In 2012, the Canada Revenue Agency reported that charitable donations by Canadians reached $8.3 billion. The banks’ report suggests one of the most influential forces in creating change in the charitable sector is the participation of women – as volunteers, leaders, board members and most importantly as donors.
Canadian women give a larger share of their assets to charity than men. TD’s study examines the roles, attitudes and expectations of women involved in charitable work, across all causes.
4% of female tax filers have the resources to make a major charitable gift ( 300,000 to 350,000 women )
A majority of Cdn households holding investable assets greater than $500,000 include at least one woman
Charitable giving by women has risen from $1.1 billion in 2002 to $3 billion in 2012
The study suggests women are more likely to volunteer and donate to a charity than men
Women and Wealth Women emphasize the importance of creating a long term relationship with a charitable organization, and the study suggests the outlook for generosity of women donors is positive. The study contains detailed data on the profile of ‘women and wealth’ and is a quick, informative read. For many women, a prime motivator to charitable giving is the realization that they and their family have a level of financial security that enables them to want to support a particular cause or charity. Interestingly, the tax considerations of charitable giving are not top of mind when gifting decisions are being made by women.
The study suggests that charitable organizations have the opportunity to raise their profile with women in their communities, and to understand how best to structure information sharing, communications in a way that responds to the motivators for women that are described in the study.
Dialogue on Capitalization
October 08, 2014
South of the border, a US based organization Grantmakers in the Arts undertook over the last four years research on the important topic of the role of capital in an arts organization. This can summarily be described as “having the capital to execute strategy” or perhaps a little more elegantly, “Capitalization is the accumulation and application of resources in support of the achievement of an organization’s mission and goals over time. A well-capitalized organization has the ability to access the cash necessary to cover its short and long term obligations, to weather downturns in its external operating environment, and to take advantage of opportunities to innovate”.
As we all remember, the recession and market decline in 2008 resulted in significant challenges and financial stresses for arts organizations. The original research work undertook to build knowledge about funding practices and how to achieve financial sustainability. The research and reports in great detail are available on the Grantmakers website.
Stimulating Discussion In 2014, the organization surveyed arts organizations to see how the fruits of the research are being put to work by arts and cultural organizations. If nothing else, the research stimulated many organizations to have a conversation about their overall financial strategy – how to strategically secure and use resources to do their work over time. Key elements of capitalization are beginning to find their way into board/staff discussions, such as:
• The different kinds of capital required by an organization • Distinguishing between regular revenue sources ( fund current operations/programs ) and capital ( funds that provide for liquidity, adaptability and durability of the organization ) • Importance of building liquidity for any organization and to create it by saving • Understanding how the behavior of funders can impact the organization’s finances
Good Business Practice A key outcome of the original research, which is increasingly accepted by funders, was that good capitalization of an organization begins with the generation of operating surpluses to be used as capital the organization may access to successfully achieve their mission/vision. Past views that an organization generating an operating surplus does not require funding is in decline – the understanding has grown with funders and Boards that achieving surpluses and cash reserves are a critical part of good business practices. Capital should be viewed as a strategic asset that enables an arts and culture organization to take a risk, adapt its mission/vision and change to be financially viable over the long term.
Good Capital Management Change is occurring to improve the capitalization of arts organizations. The report does say that some Boards are still reluctant to provide change capital or other forms of unrestricted funding, continuing an older view that an arts and culture organization should operate with very low overhead and run at a deficit. Shifting to good capital management practices ( e.g. establishing reserves ) involves all dimensions of an organization – education of board members as well as arts management staff is a continuing need. The work to better understand the role of capitalization will continue. The work of Grantmakers in the Arts is important as it frames the issues, opportunities and possible solutions in a way that is easily understood.
The Value of Unrestricted Funds
July 01, 2014
Imagine this, a man walks into a bakery and says to the baker, “I need a gluten free cake, but I can only pay you 20% of the cost, and you can only spend my money on eggs, but not butter and not on electricity for the oven; you have to find someone else to pay for the oven’s electricity!” Nonprofit funding: Ordering a Cake and Restricting it Too asks the question what it would be like if a bakery operated with the same funding restrictions as not for profit organizations.
Multiple Revenue Sources Arts organizations, like most not for profits, require multiple revenue sources: government operating and project grants, public and private foundation grants, corporate donations and sponsorships, individual donations, gifts, legacies as well as box office revenues. Applying for a grant can be a time-consuming and a rigorous process. Grants are typically annual, and deadlines and grant applications will vary depending on the funder. Fundraising donations, which in addition to grants are the lifeline of an organization’s financial wellbeing, may come with stipulations where the donor attaches terms to their gift.
Capital and endowment fund income is a welcome addition to an organization’s revenue sources. Endowment income is unrestricted - the management and board of the organization make the decision where best to apply this resource. Endowment income is stable, reliable and not subject to an application process, filing deadlines or donor restrictions.
Ontario Arts Foundation Endowed Funds The Ontario Arts Foundation manages endowment funds established under both the provincial Arts Endowment Fund and the federal Canada Cultural Investment Fund – Endowment Incentives Component. Arts organizations benefit from matching grants where privately raised funds can be doubled or even tripled, greatly increasing the value of the fund. Organizations can breathe easy knowing they will receive an annual payout of unrestricted income, that they need not apply for or is restricted by donor’s wishes.
One of the OAF’s fund holders recently told us, “Our struggle is to find sufficient, sustainable operating revenue, while keeping our fees affordable to the communities we serve. The endowment fund income is critical and helps us make up the shortfall in our operating costs, particularly at a time of year when cash flow is stretched.”
At a fundraising event, don’t say that 100% of your donation goes to programming, rather say that your donation will be used to support the organization and its work
Publicly recognize funders who support general operating funds – “Without unrestricted funds, our organization cannot run all of our programs – thanks to this funder, we are able to deliver our mission”
Rather than use words like ‘overhead’ or ‘administrative’, which seem unattractive to some funders, use words like ‘core support’ or ‘critical infrastructure’
Create a line item for reserve funds in your organizations’ operating budget. The presence of some form of reserve protects your organization during times when revenue sources may not be stable
Organizations recognize the importance of revenue from multiple sources, and know that donors may have a particular area of interest. However, don’t overlook the value of a stream of unrestricted revenue, which can be critical to an organization’s ability to adapt and deploy resources wisely for long-term sustainability.