November 3, 2010 | Read Time: 3 minutes
Grant makers often fail to recognize that nonprofit groups need two distinct types of money to thrive.
Nonprofits need capital (and lots of it) to, among other things, plan for and invest in ideas that will help them prepare for future growth and make changes to the way they operate.
They also need reliable and recurring revenue to sustain themselves year in and year out after the change has happened.
Today, I interview Ben Cameron, program director for the arts at Doris Duke Charitable Foundation, about a program administered by Nonprofit Finance Fund and financed by Duke to give these groups access to capital, while also helping them generate revenue for their operations.
Through the multiyear “Leading for the Future” project, Nonprofit Finance Fund is directing more than $10-million in capital from the foundation to 10 performing-arts organizations. The goal is to give them the flexibility to test new ideas, explore new business approaches, resist distraction, and even risk failure.
Below, Mr. Cameron shares his thoughts on the lessons learned about the relationship between capital and change in the arts. Over the coming days, we’ll post additional questions and answers from him about this program. We hope you’ll contribute your thoughts to the conversation, too.
Q: In today’s economic and artistic environment, cultural organizations are increasingly compelled to undertake transformative change –to stay both relevant and solvent. How are the foundation’s capital investments different from grant making as usual?
A: Organizational transformation is one of three priorities at the Doris Duke Charitable Foundation’s arts program. Grants in this area typically support projects over an extended period of time. While a few grants are the traditional one-year grants, most of the others support projects over 18 months, two years, or even five years.
We often support planning time as part of our overall investment strategy. In our Creative Campus program, for example, a panel narrowed a list of applicants to a smaller group, which then received funds to engage in more in-depth planning before full applications were due. We also often rely on a multi-phased application process that is resource-appropriate, with preliminary applications that pose relatively few broad questions, followed by invitations to a smaller group to submit much more extensive information.
Ultimately, the time and effort spent by potential grantees should be commensurate with the potential return. We don’t want to waste the energy of groups that may not be competitive.
The evaluation of our grant programs begins on the front end. Virtually all of our programs are administered by intermediary organizations on our behalf. We want the evaluator and the appropriate intermediary to identify the ultimate evaluative criteria upfront, allowing them to gather relevant information as the grant moves forward. We want to avoid a scramble at the end of a grant-making initiative to produce relevant information.
When the economy took a turn, we took a step back and assessed how we could meet the needs of our existing grantees. Rather than launch yet another new initiative, we opted to distribute general operating-support grants as a complement to our project grants.
Acknowledging that this unrestricted support lasts only as long as the supported project, we urge grantees to be thoughtful about how to use it, whether for debt retirement, reserves, professional development, or other infrastructure needs—examples of choices they might make that will improve their capacity and financial profile without simply plugging a “hole” or creating a bigger hole for future years.
