Philanthropy in the Arts Symphony Services International Orchestras Summit November 2011

Philanthropy in the Arts

Symphony Services International Orchestras Summit

November 2011

“Apart from the ballot box, philanthropy presents the one opportunity the individual has to express [a] meaningful choice over the direction in which our society will progress.”

George Kirstein

Philanthropy in Context

Growth in individual giving

1992-3 2001-2 2007-8 2008-9

Total gifts claimed $439m $868m $2.35bn $2.09bn

Average gift $140 $239 $523.10 $450.05

% taxpayers claiming gift deductions

33.70% 35% 35.47%

Source: Giving Australia, 2005 and Current Issues Information Sheet 2011/12, Australian Centre of Philanthropy and Nonprofit Studies, QUT

There has been a huge rise in philanthropic donations over the past 2 decades.

In 2008-9 growth was checked by the global financial crisis. “For the first time in well over a decade the number of taxpayers claiming tax-deductible donations increased, but the amount of these donations decreased.”

Giving to the Arts in AustraliaGiving Australia recorded an increase in giving to the arts and culture between 1997 and 2004 although it represented the smallest percentage of total giving for that period.

Sector % of total value 1997 2004 Arts or cultural associations Community or welfare services Education Environmental or animal welfare groups Health (inc medical research) Sporting & recreational groups Religious institutions International aid Other

0.7 15.8 15.1 2.2

11.9 8.1

34.1 10.3 1.8

2.3 12.8 6.6 4.8

14.2 3.7

36.1 13.3 6.2

Total 100 100 Total value $3 billion $5.7 billion

Source: Giving Australia, 2005

Source: AMPAG Tracking changes in corporate sponsorship and private donations 2011

However as the Major Performing Arts companies have invested in building relationships and fundraising over the past decade, they have begun to reap the rewards.

Events (net) -$2.6m / 5%

Private giving -$25.2m / 46%

Sponsorships -$26.8m / 49%

Major performing arts companies sources of revenue 2010

Today private giving contributes almost as much as corporate sponsorship to MPAB companies. In some cases, it has already overtaken corporate support.

This is no coincidence.

Source: AMPAG Tracking changes in corporate sponsorship and private donations 2011

Source: J B Were Philanthropic Services, Australian Tax Office

The rise of the Private Ancillary Fund

0

100

200

300

400

500

600

700

800

900

2001 2002 2003 2004 2005 2006 2007 2008

Accumulated PAFs New PAFs

Number of Approved PAFs

:

0

100

200

300

400

500

600

700

800

900

2001 2002 2003 2004 2005 2006 2007 2008

Accumulated PAFs New PAFs

Number of Approved PAFs

:

Introduced by Commonwealth Government in 2001 as Prescribed Private Funds (re-defined as Private Ancillary Funds in 2009), these tax vehicles have proved attractive to high net worth individuals.

By 31 October 2009 there were 769 PPFs in total. 170 were approved in 2007 alone.

Source: J B Were Philanthropic Services, Australian Tax Office

The arts fares particularly well from this group with a total of $63.2m distributed to Cultural Organisations between 2002-2008 (second only to Welfare).

In 2007-8 Cultural Organisations represented the highest percentage of total distributions.

2007-2008 PAF Distributions

Cultural Organisations 33%

Other 17%

International Affairs 5%

Health 5%

Environment 6%

Welfare 26%

Research 1%

Education 7%

What conclusions can we draw?

• There has been huge growth in giving by individuals to all causes over the last two decades

• Individuals give substantially more than corporates

• There is a relationship between income / wealth and giving

• The arts and culture are popular among potential major donor groups

• Investment in building relationships works!

What’s next?

1. We need to think harder about ourselves as a cause

2. We must make development a whole-of-organisation commitment

3. We must work at both ends of the pyramid:

• At the base to build the pipeline

• At the top to generate major gifts

4. We absolutely must be better at major donor solicitation

5. Then we can think about endowment

It takes a village to raise…a major gift


November 2011

Gift typesGift types

Gift type When Relative size Fundraising methods

Emphasis: Preparing vs Asking

Fundraising program type

Orientation

Regular

Calendar

1X

Speculative (focus on asking for gifts by $)

Annual appeal (DM/ telethon)

Project

Special

Needs of organisation

5X to 10X

Project/ Campaign (requires prior involvement)

Major gift or capital campaign

Project

Ultimate

Life circumstances of donor

1,000X to 10,000X

Nurturing (requires willingness to commit/ invest)

Ongoing Major Gift Program

Prospect

Ref: Pearl Veenema

Questions a major donor asks himself

• Do I have a compelling, driving belief that this organisation is singularly important?

• Is it well run or will they squander my money?• Who’s involved that I know and/or respect?• What, precisely, do they want money for?• What difference will my gift make?

Critical Success Factors

Vision and case for support

A concise, compelling vision and case for support which will enthuse and excite potential donors A convincing organisational strategy

Strong internal leadership

Strong internal leadership capable of inspiring, responding to and managing change, and of interacting credibly with both internal and external constituencies

Committed external leadership

Strong external leadership – volunteers and ambassadors who provide external credibility and access to new networks

Prospects & programs Ability to identify a pool or network or potential sponsors/donors who share the organisation’s aims and vision and have a capacity to give Mechanisms to engage and involve them in the life of the organisation and to reward them for their support and involvement

Skills & resources Professional fundraising expertise and adequate resources focused on maximum return on investment A cogent and accessible set of data on current and prospective donor communities Effective performance measures

Group 1Do I have a compelling, driving belief that this organisation is singularly important?• How can we demonstrate to this donor that we matter and

we have a unique contribution to make?

• What role can the following roles and functions play?• Board• CEO• Marketing/Communications• Artists• Other donors

• How can we demonstrate to this donor that we will spend their money wisely and achieve our (and their) objectives?


Group 2Is it well run or will they squander my money?

• How can we create or capitalise on a peer group network that will convince this donor?


Group 3Who’s involved that I know and/or respect?

• How do we go about developing and articulating the case for support?


Group 4What, precisely, do they want money for?

• How do we go about developing the right ask for this prospect? What should they expect in return?


Group 5What impact will my gift make?

It takes a village to raise…a major gift


November 2011

Leadership Roles & Responsibilities

The CEO, Executives and other organisational leaders should commit the necessary time, energy

and resources to create an environment where philanthropy can flourish.

Leadership Roles & Responsibilities

Executive

• Secure the active support of all departments

• Set targets, projects and resources

• Engage the Board• Engage the involvement of

external senior ‘volunteers’

Board

• Set the tone and articulate the vision

• Raise donors’ sights and encourage ‘stretch’ giving

• Enlist senior volunteers and donors by example

• Guarantee effective stewardship of donations

CEO/General Manager

• Public face of philanthropy• Understand and articulate the impact of philanthropy• Inspire the Board, volunteers and staff• Ensure unity among staff• Make the ask• Close negotiations

Artistic Director

• Drive the vision and case for support• Make time available to spend with prospects and

donors• Inspire volunteers and donors• Feed back prospect information to Development

team

Philanthropy Director

• Devise, articulate and implement strategy• Manage the organisation and performance of

development/fundraising process• Educate Executive and Board • Manage volunteers• Ask• Negotiate

Documents

Philanthropy in the Arts Symphony Services International Orchestras Summit November 2011