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May 27, 2024 Focus: Arts & Culture

Long-term, sustainable giving is key to arts and culture funding

Amber Tucker

Arts groups are often synonymous with their marquee events. But theater performances, concerts, gallery shows and museum galas aren’t just showcases for hard work.

They are an opportunity for the public to donate while feeling boosted by the experience that was created by that group.

However, art doesn’t exist in a vacuum, and neither does arts fundraising. Whether it’s fear of donor fatigue or concern with complex accounting designations, long-term fundraising can be intimidating.

But the nonprofits with the strongest balance sheets do this well. As the saying goes, it’s free to ask, and could be expensive not to.

Show donor impact to inspire sustainable giving

Smaller donations on a recurring basis can provide a stable baseline of fundraising, even if it’s a fraction of the annual total. Predictability of recurring revenue allows for the incorporation of those future donations into the strategic plan, and donors often end up contributing more over time than they would with a-la-carte donations.

Having a great answer to the question, “How is my money enhancing what you already offer?” can help unlock this type of giving. Demonstrating that, for example, 90 cents of every dollar is directly funding programs helps people connect to the mission on a personal level.

Engaging individual donors in long-term strategic plans can also inspire support. Seeing what they’ll enjoy in the coming years means donors anticipate a joyful return on investment and feel a sense of accomplishment at being part of the process.

Consider using apps that show real-time results. These tools not only make giving easy, but also create a sense of excitement when donations come in, similar to an old-school telethon.

Digital campaigning can supplement major events like fundraising galas to help even cash flow throughout the year.

Help fans identify with your work

Memberships are a great way to create recurring revenue while helping donors feel deeply connected over time. The programs that work best offer incentives such as members-only events, seating or the ability to reschedule tickets without change fees.

Offer group and gift memberships at multiple tiers. Having a fairly accessible tier from a cost standpoint can onboard new members who may increase their involvement over time.

Meanwhile, having a high-end tier will give your strongest supporters a structured way to ensure they feel like VIPs while incentivizing larger donations.

A member’s association with the group can even reach a legacy level. Asking patrons to add an organization to their will and trust can be a beautiful way to ensure the mission endures.

Arts lovers want their passions to continue, and after-life gifts support the arts in an organic and financially responsible manner.

Offering memorial seats, bricks or dedications in distributed literature is a simple and touching way to intertwine a patron’s legacy with that of the group.

Find new revenue streams

While many groups are laser-focused on their mission, they often overlook ancillary revenue streams to increase stability in the long term.

If a group operates out of a historic building, consider renting it out for gatherings. Provide unique experiences outside of regular programming, such as off-site enrichment events. These can become additional income sources.

While there are major advantages to diversifying revenue streams, it can complicate the tax picture. Revenue that comes in for the direct mission — contributions, tickets, memberships — is not taxable, but indirect revenue like ad sales or rental fees potentially is taxable as “unrelated business income,” even if it’s ultimately being allocated for the mission.

For example, selling merchandise with a logo is direct-to-mission, but food and beverage at an event may not be.

By diversifying fundraising strategies and helping community members forge a deeper connection, arts and culture nonprofits can create sustainable funding to support their vital work.

Amber Tucker is a CPA and partner at Connecticut accounting and advisory firm Fiondella, Milone & LaSaracina LLP (FML CPAs) with offices in Glastonbury, Enfield, New Haven, Stafford Springs and Stamford.

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