Philanthropy and the Arts – What are the Odds?

€8,919,000 is the total amount of Private Investment (sponsorship and donations) raised by 177 Clients of the Arts Council Ireland in 2014.  That’s according to the 2into3 Private Sector Investment into the Arts Report: 2016, commissioned by the Arts Council. It is, to my knowledge, the latest such report available For clarity, the concept of “Private Investment” in this context is composed of Sponsorship (€3.609 million) and Voluntary Income  (€5.31 million) , which in turn is composed of gifts, donations, friends schemes, bequests etc. That’s an average – in the sense of an arithmetic mean – of just over €50,000 per client. Except that – anecdotally – very, very few organisations raised anything close to €50,000  private investment in that year. So, the question is, even with the best fundraising training in the world, what are the factors affecting my chances of raising €50K in 2019? One of the functions of reports is to inform action at an organisational and policy level. For example, if I set a target for my organisation of €50k in Private Investment for 2019 I need some way to calculate the probability of actually raising it. Its not enough to say that I need to hire a fundraiser, or I need to have a fundraising strategy (these things are important), I need to know that even if I do these things what are the chances of making a return on the investment in time and money. If I don’t know the probability I’m simply making a leap of faith, a kind of magical thinking that says because I am fundraising ready I will be able to raise funds. This is a bit like saying I can swim because I’m wearing speedos – it doesn’t matter if there’s any water in the pool. On the other hand, if I’m a policy maker – at arts council, local authority or department level – I need to identify trends and characteristics so that I can take policy and legislative action to correct for potential negative trends and support positive trends.  I need to take actions that keep a flow of water into the pool. The 2into3 report is very comprehensive and primarily descriptive. It lays out data but performs no in-depth analysis or inference from that data, and consequently some vital stats are absent. For example, although it tells us the total amount it doesn’t give us a mean or a mode or a median; it doesn’t say what the distribution is like and it doesn’t offer any probabilities. Which is what I need if I’m to make an informed decision. However, we can get a sense of the underlying realities. According to the report, organisations with a turnover of €800,000 or more attracted €5.434 million or 61.% of the total; organisations with a turnover between €300,000 and €800,000 captured €2.225 million or 25% and organisations with a turnover less than €300,000 captured €1.260 million or 14%. The arts council have more clients with turnovers of €300,000 or less than they have clients with turnovers of €800,000 or more. So we can speculate that the small number of clients with the high turnovers are attracting 61% of the private investment, while the large number of clients with turnovers of €300,000 or less are attracting only 14%. Which of course means that in cash terms the large clients are doing far, far better than the smaller clients. Not only are they attracting more money but there are fewer of them sharing it. To put it another way, we could argue that the amount of private investment I have access to is directly related to the current turnover of my organisation, and the number of organisations of similar size. These become the first two variables in my evaluation. There are two other fascinating  data presentations in this report: the percentage by artform and by County:

 

It’s clear that there are significant relationships between money raised, geographical location and art form.  Just to be a bit of a devils advocate lets imagine that I work for an organisation working in YPCE, with a turnover of less than €300,000 based in Longford; what is the actual size of the money market I am competing in? Total National Private Investment is €8,919,000, Longford gets 0.2% of that  or €17,838, YPCE gets 3% so the total available money is probably about €535.14… Given these facts, what is the most effective fundraising strategy if i want to raise €50K in private investment: have a turnover in excess of €800,000, be based ideally in Dublin but if not then in Galway, and work in theatre production or festivals.  Any other choice means that you are competing for about 5% of the available funds (depending on art form and location).

Leveling the Odds

Now, there’s a lot of problems with this picture, so the real questions are what do we want it to look like and how how can we change it.  I would propose that we need to ensure that the ability to raise money is not tied to size, artform or location if we are to see an equitable spread of investment. So we need to increase the size of the money market and equalise the competition between organisations. So action is required on the national policy level and on the industry organisational level. In fairness, according to the report, the numbers are trending up (the 2018 report said that the per capita spend on charitable giving was €212, with just under €7 going to the arts) but – despite the ideologically driven policy belief that the Arts should function under a US model – we are a long way off that. The late great Tom Suddes used to say on his fundraising training courses “You’re in sales! Get over it!” And up to a point he was right. However, the secret of success in sales is to have something the buyer wants, and not waste time telling them they need it (that’s what marketing is for).  The reason that Ireland’s  per capita giving of €212 is just over over half that of the U.K. and nearly 5 times less than the U.S. is tax incentives. In Ireland there is no such incentive. So if we want to increase the money pool we have to incentivise the giving –  and that’s a government level policy action. Bear in mind it is possible to structure such tax relief so that it applies locally (e.g. an individual or business in Longford can avail of the relief so long as their contribution is to a Longford organisation). Policy and Legislation can address the overall size and regional distribution of the philanthropic pie. Its down to lobbying and political will. But how do we equalise distribution across organisational size, so that not all investment goes to the bigger players? We can train ourselves in the craft of fundraising – as we are now all doing – with its nuggets and its pyramids and its asks, and its institutional and its programmatic marketing etc., and all such knowledge is invaluable BUT the fact that I am a trained and capable fundraiser will not change the size of the €8.919 million money market, nor will it change the fact that over 70% of that money will be accessed by organisations in Dublin and Galway, and nor will it change the fact that venues, for example,  access only 6% of it nationwide. These are high-level trends driven by factors other than my skills and competence. How do we distribute the investment more equitably so that investment is not drawn to the larger organisations? This is a difficult one. The larger organisations, by virtue of size, have more capacity, larger audiences, better facilities, bigger media profile, stronger networks etc. Interestingly 3into2 provide a solution to this dilemma in another report they published in 2009 called Collaboration for Greater Impact ” “However, with increasing growth in the non‐profit sector, current economic pressures, and a growing interest within and beyond the sector for effectiveness and efficiency, the time seems ripe to consider the value of collaboration in the non‐profit sector to achieve greater impact. While the government could have a role to play in encouraging this type of working, it also falls to each player within the sector to identify how collaborative working might best work for their organisation.” (Collaboration for Greater Impact p.30) Put simply if you look at an example of say ,venues, which currently capture only 6% of the available cash by acting independently and then ask the question what would happen if they acted together, and sought investment for the venue network? Collectively their turnover is way in excess of €800,000 and collectively they are the gatekeepers of a vast amount of cultural product, audience and experience. Their philanthropic value as a single conceptual entity is enormous. Essentially if your  organisation is at the bottom of the investment pyramid then the quickest – and most effective – way up is collaboration.