Financial Sustainability For Culture Groups

Cultural organizations seek to help society aspire to something higher, but they often don’t go high enough in their fundraising, with the result that they struggle just to survive.

During the Association of Fundraising Professionals International Fundraising Conference, Janet Brown of Grantmakers in the Arts and Brian Bonde of Advanced Certified Fundraising said that cultural groups and their funders can take steps to change the shaky financial situation. They offered these tips:

* Familiarize yourselves with the basics of capitalization. Effective capitalization means having the cash necessary to execute strategy in pursuit of mission over a sustained period of time.

* Embrace integration of financial planning with organizational and program planning. An organization’s mission and goals should drive its business model and balance sheet, not the other way around.

* Understand the hierarchy of financial need. The most pressing need for cultural organizations is for short-term liquidity to manage cash-flow cycles and absorb regular operating risk.

* Get beyond break-even: manage and fund for operating surpluses. Like people, organizations need savings to take advantage of opportunities, respond to unexpected expenses and control their destinies.

* Capitalization is a way of life, not a fixed destination. There is no “arrival point” to capitalization because business and capital needs are always evolving.