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Fundraising and Management of the Cultural Sector

Jérémie Patrier-Leitus

Master in Public Policy

2019/2020

Schedule of the session

Schedule

  • Course description
  • Syllabus
  • Course validation
  • Class format
  • Introduction

Course description

1. Know the theoretical fundamentals of fundraising (110 000 nonprofit organizations in « Arts, Culture and Humanities » in the United States)

2. Know the best practices and the most effective strategies used by cultural organizations for fundrasing purposes

3. Acquire a set of techniques, tools and skills that will be directly operational and applicable to pursue a career in fundraising

4. Understand what makes a successful management of a cultural organization (a clear mission, a tailored programming activity, relevant marketing campaigns, a managed budget in order to increase the number of supporters, gain in visibility and expand income through fundraising efforts)

Course description

Syllabus

Course 1 - Presentation of the current trends and key figures

Course 2 - Must-haves: an institution building and a fundraising strategy

Course 3 - Leadership : the importance of a prominent board and senior staff

Course 4 - The annual fundraising campaign

Course 5 -Who gives ? (1) Businesses/corporate funding

Course 6 - (2) Foundations

Course 7 - (3) Individuals

Course 8 - (4) Government

Course 9 - The importance of Special Events and dedicated fundraising campaigns

Course 10 - Launching capital and endowment campaigns

Course 11 - How to successfully manage a cultural organization ?

Course 12 - Conclusion

Syllabus

Course validation

- Press review (20%)

* Groups of 3/4 students will be in charge of presenting a short press review

* Assigned groups are to be found on the Drive

* 5-6 minutes (maximum)

- Written assignment (40%)

*Groups of 3 or 4 students

Groups are to be formed by September 26th

*Choose 1 topic from the given list

* Submission date : Thursday, November 7th

* Oral presentation (10 min per group): November 16th

- Final exam (40%)

Press review

Guidelines for a successful press review:

> Choose 3 news related to philanthropy and cultural organisations, in general.

Examples : the announcement of a big donation to a cultural organization, the launch of a capital/endowment campaign by a cultural organization, the success of a fundraiser event, the launch/success of a crowdfunding campaign, the announcement of a public funding cut in the arts and cultural sectors

> Make a Powerpoint presentation (pictures and key information)

Give contextual elements : information about the organization (the country, its budget, its mission) or the patron of the arts you are talking about

> No reading. Make it lively and watch the audience

> Try to pick different countries, different cultural organizations (museums, theaters, orchestras, cultural centers, private vs public cultural organizations and so on)

Example Bloomberg 2018

https://www.bloomberg.org/press/releases/bloomberg-philanthropies-names-85-cultural-organizations-washington-d-c-pittsburgh-participate-43-million-arts-innovation-management-training-program/

Written assignment

Guidelines for a successful assignment:

> Remember it’s a practical exercise and the documents submitted must be operational, ready for use in a real life situation

> You can choose the format and the layout of the document(s)

> You should pick an existing cultural organization

> Your document should start with a short presentation of this cultural organization: its history, its missions, its activities, its budget, its team, its board, its management, its fundraising strategy etc… This short presentation should give a consistent overview of the functioning, the management and the financing of this institution

Deadline : Thursday, November 7th

Oral presentation : Saturday, November 16th

Written assignment

1. Board

Your Director wants to professionnalize the Board of trustees of your organization and attract new Board members. As the Director of the Development department, you should:

a) write a manual for the Board of your organization

b) develop 3 profiles of individuals that would be ideal candidates to sit at the Board of the organization

c) suggest 3 real names that match those profiles (include short biographies)

Topic 1

Info: Appointment of new board members at the Broad museum, LA

https://www.thebroad.org/sites/default/files/pressroom/2017.09.20_broad_announces_new_board_members.pdf

2. Gala

For the first time, the Director of your organisation wants to organize a fundraising event / a Gala. As the Special Events Manager, you should:

a) Write a Gala strategy to be sent to the Board. This note should detail the reasons why your institution should organise such an event, the objectives of this event as well as the format of this event.

b) Write the general presentation of the Gala that you will send to potential sponsors, ticket buyers, auction donors and so on.

Topic 2

3. Corporate sponsorship

Your organization has decided to carry out a special project and you are looking for a corporate sponsor to fund it (partially or entirely). As the Associate Director of Corporate Relations, you should:

a) write the sponsorship package including the letter of request, the project proposal as well as the visibility and sponsorship benefits the sponsor will receive. Try to be as creative and ambitious as possible in designing the package

b) select a list of potential (existing) sponsors and justify why they could be interested in sponsoring the project

Topic 3

4. Foundations

Your organization has embarked on an ambitious project and needs crucial funds to fund it. As the Associate Manager in charge of Grants & Foundation, you should:

a) write the proposal to a foundation: describe the project, show how it is aligned with the foundations’ missions and programs, explain why it relates to their guidelines. Include a solicitation letter as well as an indicative budget, and all the relevant attachments

b) Identify a list of existing foundations that would be likely prospects to fund this project and justify your choice

Topic 4

5. Government support

Your organization has decided to launch a new cultural program (exhibition, festival, performances) and is looking for public funding. As the Development Director in charge of Government support, you should:

a) present the program after and identify the different options for government support, both national and local levels (ex: in France: ville, département, région, Etat)

b) pick 1 funding option and fill out the grant application provided by the public organization you selected.

Ex: https://www.arts.gov/grants/apply-for-a-grant ; https://cultureveille.fr/wp-content/uploads/2016/01/catalogue_subventions_fevrier_2014.pdf; https://www.artscouncil.org.uk/funding/applying-grants-arts

Topic 5

6. Individuals

Your organization has decided to target new major donors. As the Manager in charge of Individual giving, you should write a comprehensive strategic note including:

a) a list of prospects with the reasons why these individuals would be potential major donors

b) the process to approach those persons

c) the process to thank those individuals

d) the strategy and organization to retain and cultivate those major donors

Info: https://givingusa.org/6-facts-to-learn-about-your-fundraising-event-attendees/

Topic 6

7. Endowment campaign

In a context of economic crisis, your organization is forecasting financial difficulties for the coming years. In order to anticipate those financial needs, the President of the Board is thinking of launching an endowment campaign and wants to present a detailed strategy at the next Board meeting. As the coordinator of this campaign, you should write a strategic note to the Board including:

a) the endowment campaign team (members of your staff, members of the Board)

b) the feasibility study

c) the prospect screening (justify your choice)

d) the financial goal (justify your choice)

e) the case statement/general presentation

Topic 7

Donor search

https://www.donorsearch.net/capital-campaigns-guide/

Smithsonian

https://newsdesk.si.edu/releases/smithsonian-concludes-capital-campaign-188-billion-private-support

NY Times 2015

https://www.nytimes.com/interactive/2015/10/11/arts/the-big-ask.html

Info

8. Festival/Exhibition

Your Artistic Director would like to organize a festival (film, music) or an exhibition in September 2020. As the Development manager, you should:

a) write a fundraising strategy to finance this festival (corporate sponsorship ? Individual giving ? Dedicated fundraiser ? Public funding ? Crowdunding ?) to be presented to the Board

b) establish a budget including the different sources of revenue

c) create a corporate sponsorship package including the letter of request, the project proposal, and the visibility and sponsorship benefits the sponsor will receive. Try to be as creative and ambitious as possible in designing the package

https://blog.doubleknot.com/2017/11/27/museum-fundraising-event-ideas/

Topic 8

9. Revitalization of a declining cultural institution

You have just been appointed the new Director of a declining cultural institution and want to revitalize it.

a) Select a declining cultural institution, present its history, activities and point out the major reasons of its decline ;

b) Write a strategy to find new ways of relaunching the organisation (internal reorganisation, redefinition of its mission and activities, new fundraising opportunities, positioning of the institution, marketing strategy and so on) ;

c) Project yourself in 10 years time and highlight the major changes and left challenges to your institution (has your strategy worked out ?)

Topic 9

Class format

Each session will be divided as follows :

1. A press review at the beginning of each class

-Groups of 3 or 4 students (5-6 minutes)

2. One-hour lecture illustrated by case studies

3. One-hour discussion with a guest speaker

-Guest speakers include patrons of the arts/donors, directors of cultural organizations, professional fundraisers, and heads of foundations

Class format

Introduction

Introduction to the course

Short introduction to philanthropy

Short introduction to philanthropy

Definitions

Even if the meaning of this world has significantly evolved, philanthropy refers to the free donations to the benefit of organizations acting for the general interest: education, health, fight against poverty, scientific research, environment, art and culture.

The origins of the term Patron date back to the 1st century BC. Caius Maecenas was a minister of the roman emperor Augustus, and first protector of arts and literature. His name is nowadays a byword for a wealthy and powerful person who encourages and finances the artistic creation.

Donating means giving to someone the ownership or the use of something, for free. A donation is the act of donating as well as the thing donated. We can donate money, material objects, but also our time or even our blood, a part of ourselves.

The act of donating is at the hearth of what we call philanthropy.

Concepts

Three successive visions:

-A humanist virtue and idea.

-A reformist movement stemming from the enlightenment theories.

-Financial donations to the benefit of the general interest.

History

The term philanthropy made its first appearance in the 5th century BC, in the well-known Greek tragedy Prometheus Bound, attributed to Aeschylus. In this play, Prometheus gives the fire to mankind, together with arts and science, defying the Gods’ will to wipe out and replace the humanity.

The word is composed by the Greek terms philos (to love, to befriend, to do good) and anthropos, the human being: philanthropy is therefore defined as the love for humankind. It differs from friendship since it refers to the humanity in general, not only to some people in particular.

Prometheus

Philanthropy in France

With the development of Christianity, during the Middle Age a new generation of philanthropic initiatives in Europe sees the light, even if the term used is charity.

Hospices de Beaune

In the 18th century, marked by the Enlightenment, the ideas of Montesquieu, Voltaire and Rousseau inspire noblemen and bourgeois to the foundation of the first philanthropic societies, characterised by their secularity and their respect for multiplicity of political and religious opinions.

Philanthropy in France

The Fondation de France was created in 1969 by decree of the General De Gaulle. Strongly wished by André Malraux, then minister of Culture, this large foundation is directly inspired to the American foundations.

In 1979, the Association for the Development of Industrial and Commercial Patronage (ADMICAL) was created by young professionals who, impressed by the amount of enterprises financing cultural institutions or events in the US, decided to try to do the same in France.

Philanthropy in the US

Fundraising techniques, systematized patronage strategies and other common methods have appeared only in the early 20th century in the United States. Before, philanthropy was done on a much smaller scale, and most of donations were destined to the Church, the poor, the schools or the hospitals.

Main features of American first philanthropic institutions:

- They aim at serving the common good, following the objectives set in their bylaws. Example: Rockefeller Foundation for the progression of knowledge in the world.

- They focus on the root causes of the problem, more than on the tangible help to unfortunate people.

- They have a defined legal status.

Philanthropy has contributed to the transformation of the American society.

“A man who dies rich dies disgraced”

Andrew Carnegie

“In the first place, I advise you to apply to all those whom you know will give something; next, to those whom you are uncertain whether they will give any thing or not, and show them the list of who have given; and lastly, do not neglect those who you are sure will give nothing, for in some of those you may be mistaken.”

Benjamin Franklin

Comparisons

French philantropy v. US philanthropy

- In the US prevails the idea that the pursuit of individual success will result in an advancement of the common good, and that the state should favour the fulfilment of private initiatives and stimulate the voluntary commitment of the citizens.

The free market and philanthropy are seen as the best means through which allocate collective resources.

- France is the heir of revolutionary and republican ideals, and solidarity is preferred to charity, recognizing that everyone belongs to a nation of equal and free human beings.

The idea that the common interest must be separated from private interests has prevailed. The state is responsible for the general interest and bound to play a primary role in the allocation of collective resources , especially when it comes to the levelling of life conditions. Nonetheless, this monopoly has been called into question since the 80s

“If you look at who is the leader of an enterprise, you’ll see in France a boss, in England a Lord, and in the US an association”.

Alexis de Tocqueville, 1840.

French philantropy v. US philanthropy

In the two countries, the State has encouraged the development of private philanthropy through quite similar instruments (tax credit or promotion of voluntary activities for young people) but in different periods (from mid-30s and especially the 60s in the US; from 60s and especially end of the 80s in France).

Main differences:

  • The status of philanthropy among the society
  • The moral justifications provided to sustain it. If in the US the “give back to the community” idea prevails, social utility and solidarity take the precedence in France.
  • The fact that it’s massive, capillary and popular still differentiates American philanthropy from French one: in the US, 6 out of 10 households makes recurring donations. In France, 1 out of 7.

Current issues

Current issues

The economic downturn and consequences on cultural organizations

Since the recent economic downturn, cultural organizations across the world have faced deep cuts in public funding

> More than 20 museums in the north of UK and the Midlands have closed since 2010. Public funding to Northern England arts and culture institutions have decreased significantly.

> According to the Arts Council England’s 2018-2022 four-year national portfolio funding, The National Theatre, the Royal Opera House, the Southbank Centre and the Royal Shakespeare Company will lose £2.5m of Arts Council England funding per year between them.. For the Southbank Centre that amounts to £826,000 a year and for the ROH, £750,000.

> Australia has cut $300 million from the cultural budget since 2013

France is an exception as in 2016 the country has announced the largest cultural budget in the country’s history amid falling

museum attendance.

> Budget of the Ministry of culture in 2019: 10 bn euros.

> New initiatives to raise money: The Heritage Lottery, launched on Sept 15th 2018 with the intention of raising millions of euro to protect 118 heritage sites across the country, has been confirmed for 2019. In the first edition, €22 M have been raised.

> These nationwide results mask certain inequalities between big and small cultural organizations as well as local and regional differences. The financing of culture by departments, regions and cities is decreasing.

http://www.culture.gouv.fr/Nous-connaitre/Decouvrir-le-ministere/Budget/Projet-de-loi-de-finances-2019

The subsequent need of private funds: Fundraising has become a necessary skill

> The lack of money and resources as well as the growing competition between cultural organizations to attract public and private funding have reinforced the professionalization of fundraising

> Fundraising is now a real profession with a set of techniques and skills (and even dedicated professional associations) that we will explore in this course

> Fundraising for arts and culture today is a challenging and increasingly complex process: cut in public funding, corporations asking for more benefits in exchange for their donations, individuals asking for more services.

Fundraising has become vital in order for cultural organization to compensate for this lost income, and to ensure an extra source of funding

The rise in philanthropic giving

> In the US, income generated from fundraising efforts continues to be critical to the financial sustainability of organizations. Combined, the donations from two sources – trustees and individuals – grew 8.8% from 2011 to 2014.

> In France, public funding to the Louvre and other large cultural institutions have decreased and private sector contributions (individuals, foundations, corporations) now account for around 8% of their budgets.

> New initiatives in France that show the growing importance of private contributions alongside public funding:

*The Ministry of Culture has launched the second edition of the "Prix mécénat" which rewards cultural projects that emerged thanks to private contributions.

*The Centre Pompidou launches an endowment fund composed of firms who will support artists in residency

*The Air and Space museum (Le Bourget) has created a "Development department" focused on fundraising funds for exhibitions and events

Data on the rise in philanthropic giving

There is a rise in philanthropic giving (individual giving, corporate sponsorship, bequest, foundations) to the arts and culture

Trump's disinterest in the Arts

Trump v. the Arts

- For the third year in a row, Trump’s proposed budget seeks to entirely eliminate the National Endowment for the Arts and the National Endowment for Humanities, since he does not consider the activities of the two agencies “to be core Federal responsibilities". The NEA is an independent agency of the US federal government that offers funding and support for the arts and cultural sector.

- Previous attempts to cut the arts and cultural agencies have met with bipartisan opposition in the Congress with both the NEA and NEH receiving a boost in funding, up to $155m for 2018 fiscal year.

https://www.nytimes.com/2018/03/23/arts/nea-and-neh-spared-in-spending-bill.html ; https://comptroller.nyc.gov/reports/culture-shock-the-importance-of-national-arts-funding-to-new-york-citys-cultural-landscape/

Philanthropy is not a neutral and consensual issue. It has a lot of detractors, but also a lot of defenders.

  • For the former, it accrues the state’s withdrawal in social issues and weakens its authority, thus reinforcing inequalities and prevents any alternative to capitalism.
  • The latter claim that it appeals to the best part of the human being: it sustains innovation, creates social bonds and contributes to a free and more responsible society.

Paradox: while in France philanthropy has a quite positive image and it’s encouraged by public authorities, more and more books calling it into question are being published in the US.

The debate over philanthropy

Book Review

Rob Reich is Professor of Political Science at Stanford University. His work primarily focuses on educational inequality and the role of philanthropy in the public sector.

He wrote Just Giving in 2018, investigating the ethical and political dimensions of philanthropy and considering how giving might better support democratic values and promote justice.

  • Big philanthropy is often a largely unaccountable exercise of power, the conversion of private assets into public influence.
  • Philanthropy might also undermine democratic values and set back aspirations of justice.
  • Philanthropy currently fails democracy in many ways, but Reich argues that it can be redeemed.
  • He proposes to limit the fiscal advantages to donations for the reduction of misery or inequalities, thus excluding the causes concerning the elite’s interests

David Callahan is founder and editor of Inside Philanthropy, a digital media site. Previously, he was a Senior Fellow at Demos, a public policy group based in New York City that he co-founded in 1999. He is also an author and lecturer.

He wrote The Givers in 2017, sounding the alarm about how philanthropists, even the best intentioned, are creating a power shift in American society that has implication on us all.

  • It is not the specific aims of givers that make Big Philanthropy problematic so much as the fact that it’s big. Philanthropy is “occupying a bigger seat at the table of power than at any time in the past century,” even as “ordinary Americans struggle to get their voices heard at all.”
  • He offers a handful of reform ideas: greater transparency, stricter tax guidelines and increased government regulation, suggesting a new “office of charitable affairs” to help on that front.

Matthew Bishop is The Economist U.S. Business Editor and New York Bureau Chief, and a sought-after expert on philanthropy.

Michael Green is an economist and writer, based in London. He is an adviser to the Big Society Network and a fellow of the Royal Society of Arts.

They wrote Philanthrocapitalism: How the Rich can Save the World in 2008, an examination of how today's leading philanthropists are revolutionizing the field, using new methods to have a vastly greater impact on the world.

  • The central thesis is that what makes philanthrocapitalists so successful is that they are ‘hyperagents’: they ‘apply to their giving the same talents, knowledge and intellectual vigor that made them rich in the first place’ and leverage their formidable wealth and ‘convening power’.
  • In a climate resistant to government spending on social causes, focused donations may be the greatest force for societal change in our world, as well as a source of political controversy.

Anand Giridharadas is an Indian writer, former foreign correspondent and columnist for The New York Times. An Aspen Institute Fellow and former McKinsey analyst, he teaches journalism at NYU.

He wrote Winners Take All in 2018, investigating how the global elite’s efforts to “change the world” preserve the status quo and obscure their role in causing the problems they later seek to resolve.

- The rich and powerful fight for equality and justice any way they can, except ways that threaten the social order and their position atop it, constantly seeking to do more good, but never less harm. - He asks hard questions: should the world’s gravest problems be solved by unelected elites rather than the public institutions they erode by lobbying and dodging taxes?

- He argues that we must create more robust and egalitarian institutions, taking on the grueling democratic work of changing the power structure from the bottom up.

Patronage called into question in France

France is still ranking in the middle of the table when it comes to philanthropy, but a spectacular development has taken place over the last decades, allowing France to partially make up for its gap with the other European countries.

In the space of 20 years, France adopts one of the most incentivising fiscal and legal systems in the world in order to foster the development of philanthropy

  • 1987, "Leotard law": First law clearly defining philanthropy and patronage, establishing fiscal advantages for donations to non-profits, opening the way to the great development of philanthropy in France.

  • 1990, "Lang law": Recognition of a special legal status and fiscal advantages for corporate foundations.

  • 2003, "Aillagon law": France introduces the highest tax credits for charity donations in the world.
  • 2008: introduction of a new, simplified legal vehicle, Fond de Dotation, close to the anglo-saxon endowment funds.

Four main issues remain:

1. A fragile « donation-culture ». Even if French are generous, donating isn’t part of the national culture yet, and the average level of trust towards the institutions is still quite low.

2. A complex legal framework. The notion of general interest, common good, social utility overlap with themselves. There are seven different legal status for a foundation, and the endowment funds.

3. A fiscal uncertainty. In order to develop, philanthropy needs fiscal stability. Many recent law propositions have menaced of reducing or remove any fiscal advantage for donations.

4. The economic stagnation. Since the 2008 economic crisis, the purchase power of French households has lowered, enterprises are often relocating their activities abroad. Philanthropy cannot thrive in the long term when the general economy is depressed.

Loi Aillagon for charity donations, 1st Aug 2003

Known as "loi Aillagon" from the name of the Culture Minister who pushed for it, the following tax credits were introduced:

CORPORATIONS: 60% tax credit, in the limit of 5 ‰ of their annual turnover. Plus the possibility of getting benefits (free tickets, private tours, logo on material etc etc) in the limit of 25% of the donation.

INDIVIDUALS: 66% tax credit, in the limit of 20% of the person's income. Contreparties limited to 65€.

Another law, passed on jan 2002 introduces a credit of up to 90% for corporation donating for the acquisition of special objects, National Treasures.

An extraordinary rise in philanthropic giving

Since the introduction of such as favourable law, donations in France have literally exploded.

A fiscal advantage more and more criticized

For each € donated, the State forgoes €0,60 to €0,66 of taxes --> Tax expenditure

This fiscal advantage has been increasingly criticized for being too expensive and an instrument of fiscal optimisation, giving to wealthy taxpayers and enterprises the power of allocating up to 66% of their taxes.

In 2016, for example, the biggest 36 enterprises represented 3/4 of government's tax expenditure for donations.

The most clamourous case was the Fondation Louis Vuitton, inaugurated in 2014. Its construction has costed €790 M, of which €518 M fiscally deducted.

The French fiscal court, Cour des Comptes, in its 2018 report has criticized the absence of control on tax expenditure and the efficiency of this powerful philanthropic instrument, recommending to better supervise it.

Recent developments

In order to avoid abuses and to reduce tax expenditure, the Government has announced the intention of reducing fiscal advantage from 60% to 40% of the donation, if this last exceeds €2 M. This measure would be introduced in 2021.

Donations to associations fighting poverty are excluded.

Forecast: €80 M annual cut in tax expenditures, but 2020 Budget won't be voted before next November.

This cut affects €400 M of donations that can potentially be withdrawn from 2021. How will the State compensate for such loss?

The business models

- The income earned from sales of tickets, merchandise and services covers 40 to 60% of the operating expenses of a typical cultural organizations in the US ( = earned income).

- Arts and cultural organizations depend on voluntary contributions to meet their budgets.

- In the US, income generated from fundraising efforts contributes largely to the financial sustainability of organizations. The average cultural organization across the country relies on unrestricted donations to support 57% of its annual expenses.

Business models

Earned income : 70%

Government funding : 30%

Source: http://www.chateauversailles.fr/sites/default/files/chateau-de-versailles-rapport-d-activite-2018.pdf

Earned income : 59%

Government funding : 41%

Source: https://www.louvre.fr/sites/default/files/medias/medias_fichiers/fichiers/pdf/louvre-rapport-d-activites-2018.pdf

Source: https://www.musee-orsay.fr/fileadmin/mediatheque/integration_MO/PDF/Rapports_activ/RAMO2018.pdf

Source: https://www.metmuseum.org/-/media/files/about-the-met/annual-reports/2017-2018/annual-report-2017-18.pdf

Sources of income: Opéra de Paris (FY 2017)

Earned income : 55%

Government funding : 45%

Source: https://www.operadeparis.fr/lopera-de-paris/rapport-annuel

Earned income : 31%

Government funding : 69%

Source: https://www.comedie-francaise.fr/fr/budgets-et-statuts

Source: https://www.rsc.org.uk/about-us/finance-and-funding

NOTE: Drawing down the corpus of the endowment to pay debts or operating expenses is known as "invading" or "endowment invasion" and sometimes requires state approval.

Source: file:///C:/Users/User/Downloads/file_32_10834.pdf

Source : https://www.hkballet.com/uploads/docs/5bd6dc4779c2c1.pdf

Average Sources of Revenue & Support in museums (US, 2018)

SOURCE: https://s3.amazonaws.com/aamd.org/s3fs-public/document/Art%20Museums%20by%20the%20Numbers%202018.pdf

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