Recycling Capital of Endowments
May 13, 2013
There is no shortage of material to read about the challenge of securing arts funding at a time when government sources are static or facing cutbacks. A recent article in the Toronto Globe and Mail (April 20, 2013) references this in the context of arts organizations winding up, which can be one way of ‘freeing resources’ for younger performing artists.
As I read the article, another reality came to mind – when an arts organization or artistic director decides it is time to close up shop or move on, how is their artistic legacy preserved? We see few solutions or resources allocated to for instance, preserving the choreography and staging of a ballet or archiving music composition. As senior artists or organizations make the decision to retire or are in transition, it is important that resources preserving the best of their art form as a legacy for future artists/arts organizations be part of the funding equation.
We don’t have a perfect solution today to address the question of legacy, but one way the Ontario Arts Foundation is able to continue supporting arts organizations is by ‘recycling capital’. Within the fine print of endowment agreements, is a provision that has turned out to be a quiet blessing to arts groups in Ontario. All endowments contain a provision which states that if an arts organization winds up, or loses its charitable status, the Foundation Board has the responsibility to re-allocate the capital to another arts organization. The endowment capital is not returned to the organization as it winds up, or to the original donors. The capital must continue to be used to support the arts in Ontario through another arts organization. Our Board identifies an arts organization whose arts mission/discipline is comparable to that of the organization winding up. In other words, private capital and government matching dollars (Arts Endowment Fund program) raised to support ‘dance’, will continue to support ‘dance’. The endowment may be added to an existing organizations’ endowment, or we may invite a new arts organization to create an endowment and receive immediate funding. We try, as much as possible, to keep the capital within the same geography/community where private donations were originally raised.
Since the OAF was established in 1991, we have re-cycled over $850,000, money which continues to be invested on behalf of arts organizations across Ontario. The income arising from the endowments is unrestricted and has tangible value to an arts organization.
At a time when arts organizations struggle to secure funding, the security of long term unrestricted annual income becomes quite attractive. Without the burden of lengthy, time consuming annual grant applications, arts organizations gain time to dedicate to their artistic endeavors. This is appealing to young arts groups trying to build a sustainable operation, and at the same time offers comfort to donors, who see their donations continuing to serve their initial purpose.
As the Globe article concludes, nobody thinks there is one solution for all companies. Endowments held by the Foundation are one quiet way that capital is kept at work, supporting Ontario arts organizations as they grow, mature and transition over the long term.