Is our funding system still fit for purpose?

As funding for the arts becomes ever more challenging, it seems that we require more and more from our arts leaders. They need to be excellent artistic implementers and curators as well as stellar politicians, fundraisers, marketers and entrepreneurs. Demonstrating an impressive breadth of skills also goes for our arts fundraisers. It is no longer sufficient to have a grounding in trusts, major gifts and corporates – fundraisers also need financial acumen and an understanding of business strategies and social investment. This sort of change management is often led by necessity. With a much changed economy, our arts organisations are having to adapt whether they want to or not. However, for funders that might be well-established with sizeable endowments, there is no comparable burning platform for change. And herein lies the disconnect – if organisations are changing quicker than our funders, there’s a risk that our funding system isn’t fit for purpose.

It seems to be an unspoken rule that 100% of grants must succeed, but this needs to change or we will simply see a protection of the status quo that rewards the same old, same old

Two recent reports have thrown an unaccustomed spotlight on foundations. The first Supporting Social Change: A New Funding Ecology, a report commissioned by the Big Lottery Fund and the Calouste Gulbenkian Foundation, argues that, by failing to collaborate effectively, independent funders are inhibiting the systemic change of social support in the UK. This goes against the very current message from funders to organisations – that collaboration and partnership are essential for organisations to show added value in the sector.

The second, a blog by Jake Hayman, a trustee of the Lankelly Chase Foundation, asserted that foundations are turning charities into perpetual beggars by providing insufficient or short-term funding. Hayman also looks at the unequal power between foundations and grant seekers and suggests that it is only through true partnership and collaborating on a joint vision that things will change.

Undoubtedly there is something in this, and there are several consistent themes that emerge in relation to how arts organisations would like funders to align themselves more intuitively to the changing needs of organisations:

1. A breakdown of the status quo: While funders might nod vigorously when they hear word of a new business model or innovation, their behavior in subsequent grant-making often suggests they’re the last place to go with a bold or risky idea. If you look at this from the grant-maker’s point of view, it’s understandable. Why would a funder make a high-risk grant that might flop, especially when public funds are at stake? It seems to be an unspoken rule that 100% of grants must succeed, but this needs to change or we will simply see a protection of the status quo that rewards the same old, same old.
2. No-risk call for funding: Wouldn’t it be wonderful if our arts funders put out a ‘no-risk’ call to organisations wanting to explore radical new business models, where the best advice, funding and support (including from outside the establishment) could be given to those needing to change? Funding could be ring-fenced for establishing new ideas and taking a fresh look at place, partnerships and positioning to really make sure that our organisations are fit for the future. Surely such transparent innovation might lead to quite a different picture of grant funding for 2018–21? And let’s not forget that funding innovation does not happen in a silo – it is a core part of strategic philanthropy.
3. Rethinking risk: The word risk derives from the early Italian ‘risicare’ meaning to dare. In this sense risk is a choice not a destiny. If funders had a different and more long-term attitude to risk, we would surely see better active engagement in the process of sourcing, selecting, supporting, measuring and scaling for long-term grants. The Rockefeller Foundation, for example, uses other grantees to help with scanning the environment for best practice, providing additional funding to a group of ‘searchlight partners’ or advisors who report back from the front lines about the latest trends and opportunities.
4. Adoption of design thinking: Often funders are asking organisations to plan for a future in great depth, which in itself means that a programme’s design is based on the constraints of existing models. This inhibits innovation by the very nature of the process, as it focuses an organisation on execution rather than the key question of “Why are we doing this?” All organisations need to seek new input to redefine the challenge that they are attempting to solve. The Knight Foundation has a brilliant model with grants of $35k or less, innovators are given six months to research, test and iterate before building an entire project and if successful projects emerge, the foundation can help them.
5. Invest in people: Funders, such as Ashoka and the Open Society Foundations, use fellowship programmes to find breakthroughs. In much the same way as the enterprise funders, they invest in innovative and entrepreneurial leaders, rather than in specific ideas, and provide those leaders with relatively unrestricted support to pursue their interests. As we are asking so much of our arts leaders in asking them to adapt and change, how great would it be for funders to reward those that can really inform sector change? This in itself would give huge confidence for others to follow.

There is some great practice from our arts funders but it would be fantastic to see a more aligned programme of change from both funders and arts organisations alike. So I wonder if it is time to create a burning platform for funders as well as for arts organisations. Some urgency and a genuine partnership model would surely help to create real change and the sort of sustainable and resilient arts sector that we all want to see.

Michelle Wright is the Founder and CEO of fundraising and development enterprise Cause4 and is Programme Director for Arts Fundraising and Philanthropy.
artsfundraising.org.uk

This article is part of a series of articles on the theme Fundraising for the future, sponsored and contributed by Arts Fundraising and Philanthropy.

Arts Fundraising and Philanthropy has announced plans for 2015/16 including essential fundraising skills one-day training courses, trustee leadership half-day courses, bespoke/tailored training, and a number of one-day courses being offered on demand.