It is very positive that there is evidence of growth in private giving according to the 2019 Private Investment in Culture survey prepared by MTM on behalf of Arts Council England.
91% of the arts and cultural organisations taking part received some form of private investment in the 2017/18 financial year, making it the most common source of income in the sector.
In a period of great economic uncertainty pre-Brexit, many arts organisations could be forgiven for being gloomy about the future, but in fact this survey shows an inherent positivity about the potential growth in future fundraising, particularly related to the anticipated growth in investment from earned income, as well as trust and foundations and individual giving. In fact, 51% of the organisations surveyed expect their total income to grow over the next three years.
Perhaps the biggest headline that jumps out to me though is that private giving is disproportionately skewed towards the top 50 recipients and organisations based in London, which receive almost 60% of private investment. These top 50 organisations are more reliant on individual giving, while organisations outside the top 50 are more reliant on grants from trusts and foundations. Smaller organisations are most reliant on local business investment, with individual giving being their smallest category of private investment, which also probably indicates their limited ability to attract this type of funding due to capacity and resource constraints.
The report highlights just how uneven the distribution of private investment is, with almost 60% of all investment flowing to the 50 largest recipients. The largest recipients of private investment tend to closely overlap with the largest organisations by total income, with most of them belonging to the major or large organisation categories (e.g. DCMS-sponsored museums).
Of course, there are no surprises here. The top 50, are organisations that are confident in their fundraising, with substantial track records. They have invested in their brand and most importantly have invested significantly in teams that can build growth from individual donors. But it also perhaps speaks to the behavior of donors, as investing in these bigger organisations is seen as a safe bet.
It is striking that according to this survey, individual giving remains the most significant form of private investment to arts and cultural organisations. However, it has dropped from 51% in the previous survey to 43% in 2017-19 financial year. So whilst competition for trust and foundation money is likely to increase, it seems like investment in individual giving remains a really good bet.
In a more concerning headline, it is a stark reminder that 61% of the organisations surveyed believe that their staff do not have sufficient capacity or time to engage with private fundraising activities and this is exacerbated amongst organisations that aren’t based in London and where competition for funds with other local arts organisations as fierce.
So what conclusions might we draw in relation to this report?
- As a sector we should set a target for philanthropy – In many ways how we aim to drive fundraising is focussed on our ability as individual organisations rather than as a sector-wide approach. For example, if the latest Charities Aid Foundation report indicates that 2% of giving comes to the arts – what would a commitment to moving to 3% or 5% look like and over what period of time? And who would be the philanthropic leaders and drivers who could drive such a change? If we committed to changing our targets for investment as a sector, then it is likely we would see very different results.
- Benchmarking – There are vast differences in an organisation’s ability to drive fundraising based on turnover, region and artform. It’s crucial that when we devise fundraising strategies that we look at organisations that are ‘like us’ or that we aspire to be like. Drawing conclusions from the top 50 organisations is likely to bend our fundraising strategy out of shape. We need to know real data about how successful our peers are to form an effective baseline for creating a fundraising strategy.
- Diversify carefully – Whilst we often hear the message that diversification is at the heart of fundraising sustainability, we need to be cautious. Most organisations bring in most of their investment from just 2 or 3 different sources of income. Whilst exploring the potential in individual giving seems positive, we need to make sure that we add activity cautiously and invest carefully in the skills across the organisation to drive this funding forward. Successfully realising new strategies takes time, and it’s much better to invest well in one area than spread our resources too thinly.
- Build earned income and cost saving strategies in parallel – Too often we get obsessed by growing private sector fundraising which is obviously essential, but let’s not forget that alongside this, we should also look at growing earned income. We also need to be very critical of our cost-base, if we can save money on procurement, subscriptions and the like then our fundraising targets might just become more achievable.
- Be bold in the messaging and build your brand – Whilst smaller, newer organisations can’t compete with 50 years of a major organisation’s brand building in terms of profile, we can highlight our distinctiveness. It’s urgent that we all stimulate donors’ interest in and access to the sector. All organisations need to embrace the importance of storytelling and to really think about how we engage head, heart and hand (making donors think, feel and act), as well as co-creating story telling via digital and other means.
- Embrace philanthropic place-making and collective fundraising – We shouldn’t forget that smaller arts and cultural organisations can develop a more bespoke, experimental and imaginative philanthropic partnership packages, and we need to ensure that philanthropists recognise that partnerships with smaller arts and cultural organisations are as valuable as with larger organisations. Where possible, collaboration is considered very attractive. There is power in building coalitions in more challenging economic times, perhaps by clusters of organisations taking on common agendas, e.g. populations in need, or devising joined up giving programmes to attract philanthropists. Shared outcomes, shared patronage and collective appeals could be very positive, as could building alliances around mission critical core funding.
A final thought is that we should embrace the positive action identified in this report. Often we see organisations paralysed with fear about fundraising and with Brexit still unresolved and many challenges in the economy at home and abroad, its right that we might be fearful. But in the words of the sociologist Richard Sennett, we cannot dwell in a permanent state of creativity, we actually have to do things. In fundraising fortune favours the bold.
Michelle Wright is the Founder and CEO of fundraising and development enterprise Cause4 and is Programme Director of the Arts Fundraising and Philanthropy Programme.