NCAR releases a report on fundraising trends in the arts
Report shows overall growth in unrestricted contributions, which outpaced both growth in expenses and inflation
SMU’s National Center for Arts Research (NCAR) today released its most comprehensive report to date on national fundraising trends in the arts and cultural sector, the latest in the Center’s series of evidence-based insights on the health of the industry. The NCAR Fundraising Report, available online, is the only report to examine fundraising by sector, organization size and geographic location. It is based on 2014 data provided by over 4,200 organizations across 11 arts disciplines, with trends for a subset of over 2,700 organizations over the four-year period 2011-2014. The report shows that over this period, growth in unrestricted contributed revenue – meaning contributions that are provided without any restrictions on how the funds are to be spent – slightly outpaced growth in expenses, suggesting that over time, arts organizations have built deep, committed relationships with their supporters.
NCAR regularly publishes its findings on important trends and issues in the arts. In addition to white papers and its annual Arts Vibrancy Index, NCAR recently launched the KIPI Dashboard, a free online diagnostic tool that allows arts organizations to see how they are performing in nine finance and operations categories relative to organizations like theirs nationally. The Dashboard also allows organizations to model how performance would have to change in order to increase their score, and provides links to resources that can help improve organizations’ health. NCAR’s offerings provide data-driven findings and nationwide benchmarks to help inform arts practitioners, board members, policymakers and researchers as they set strategy, make day-to-day decisions and gain a better understanding of the field.
NCAR’s latest report takes a close look at the various dimensions of fundraising, examining the unrestricted contributed revenue index (which analyzes contributions in relation to expenses), the return on fundraising investment (examining the revenue generated for every dollar spent on fundraising activities), as well as contributions by five major sources – trustees, individuals, corporations, foundations, and government – relative to expenses. The report also examines how certain organizational and community characteristics impact an institution’s ability to attract public and private dollars.
“As the latest addition to NCAR’s library of resources for the field, this report tracks fundraising trends and helps arts organizations understand their performance in relation to their peers around the country as well as other organizations in similar communities,” said Dr. Zannie Voss, director of NCAR and chair and professor of arts management and arts entrepreneurship in SMU’s Meadows School of the Arts and Cox School of Business. “By providing evidence-based insights and field-wide benchmarks, we hope that this report becomes an effective management tool that helps organizations set goals, make strategic decisions and contextualize their performance with key stakeholders. For example, our analysis has shown that as organizations invest more in fundraising staff, they achieve a higher return on their fundraising efforts, indicating that a high investment in personnel is key for successful relationship cultivation.”
Highlights of the NCAR Fundraising Report include:
- Income generated from fundraising efforts continues to be critical to the financial sustainability of organizations. The average organization across the country relies on unrestricted donations to support 57% of its annual expenses.
- Overall, fundraisers are becoming increasingly efficient and effective: organizations are spending more on fundraising, including personnel compensation; but, as a result, they are attracting higher returns for the additional investment.
- In markets with more state and federal grants and dollars overall, unrestricted donations also tend to be higher for each individual organization, with a higher level of support from foundations, trustees and other individuals. In these markets, organizations tend to spend less on fundraising.
- For the average organization across the country, individuals (non-trustees) provide the most funding to the arts on an annual basis while corporations provide the least.
- Combined, the donations from two sources – trustees and individuals – grew 8.8% from 2011 to 2014. By comparison, revenue earned from paid subscriptions and memberships grew 3.3%. As a result, trustee/individual donations are covering slightly more expenses (1.1% more), while revenue from subscribers and members is covering 3.4% less.
- In relation to expenses, each of the five major sources of funds varied less than one percentage point annually and over time, signaling reliability of relationships and consistent commitment.
- Only government support was lower in 2014 than in 2011. This was true both overall and for average support from each of the three levels of government: local, state and federal. Annually, the average organization’s local funding is three times higher than that of its state funding, which is slightly more than the average amount it receives from federal agencies. As with most findings, this varies somewhat by arts sector and by size.
For more information and a summary on findings by organizational size, type and sector, please download the full PDF press release below.