The Long View

Donate or invest?

The difference in attitude is important

By Jim Sparrow
I have always disliked calling cultural nonprofits charities, a definition tied to the tax laws that give the same benefits to people who donate to arts and cultural nonprofits as to human services charities. To me the word “charity” does not fit arts and cultural groups as well as it fits the human services nonprofits. Charity is a noble gesture of human service and empathy, and I think a far more defining characteristic of donating to arts and cultural organizations is in the investment aspect of supporting a cultural nonprofit and the benefits it brings to society.

Following that idea logically, I have begun begin to question whether the current “one size fits all” non-profit business model is in the best interest of various organizations within the non-profit sector and their supporters, especially arts nonprofits.

I am not suggesting that arts groups should relinquish their 501(c)3 status and wade into a purely profit-based, supply-and-demand model. But I am suggesting that the current model hampers the ability of an arts group to discover a different relationship with its own mission.

I admit that some of the challenge belongs to the arts groups themselves. They are institutions and have an institutional mindset built around delivery of culture as their product. The larger product-producing world now moves very quickly, however, and institutions like orchestras, theatres, ballets and museums need to continually look at how much effort and resources they are spending on sustaining the institution versus how much are allocated for the mission.

I have become convinced arts and culture groups need to refresh the idea of donating and their relationship with their donors. Making the attitudinal and actual change from donation to investment is the challenge and the opportunity.

I am intrigued with the possibilities of combining aspects of the nonprofit and for-profit models, which could be particularly beneficial for cultural nonprofits because they have products to offer. If the product line can include greater percentages of new creative experiences and art forms as well as what has been the traditional product line, the opportunity to increase interest and investment grows.

How to do that is a big question, given that creating new products — whether cultural or commercial — is expensive and risky. I go back to the obvious need for the institutional model being redesigned to be leaner, facile and less rigid, but just as important is getting more investment from those interested.

So it seems reasonable to ask if we can take existing simple micro-capital strategies from outside the cultural economy and turn them into the next KIVA (a very successful social entrepreneurial investment tool for changing the world) for cultural development. We need to encourage both the small creative industry entrepreneur and the traditional arts organization.

These investment opportunities have multiple benefits. Think of them the same way capital invested in a commercial or industrial enterprise is used by the enterprise and then again and again by employees, vendors and customers. Arts and cultural investment also creates cultural and civic benefits improving the energy and diversity of our cities.

Models exist. I have looked at both the LC3 and the Power2Give models, which you can research online. I envision similar types of investment concepts for our community, plus forgivable loans for downtown development, creative investment grants for new art, activity and diverse expression.

Individuals’ investments make things in the community happen. I believe there is a way to achieve arts and cultural investment without losing the generosity of intent. We will keep working on this line of thinking. And when we have succeeded, the return on investment will be enormous.

Jim Sparrow

Jim Sparrow is executive director of Arts United, the third-oldest united arts fund in the United States and the second largest arts council in Indiana.

Posted: Thu, 08/30/2012 - 10:25 am
Last updated: Mon, 10/29/2012 - 1:44 pm