President’s Blog: Capitalize for Thriving
Grantmakers in the Arts is sharing context for our upcoming Capitalization and Nonprofit Financial Health Workshop online January 30, 2024.
According to the Urban Institute’s Nonprofit Trends and Impacts 2021, 40% of organizations reported losses in total revenue in 2020, including 54% of arts organizations. The performing arts are struggling to the point of closing. As we look to the future, nonprofit organizations worry about funding slowing and dwindling. After record highs in 2021, in 2022 philanthropic giving declined 3.4% in current dollars – down 10.5% after adjusting for inflation. Adjusted for inflation, giving to the arts, culture, and humanities has declined by 8.9% in 2022.
However, there is hope. In 2022, 57% of GIA’s members reported increasing their giving, more than in 2021, and the same percentage that did so in 2020. This increase has been higher than anticipated. In 2020, 26% of GIA’s members had anticipated increasing their giving in the future. 41% of GIA’s members increased multi-year support in 2022, after only 23% of our members said they’d do so in the future, with only 16% in 2020 and 24% in 2021 doing so. In terms of these positive changes, GIA’s members cite the influence of our workshops, webinars, and conversations with other grantmakers that we enable through our programming.
GIA’s members’ increased generosity has had a strong positive impact on small organizations, including organizations of color, which have proven nimbler during the pandemic. This is due to lower reliance on earned revenue streams and fixed costs. These are mixed blessings; while the pandemic has revealed that investments in small and BIPOC organizations are less risky, these organizations’ nimbleness is the result of decades of under-investment in their overhead.
How do we match generosity with a strategic approach to long-term thriving? As GIA’s Capitalization consultant Rebecca Thomas shares, we have failed to properly support our cultural organizations’ recovery after our nation’s last great financial crisis – the great recession – creating a field of cultural organizations that were more vulnerable than before the recession. We funded cultural organizations but did not capitalize them. GIA defines capitalization as, “the accumulation of the resources an organization needs to fulfill its mission over time,” specifically regarding financial health. Capital is different from revenue (which is immediately spent), and from assets like endowments or facilities (which are not available as liquid cash that can pay expenses). Capital is money saved in order to respond to challenges and opportunities.
As we face new challenges, how do funders ensure that cultural organizations will thrive? How do funders assess the financial health of their applicants and grantees to support each other responsively? How can funders assess and respond to organizations’ financial health through the lens of racial equity?
Join GIA and Rebecca Thomas & Associates, informed by advice and counsel from cultural strategist Sage Crump, for our online Capitalization and Nonprofit Financial Health Workshop. This workshop includes data on cultural organizations’ fiscal health nation-wide, advice on how to fund responsively and equitably, and how to plan in times of uncertainty.
Register today for GIA’s Capitalization and Nonprofit Financial Health Workshop, and explore with GIA and your peers how to capitalize to build a resilient field that can thrive into the future.
