Special events (specify options) Source: The Nonprofit Handbook – fund raising, by James M. Greenfield, ed. The AFP/Wiley, Fund Development Series, third edition, 2001, p. 440
- 5. Reasons for people to give People who give to charity are motivated by many different reasons other than simply ‘pure altruism’. Certainly motivations for giving tend to be universal: giving to meet a need, make a difference, bring about change. E. T. Hall developed four categories of cultural variables that are related to the fundraising campaign: Relationship Communication Time Space Ethical practice and stewardship are vital for NPOs’ success in gaining the confidence of donors of all types. Philanthropy
- 6. The practice of “stewardship” “The careful and responsible management of something entrusted to one’s care by the others” (Dan Conway - 2003) Stewardship Efficient management Embodied trust Sustainability
- 7. Applied example: the case of the National Opera of Paris (2009) The story… …illustrates the concepts of fundraising. •Opéra National de Paris (ONP) : four galas a year •Gala hosted on the 16th Dec. 2009, in Palais Garnier under the “haut patronage” of the French President Nicolas Sarkozy •Included a lavish dinner & performances from the ballets of the ONP and Bolshoï •The French Garde Républicaine expected to stay in the grand staircase •Donors at the heart of the event: invited to rehearsals with the dancers, to a reception at the Russian ambassador's residence in Paris & to go on tour with the company to Moscow •Grand Donateurs: invited to meet with singers, dancers and directors + opportunity to attend dress rehearsals + their names engraved in the Palais Garnier's rotonde des abonnés Intention: collecting funds: k€10 for the night for 10 tickets which benefit the ONP ballet's 2011 tour to Novosibirsk and Moscow Organization of the event: •Prestige of the evening: in accordance with the types of contributors; segmentation of contributors & differentiated approach, more efficient •Contributes to the prestige & corresponds to the standing image •Conveys a traditional while quite elitist story through its “brand” Financial approach: benefits from the location and the building of the Palais Garnier & takes the opportunity of these evenings to promote its own story and its own talents Stewardship: reward as a thank you, given to major donors, according to their contributions
- 8. Part II – Italian funding
- 9. The FUS (Fundo Unico per lo spettacolo) – Italian General Fund for Art Before 1945: culture has been supported by the State’s ruling class After 1945: No more patronage system; increase of ticket sales and private donation Very fragmented and ever changing legislation (cinema) Hindered creative growth and long-term sustainability of the institutions Since1985: FUS as a stable pool of direct State funding (according to the national GDP) Monitoring Department for Arts and Culture Criteria of funds distribution Conflict between Rome-based institutions and the rest The examples of the Cinecittà, La Scala and Northeastern theatres Focus on the importance of the Italian culture: role of the State as a patron of culture
- 10. PUBLIC FUNDS 2007 2011 DIFFERENCE % FUS € 2.020.000,00 € 1.802.605,00 - 10,76 City of Turin € 9.250.000,00 € 5.500.000,00 - 40,54 Region of Piemonte € 750.000,00 € 800,000 + 6,67 Provincial administration of Turin € 100.000,00 € 269.000,00 + 169,00 City of Moncalieri € 250.000,00 € 230.000,00 - 8,00 TOTAL € 12.370.000,00 € 8.601.605,00 - 30,47 In 2012 the FUS gives €1.900.000 Public fundraising After Piccolo Theatre in Milan, the Teatro Stabile is the second one most sustained institution by the FUS.
- 11. OWNED REVENUES 2007 2011 DIFFERENCE % Gross revenues of business € 1.870.350,00 € 2.937.812,69 + 57,07 Other revenues and sponsors € 540.171,00 € 1.388.523,09 + 157,05 % Owned revenues on balance sheet 13,60 % 28,25 % + 107,72 Bank foundations Sponsorships O only temporary seasonal projects Private fundraising
- 12. Part III – International case: Washington National Opera
- 13. Washington National Opera U.S. Case The American system of funding performing arts differs from those of other nations: U.S. art institutions relied almost only on private donations to support their annual operating budget. American arts organizations benefit from certain tax benefits. July 2011: WNO became an affiliate of the John F. Kennedy Center for the Performing Arts. WNO is totally dependent on private funds: Contributions come from: The Opera Ball is the largest fundraiser Individuals (philanthropy) Local corporations Foundations WNO does not receive any federal funding for its productions or operations.
- 14. Conclusions Changes in the environments: legal shocks, global financial crisis, decreasing State funding… External shocks to be taken into account in the fundraising strategies Importance of local specificities • Need to find innovative ways to attract funds through fundraising 2 main issues to consider while developing fundraising strategies: 1. Context: local environment is crucial 2. At the core of value creation: ex-ante & ex-post analysis of donors structure
- 15. Thank you for your attention! Q&A…
- 16. Appendixes
- 17. Adapt the tools to the different targets Sources Techniques Individuals (major gifts) Personal solicitation Individuals (small gifts) Direct mail Individuals (bequests) Phonathons Foundations Proposals Corporations Joint ventures Civic groups Raffles Special events (specify options) Source: The Nonprofit Handbook – fund raising, by James M. Greenfield, ed. The AFP/Wiley, Fund Development Series, third edition, 2001, p. 440
- 18. Different types of campaigns ANNUAL CAMPAIGNS CAPITAL CAMPAIGNS •Designed to provide funds for basic program operations and normal growth •Address relatively short-term needs (a year or less) •Focus on individual giving, corporations, foundations, and civic groups •Typically thousands of dollars raised in annual giving campaigns •Undertaken to achieve a major organizational goal •Concern extraordinary investments •Often in millions of dollars Source: The Nonprofit Handbook – fund raising, by James M. Greenfield, ed. The AFP/Wiley, Fund Development Series, third edition, 2001, p. 438
- 19. The fundraising plan 1. Evaluate past activities, in terms of tapped sources, income obtained, evolution of the obtained sources, costs (direct & indirect) linked to fundraising. 2. Determine what support is needed, if possible, in order to have a more efficient fundraising program. 3. Identify potential fund-raising markets. 4. Establish a goal, amount-wise. 5. Create a calendar and put someone in charge of each project. 6. Give recognition. Source: The Nonprofit Handbook – fund raising, by James M. Greenfield, ed. The AFP/Wiley, Fund Development Series, third edition, 2001, p. 439
- 20. Focus on special events Before organizing a special event Choosing between types of events 1. What is the event primary purpose? 2. Is there an existing event to which a fund-raising component could be added to? 3. Who will lead the event? 4. Is the event compatible with other projects or will it exclude other profitable activities? •Many different forms for these events: gala dinner, auctions, golf or tennis tournaments… •Depends on the institution •Opera houses Take into account the nature of the institution, and in particular its history, its strategy and its mission Events may be more closely related to the arts performed inside the institution or to the place of the institution In the case of quite old institutions, the story-telling around the image of the institution takes part to the value of “branding” One of the priorities: to consider the current image and the potential image impacts of the event
- 21. The practice of “stewardship” (2) 4 strategies: • Reciprocity • Responsibility • Reporting • Relationship maturing Practical guidelines for communicating data can be summarized as following: • “a clear mission statement along with a description of programs, services, goals, and objectives • Organizational charts showing the governance structure of the organization (board) and the management team (staff) • A strategic plan, including evaluation measures • Overviews of the organization’s finances, including sources of income and a case of philanthropic support.” Source: Waters (2009), in Achieving excellence in fundraising, “the practice if stewardship” by William G. Enright and Timothy L. Seiler, ed. Eugene R. Tempel, Thimothy L. Seiler & Eva E. Aldrich, third edition, 2010, p.269
Editor's Notes
- Relationship: some donors prefer to establish a strong relationship before giving Communication: In some cultures, concise and precise communication is preferable; in others, many details and stories are necessary for complete understanding. Time: some populations are punctual and adhere to schedules while other people consider time fluid and flexible Space: proximity may cause discomfort in some places, while in other sites it is a way to form quick and warm relationships.
- “Stewardship typically means a management function that includes thank-you letters, gift receipts, donor acknowledgements and recognition, annual reports, prudent investment of gift funds, careful accounting, and measurements of outcomes and impact; in a short, a high level of accountability to donors and to the general public”. But authors precise that stewardship is more than just effective management. Indeed the definition could be “the careful and responsible management of something entrusted to one’s care by the others”. Thus, we can see that this concept of stewardship connects with different ideas: First, the concept of efficient management. The institution and the money in the institution are to be used efficiently. This concept is slowly entering the scope of the public organization, which are usually not evaluated according to criteria of efficiency. For instance, the French reform regarding public administration, called RGPP (Révision Générale des Politiques Publiques – General review of public politics), announced in June 2007, and launched in July 2008, has been implemented in regards to the reform started with the LOLF (Loi Organique relative aux Lois de Finance – Organic law regarding the Finance Law – promulgated in August 2001). It aimed at introducing criteria of efficiency for evaluating the performance of the public administration, in order to reform the State functioning, for lowering public expenses while improving public policies. This is quite innovative as it means that first, there will be new standards regarded as part of the performance. For non-profit organizations, it is quite innovative to consider performance criteria based on other criteria than just fulfilling their mission, which is usually oriented towards a pro-social impact – that is why we can draw a parallel with the public actions of the public organizations. In addition, in France, many cultural organizations are related to the State because of their juridical form - Secondly, it means that new criteria of evaluation need to be implemented. Consequently an adapted and customized balanced scorecard can be designed in order to measure the performance of the institution at stake. It seems that those two steps are quite difficult to put in place, or at least take time. In particular, the bigger and the older the institution is, the more difficult it is to make it move. Secondly, the concept of embodied trust. Indeed, there should be a win-win relationship between the institution and the donors. This is the idea of thanking the donors and getting back to them for informing them about the project and creating this relationship over time, making sure that they care about the institution as much as the institution cares about them. This trust will grow even father if the targets announced by the institution are reached and the performance is demonstrated. This is why the measurement of efficiency is important, as mentioned previously. Thirdly the concept of sustainability. Indeed, the idea is not to create a punctual support. Of course, any donation or gift made at any point, even punctual, is always a positive thing for the institution. But generally speaking, the cultural organization should really target long term relationships with its donors. This really takes part to the concept of stewardship. We can note that sustainability is important as long as it helps to build the trust between the institution and its donors. If the strategic plan conducted by the board of the organization is sustainable – in particular financially – and is well implemented, the trust should grow at the donors’ side, which may contribute to generate recurrent donations, and then consist in a sustainable contribution over time, provoking a beneficial circle for both sides: the institution benefits from the money and can develop more projects, and, accordingly, rewards to the donors will be greater - even though it is mostly philanthropy effects. Those points regarding stewardship are summarized under four strategies: “Reciprocity, expressing gratitude to the donor or the stakeholder; Responsibility, acting in a socially responsible way for the donor or the stakeholder; Reporting, keeping its public informed about development and issues; Relationship maturing.” Expressing gratitude will go through the thank-you letters, and gift receipts, but not only: the board should dedicate a little bit more time, making personal phone calls, writing short notes, or even paying a visit to the donor. The members of the board should be the first responsible and leaders for these actions, as they are also the most concerned about fundraising. In order to grow the trust with the donors, the board should also make sure that the donors are informed properly about what is going on. Practical guidelines for communicating data can be summarized as following: “a clear mission statement along with a description of programs, services, goals, and objectives Organizational charts showing the governance structure of the organization (board) and the management team (staff) A strategic plan, including evaluation measures Overviews of the organization’s finances, including sources of income and a case of philanthropic support.” Similarly to the companies with shareholders, the cultural institution should behave with transparency in order to communicate about the position of the organization to the people who provide the funds. Behaving with transparency naturally highers the level of trust in relationships and thus benefits to the win-win relationships between an institution and its donors.
- For example, the case of the National Opera of Paris – ONP, Opéra National de Paris (France) - as reported in the Wall Street Journal is interesting in regards to the previously explained theoretical and practical points. The institution hosts four galas a year. The gala hosted on the 16th December 2009, in the prestigious location of Palais Garnier (one of the two houses of the ONP), was under the “haut patronage” of the French President of that time, Nicolas Sarkozy. The evening included a lavish dinner and performances from the ballets of the ONP and Bolshoï. In addition, the French Garde Républicaine was expected to stay in the grand staircase - considering that the previous time the Garde Républicaine had come was when the Prince of Walls Charles attended a gala in 2004. As stated in the article, donors were at the heart of the event: “The ONP plans to invite the gala's donors to rehearsals with the dancers, a reception at the Russian ambassador's residence in Paris - and also to go on tour with the company to Moscow. Grand Donateurs, who give a minimum of €100,000 and often underwrite a production or a ballet tour, are invited to meet with singers, dancers and directors and are given the opportunity to attend dress rehearsals. Their names are engraved in the Palais Garnier's rotonde des abonnés, which is being restored thanks to Grand Donateur support. The ONP counts some of Europe's most high-profile philanthropists among its top donors, including Yves Saint Laurent co-founder Pierre Bergé, Rolls-Royce Chairman Simon Robertson (also a supporter of the Royal Opera House in London), Brazilian philanthropist Lily Safra, winery owner and heiress Philippine de Rothschild and Albert Frère, the richest man in Belgium.” This example illustrates perfectly some of the principles given previously. First, we can see that the event has been conducted in the intention of collecting funds. As a matter of the fact, the article mentions that donors & sponsorships consist in 5% of the ONP’s operating income – which can’t be overlooked then. – Thus, the gala contributes to promoting actions for developing fund raising among high-profile philanthropists. In addition, as mentioned in the article, the night “costs €10,000 for 10 tickets and benefits the ONP ballet's 2011 tour to Novosibirsk and Moscow”. The prestige of the evening is also decided in accordance with the types of contributors. This corresponds to a form of targeting of the event, segmenting the contributors in order to have a differentiated approach, more efficient – which we mentioned as our first point of analysis. The organization of the event contributes to the prestige of the ONP and corresponds to the standing image of the institution, which conveys a traditional while quite elitist story through its “brand”. The institution benefits from the location and the building of the Palais Garnier (cost saving) and takes the opportunity of these evenings to promote its own story and its own talents – with the possibility to attend dress rehearsals, which does not compromise the financial equilibrium of the high-margin tickets sold during performances, and inviting the donors to meet the artists. It is a reward as a thank you, given to major donors, according to their contributions. In particular, names appear in the “rotonde des abonnés”, i.e. in the Palais Garnier.
- According to the fundraising literature, the tools used for fundraising are classified according to the technical means they require for contacting potential donors and to the type of contributors. Indeed it seems quite logical that we cannot contact and be in touch with different types of potential contributors such as individuals, foundations, corporations or civic group in the same manner. Individuals need to be targeted using the preliminary analysis of the past contributions. Individuals who are close to the organization and may be willing to make significant contributions should be solicited in person. Smaller contributors or contributors whose name can’t be used as a communication argument – the fact that a cultural institution receives a contribution from certain “famous” people can be used as a communication argument for promoting the image of the institution and consequently attract new contributors and/or increase the amount of contributions – less strategic contributors or potential contributors can be contacted by mail/email and phone. Events are a way to gather the important contributors and increase the feeling of “being part of the club”. (see: following paragraph “special events”) Companies require a dedicated approach as it is almost useless to send letters to companies without knowing anybody in particular. As a matter of fact, gifts are often generated because of a special relationship between with the top executives and the institution. Consequently, it is crucial to have specific contacts within the company. In addition, after getting the contact, it is necessary to maintain the relationship with these top managers and to develop the network. It can be even easier as long as top executives are not that numerous and usually belong to the same social groups.
- The approach for the two types of campaigns is different, though they should not be conducted completely separately. Indeed, they can benefit to each other, or have negative impacts if they lack coherence for instance.
- In order to have a good fundraising campaign, it is important to be able to first identify who are the potential contributors and then take actions accordingly to target efficiently these prospects. Before going deeper in these techniques, we can already highlight the importance of the preliminary analysis of the current fundraising structure: indeed, it seems important for cultural institutions to be able to analyze who are the current contributors. Consequently the fundraising campaign can be oriented towards those contributors and potential new ones, according to the fundraising strategy adopted by the institutions and to the local environment. Evaluate past activities, in terms of sources that have been tapped, income obtained, evolution of the obtained sources, costs (direct & indirect) linked to fundraising. Determine what support is needed, if possible, in order to have a more efficient fundraising program. Identify potential fund-raising markets. Establish a goal, amount-wise. Create a calendar and put someone in charge of each project. Give recognition. – Recognition is a complete part of fundraising which should not be overlooked. Indeed it takes part to the dynamics of philanthropy which emerges from the donors’ attitude. In addition, it helps the contributors to “feel part of the club”, flattering in a way their ego, while developing a feeling of appurtenance which is very important in a field like arts, where contributors feel that they are collaborating with institutions in order to spread and develop the cultural knowledge, which they are already aware of. These concepts can be classified under the main idea of “stewardship”. (see: following paragraph “stewardship”).
- What is the event primary purpose? It is really fund raising or is there another purpose more important at stake? It is crucial to keep in mind the main objective of the event. As long as it is well conducted, they could be positive (hopefully) side effects. For instance, for prestigious theater houses, an event is also a communication tool, to have the media talk about the institution, and play on the image of the institution. 2. Is there an existing event to which a fund-raising component could be added? This would help to save costs generally speaking. 3. Who will lead the event? The event must be led by a project leader who will be fully in charge. This will help to have a red line in the organization and somebody to coordinate practical aspects, in order to guaranty its success. 4. Is the event compatible with other projects or will it exclude other profitable activities? The idea here is to determine the priorities, and make sure that priority is given (in particular in a tight financial context) to the most profitable project for the organization. Choice of types of events: There are many different forms for these events (gala dinner, auctions, golf or tennis tournaments…) The choice of the format depends on the institution. In the case of opera houses, it is crucial to take into account the nature of the institution, and in particular its history, its strategy and the mission that it fulfils. Thus events may be more closely related to the arts performed inside the institution or to the place of the institution (if the building is old and valuable for instance). In addition, in the case of quite old institutions, the story-telling around the image of the institution takes part to the value of “branding”. Consequently, because of potential media repercussions after that the event happened, considering the current image and the potential image impacts of the event must remain part of the priorities while taking decisions about the event planning.