A culture of giving?
Theresa Lloyd takes a close look at key success factors in sustaining private support for the arts...
Why is more private money needed for the arts? Government spending in this area has increased over the past decade, from a very low base, but other pressures on public spending and drawing on the Lottery funds for the Olympics means a standstill at best; the DCMS budget is under 0.5 per cent of total government expenditure. At the same time we know that charitable giving across the board has not kept pace with the increase in wealth, especially among the very wealthy; indeed it is lower in real terms than in the mid 1990s. And of the £9.5bn given by individuals to charity in 2006/07, no more than £400m goes to the arts, and more than two-thirds of that goes to the South East1. In the meantime, the costs of running arts and heritage organisations are increasing, especially funding acquisitions.
Earlier this year several organisations in the culture sector launched Private Giving for the Public Good2 with the aim of encouraging just that.
But how difficult can it be to raise money for the arts and heritage? Those concerned with other causes sometimes look with envy at a sector whose potential supporters walk in through the door and buy tickets and whose core mission of performance or the visual arts or buildings and gardens itself provides opportunities for the engagement of prospects and donors. High-profile artists and volunteer leaders can be called on to nurture relationships.
Motivation
The importance of well-managed relationships was a constant theme in the research for Why Rich People Give3. Why do people give to the arts, particularly substantial sums and recurring support? There are overlapping themes but the main factors are:
- a passion for the art form and perhaps a particular artist, composer or performer;
- knowing that you are making a real difference to an overall mission or individual lives;
- civic pride, community support, and putting something back into the community;
- giving opportunities to others, whether young talent, or visitors and audiences who would not otherwise benefit, and sharing learning opportunities; and
- the rewards of relationships with those who deliver the mission, with specialists, with beneficiaries and with other donors.
Civic pride is very important. People spoke of London, or the North West, or the North East as ‘deserving’ a world-class opera house or art gallery or concert hall. As one person said: ‘It’s the job of the state to provide the basics; it’s the role of the private philanthropist to make the basic the best.’
Although sometimes people support arts organisations as a ‘deal’ (to get access to scarce tickets, for example), in the case of organisations with which they are really involved such access is a bonus, not the main reason for giving. From research and experience we see that what really matters is seeing the work, knowing that one has made a difference and being properly thanked and involved.
But what do we see all too frequently? A typical example of a donor comment is the following: ‘I would give 10/10 to an organisation which came back after a year and asked for 30 minutes of my time to explain what had happened to the money and project and what was achieved. I have very little experience of this happening.’
All this is about far more than a standard letter – although letters are important and must be personal and well-written, with names and titles correct. Those supporting the arts look for passion and involvement. They look for respect for their knowledge and love of the art form, and respect for the expertise which is the source of their wealth.
The question of respect for expertise is crucial, and can be difficult to manage. The self-made business person or financier now dominates the rich lists and higher-level donors more generally; apart from higher levels of wealth (not yet matched by higher levels of giving, in aggregate) we see attitudes, occasionally naïve, about the transferability of business skills to the non-profit sector. They may be more entrepreneurial and risk-taking than traditional donors, and look for engagement, impact and accountability. Some will look beyond the conventional development model to seek leverage to suggest new types of financing.
Reflecting the general market focus on impact, accountability and transparency, more information on the financial model underpinning the arts operation will be sought and should be provided. It is no coincidence that Glyndebourne, dependent as it is on private philanthropy, produces an accessible, inspiring and informative annual report, which (among other things) demonstrates where the money comes from and how it is spent.
The marketplace is changing in other ways. There are more role models who are willing to stand up and be counted and an improving research base and expertise. The tax regime is helpful, although it could be significantly simplified and improved, with tax relief for gifts of works of arts and lifetime legacies. Wealth managers and advisers are seeing philanthropy advice as an opportunity to add value to their service and some are introducing their clients to arts organisations.
Donor management issues
All this means that there must be a more sophisticated approach to prospect identification and donor education and engagement.
It is all about how the relationships are managed. And donors do not want to meet only staff from the development office, however knowledgeable and charming. They want to meet those who deliver the artistic mission, whether conductors or wig-makers, curators or gardeners. They want to meet the leaders – trustees and senior staff, and, increasingly, to know that trustees with the means have themselves given. And they want to share the pleasure of involvement and learn more about the art-form with likeminded others. (See case study.)
What all this is telling us is that it is a question of a corporate culture of engagement. As Robin Thomas wrote in her Managing major donors article, there must be legitimate opportunities to involve and listen to donors and prospects. Staff and artists must understand that participating in nurturing relationships is not a matter of ‘doing a favour’ for the development office, but an integral part of their role.
Everyone must understand why this matters, and see such potential major donor support as a major asset, drawing in people who will not only give money but also be advocates. This may require a culture change and investment. It is instructive at this point to consider the results of a survey I conducted in 2000 based on eight major national arts institutions in various sectors, about what really mattered to donors, and the institutional success factors:
- the nature and quality of the artistic mission;
- the nature of the organisation (opera house, museum, theatre…);
- the reputation for competence and sound financial management;
- the corporate culture – how open to donors;
- the board and other volunteer leadership – trustee participation in stewardship, extent of exemplary giving;
- the entertaining facilities and the catering;
- the ability to identify and communicate with regular visitors;
- the quality of the research information and database systems; and
- the level of investment in PR and communications, to promote the messages that underpin successful fundraising.
It can be seen that most of what matters is outside the control of the development office. Development – the creation and sustaining of longterm relationships for the benefit of the institution – is something which must be undertaken by, and seen as the responsibility of, the whole organisation, from chair to caretaker. Development is the facilitator. And this requires investment.
The latest Fundratios report (2006/07)4 indicates a cost to income ratio for major donor programmes of about 21 per cent, and about 29 per cent for committed giving and membership programmes. Allowing for problems of definition, and higher costs in start-up phases, an average of about 25 per cent is probably about right. Yet too many trustees focus on the percentage of costs to income as a marker of effectiveness, rather than the net amount raised, and investing what it takes (with prudent oversight) to maximise the market potential. In figure 1, I would argue that the trustees of organisation A, possibly priding themselves on ‘only’ spending 10 per cent on fundraising, are failing their institution, while organisation D, netting £3m for its artistic mission, is achieving its best for its artists, experts and audiences or visitors.
Future of cultural giving
Without active engagement and commitment from the board, private fundraising will not reach its potential. The board must not only oversee the delivery of an outstanding artistic mission, but adopt a strategic approach to development and invest accordingly. The chair should give credible messages about the importance of development to the organisation by taking a leadership role in some aspect of the development activities. It should be accepted that the participation of at least some trustees in the cultivation of prospects and nurturing relationships with donors is essential.
The organisation must be a philanthropic priority for all members of the board, and the director and senior staff should be encouraged to develop a corporate culture of engagement.
Senior management is responsible for a first-class cultural programme, and for excellent business planning and accounting systems. They must implement the necessary changes to ensure creative engagement with donors, and an integrated approach to marketing and fundraising activities and messages. They should produce a compelling and informative annual report designed for donors and they must invest in the development office.
With this attitude and appropriate investment in a genuinely personalised approach and the necessary support systems, the development office will be well-placed to orchestrate the management of relationships for maximum enjoyment of supporters and hence the lasting benefit of the arts institution.
As one donor puts it: ‘The sense of making a real difference… satisfaction, getting to know some extraordinary people… who are now friends. Fun with a capital ‘F’. You can’t buy it and it’s unobtainable elsewhere.’
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1 CAF/NCVO (2007) UK Giving and Arts & Business (2008) Private Investment in Culture Survey 2006-7
2 See www.philanthropyuk.org
3 Also on www.philanthropyuk.org
4 www.cifc.co.uk
Author: Theresa Lloyd
Theresa Llloyd is author of Why Rich People Give (2004) and Cultural Giving (2006) and a leading adviser to cultural and other non-profit institutions on governance, planning and fundraising. She is a board member of the Young Vic, a member of the development board of the OAE, a trustee of the European Association of Planned Giving and a member of the advisory board of Philantropy UK
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