The Need for Patient Capital in the Arts has Implications for All Nonprofits and Foundations

As the Nonprofit Financial Commons pointed out in its webinar on the nonprofit business model based on earned income, building and rebuilding sustainable nonprofit businesses is not for the faint of heart or seekers of immediate profit. This report, In Search of the Magic Bullet: Results from the Building Audiences for Sustainability Initiative, reinforces that message with vividly drawn examples and a set of common lessons.

The research focuses on audience building and its relationship to finances. It comes from Francie Ostrander of the University of Texas at Austin, who’s always thorough and insightful, with support from the Wallace Foundation. The venue for the research was a funding cohort, the Wallace Foundation’s Building Audiences for Sustainability (BAS):

“BAS awarded nearly $41 million in grants between 2015 and 2019 to explore audience-building challenges and the connection between building audiences and financial sustainability. The Foundation awarded grants to 25 large nonprofit performing arts organizations from different artistic disciplines to try to engage new audiences while retaining existing ones and to see whether audience-building efforts contribute to organizations’ financial health.”

Ostrander’s body of reality-based research often counters what’s considered “common knowledge,” and she does not disappoint in this case, challenging the short-term financial expectations funders sometimes hold for their investments. Audience building, she points out, aims to engage those who may not have had a prior close relationship with the arts group; doing so may take an extended period of reciprocal relationship building toward a mutually agreed-upon outcome. Such outcomes may be quite different from one community to another and one institution to another, so the idea of building toward a single outcome of financial sustainability within a diverse initiative is perhaps destined for failure from the outset.

As she writes in the summary, “As much as we wish it were otherwise, the reader should be forewarned that neither the initiative nor this study yielded easy solutions to the problems. As the leader of one BAS organization said, ‘We were, in good faith, hoping to find the magic bullet…. I don’t think we or anyone else has found it.’ Still, the projects and their results do provide a wealth of insights about some approaches that proved effective—and equally important, about those that proved not to be. Furthermore, our analyses highlight that expanding audiences may happen, but not necessarily on the organization’s original terms. An overarching message to emerge from our findings: If organizations want to change audience engagement with them, then organizations need to be open to changing themselves.”

And perhaps we could extend that to the need for funders to be open to changing the most super-rational of their expectations in such a turbulent but critical field. The report’s findings about the audience-building tests and their outcomes are incredibly useful, and we encourage our readers to check it out for its insights on the relationships between nonprofits and their markets. The whole report can be found here for free.