Diversification in Arts Funding: Calling to Question our Basic Assumption

arts funding diversification - roll of the dice

A large part of learning development over the past couple of years was an emphasis on “Diversify, Diversify, Diversify!” Even when I recently interviewed for a devo job, my interviewer’s main development goal moving forward was to diversity sources of contributed revenue. But what if this basic assumption is just that – an assumption?

This week I came across an article on Nonprofit Quarterly which challenges this very basic tenet of the development world. Summary: Whether you should diversify seems to depend on the size and type of your organization, but more importantly: the niche you fill in the world. For example, a funder may only grant to $2.5 million orgs that serve three-legged cats. If your org falls into that category (and you are likely the only org that falls into that category), you will receive the funding practically by default. Wouldn’t that be nice? And if that is the only funding you need – why bother trying to get more?

My devo teacher, Sydney, will probably come after me for saying this…but I do not see any reason to diversify just for the sake of diversifying. If you have a team member who can go out and secure every dollar you need for the budget purely by charming individual donors into parting with their hard-earned cash – and this team member is not so great at writing grants – why put them through the misery when they can more efficiently raise money elsewhere? I was told over and over in grad school to “play with your strengths.” Presumably, it is a waste of time to try to improve a weakness. So if you have the rare staff member who doesn’t have a weakness, by all means Diversify! Otherwise, let your staff efficiently raise the money you need by playing to their strengths, then send them on a much-needed vacation so they don’t get burnt-out.

Some of you (Sydney) may argue with me, pointing out that if Donor #1, who provides 99% of the annual budget, suddenly dies (or maybe not so suddenly), your org will never recover. But here’s a thought – start a planned giving campaign and get Mr. #1 to set up a charitable trust for your org, supporting you for a certain number of years after his death or even, dare I say, indefinitely? Imagine the budget where you could reliably count on that income! You will actually be able to budget year to year on what you know will happen (as opposed to what you expect or hope to happen up until you have a check in hand)! And it is much easier to get the same donors to say yes in a new way than to get new funders to say yes at all. 

There are plenty of reasons to create more work for ourselves – diversifying funding sources can be useful, and should certainly be tackled by organizations with the capacity to do so. (Capacity meaning board and staff with the right skills, connections, time, and magical touch with funders.) But it’s also important to take advantage of your org’s position in the funding environment. So….if anyone has $2.5 mil and a few three-legged cats, give me a call.

——- And Just for Fun ——–

Another entertaining argument against diversification of funding through grants is made over at NWB: a jolly discussion of how funders sometimes make it impossible to be funded (in a meaningful way).

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