Report Brief How Much Is Enough? An exploration of philanthropic capacity for arts and culture in Greater Milwaukee August 2015

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1 Reprt Brief Hw Much Is Enugh? An explratin f philanthrpic capacity fr arts and culture in Greater Milwaukee August 2015

2 Reprt Brief Hw Much Is Enugh? An explratin f philanthrpic capacity fr arts and culture in Greater Milwaukee August 2015 Study Authr: Anne Chapman, Researcher Rb Henken, President

3 In recent years, Greater Milwaukee has been engaged in impassined debate abut the array f arts, cultural, entertainment, and recreatinal assets that are needed t satisfy the desires f residents, and t maintain r enhance the regin's status as a thriving, "majr league" metrplitan area. Whether cnsidering new facilities like an NBA arena, r taking care f lder, belved institutins like the Milwaukee Public Museum and Milwaukee Cunty Z, the heart f these discussins has centered n funding specifically, wh will pay fr cnstructin, maintenance, and peratins, and is there enugh demand and cmmunity supprt t sustain these assets in the future? In tw previusly published reprts, Pulling Back the Curtain and The Shw Must G On?, the Public Plicy Frum identified significant capital and perating needs amng arts, cultural, and recreatinal facilities in the regin, and explred ptential public funding ptins t help address them. In this reprt, we cnsider the ptential rle that private philanthrpy might play. The reprt begins with an analysis f trends in fundatin giving t the arts and culture sectr in Greater Milwaukee, with a particular eye tward determining the impact f the Great Recessin and whether giving ttals had rebunded since that time. Because cmplete data sets fr that analysis nly tk us thrugh 2011, we then used qualitative data frm interviews with 25 key infrmants t explre mre recent develpments, including identificatin f emerging challenges that may impede future philanthrpic giving and pprtunities that might exist t enhance it. Pulling Back the Curtain Released December 2013 Recent trends in fundatin giving in Greater Milwaukee T discern verall giving acrss the wider private philanthrpic sectr and t track trends befre, during, and after the Great Recessin, we used histrical data n private and crprate fundatin giving in Milwaukee, Ozaukee, Washingtn, and Waukesha Cunties. Because f data limitatins, ur analysis nly extends frm 2004 t The Shw Must G On? Released March 2014 Based n ur research, histrical trends seem t suggest a number f dynamics likely t influence the future f private philanthrpic giving fr the regin s arts and cultural assets. The first is that while verall fundatin giving in Greater Milwaukee rebunded after the recessin (as ttal assets als grew), giving t the arts and culture sectr did nt shw the same resilience. This is cnsistent with the perceptin f many f ur key infrmants. Sme attribute this decline t a narrwing f giving pririties, especially amng crprate dnrs, t areas related t educatin and wrkfrce develpment. 2

4 Millins Ttal grants paid and assets f fundatins in Greater Milwaukee, $350 Grants (in millins) $300 Grants Assets $5.0 $4.0 Assets (in billins) $250 $200 $3.0 $150 $2.0 $100 $50 $1.0 $ $0.0 Surce: Fundatins in Wiscnsin, Marquette University Ttal value f intra-milwaukee grants t arts and culture prgrams, $10.0 $8.0 $6.0 $4.0 $2.0 $0.0 Surce: Fundatin Center Our histrical analysis als fund that the Great Recessin seemed t dampen supprt fr capital prjects acrss all giving categries (nt just arts and culture), and that the trend cntinued in the recessin's immediate aftermath. Again, this finding did nt surprise ur key infrmants, many f whm bserved arts and cultural institutins delaying capital and ther majr fundraising initiatives during the recessin. Hwever, this als was felt t pse a future prblem, as several institutins nw face pressing capital needs and will be appraching the same set f funders t address them. 3

5 Fundatin supprt fr capital needs, $14,000,000 $12,000,000 $10,000,000 $8,000,000 $6,000,000 $4,000,000 $2,000,000 $ Value, Capital Grants Surce: Fundatin Center Finally, ur analysis revealed a key vulnerability in the regin s philanthrpic supprt fr arts and culture. With abut 60% f all arts and culture giving emanating frm nly five fundatins, Greater Milwaukee s arts and culture sectr is extremely dependent n nly a handful f funding surces. Percentage f arts and culture grants made by tp funders, Nrthwestern Mutual Fundatin Bader Philanthrpies All Other Fundatins Greater Milwaukee Fundatin The Lynde and Harry Bradley Fundatin The Argsy Fundatin 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Surce: Fundatin Center 4

6 The views f Key infrmants Our 25 key infrmant interview sessins captured a breadth f perspectives and rganizatins that included bth funders and funding recipients. We used these interviews t explre the capacity f the regin s philanthrpic cmmunity t help meet the future needs f the arts and culture sectr. Althugh the histrical data n fundatin giving t arts and culture reflects a decline thrugh 2011, key infrmants as a grup believed that verall philanthrpic supprt fr the sectr is nw steady r n the rise. A series f mre nuanced bservatins n specific funding surces als surfaced: Giving by majr private fundatins is perceived t be flat r slightly up. Althugh infrmants acknwledged nly a few majr fundatins giving substantially t arts and culture, we heard a general cnsensus that giving by lcal private fundatins has been and is expected t remain relatively stable. Sme bserved lcal private fundatins absrbing the vlatility and cyclical giving patterns in ther philanthrpic sectrs. Individual dnrs and small family fundatins are seen as trending up and likely t grw. In light f declines in crprate giving t arts/culture and cnstraints n the assets f private fundatins, arts and culture rganizatins see individual giving as the greatest pprtunity t raise unrestricted resurces that tend t be sustained ver many years (despite the relatively high cst f cultivating these dnrs). Cntributins t the United Perfrming Arts Fund cntinue t increase, but individual grups feel vlatility. Between 2011 and 2014, UPAF allcatins have risen steadily by abut 20% verall. Hwever, sme rganizatins see fluctuatins frm year t year depending n hw they rate in UPAF's allcatin criteria. 5

7 External and natinal funding surces are diminishing. With few exceptins, rganizatins are experiencing vlatility in grants frm the Natinal Endwment fr the Arts and ther majr natinal funders. Mst are seeing a decline in bth the number f remaining funders and the amunts f their grants. Crprate giving is dwn, and there is mre pessimism abut crprate giving t arts and culture than any ther frm f giving. Infrmants agreed that, verall, crprate cntributins t the arts and culture sectr have been flat (at best) since the recessin. Mrever, they expect it t decline ging frward. Infrmants attribute this shift t a recent trend in crprate philanthrpy t align giving with business bjectives such as educatin and wrkfrce develpment-related effrts. The declining number f lcal CEOs and the rise in internatinal fcus f lcal crpratins als cntribute t this utlk. The views f key infrmants als revealed a series f pprtunities, threats, and additinal themes that are likely t influence philanthrpic capacity nw and in the near future. Tgether, these insights infrm ur verriding research questin: Hw much is enugh? Opprtunities Individual dnrs. As eched abve, individual giving pses the greatest pprtunity fr grwth in philanthrpic supprt fr arts and culture. Individual giving tends t be less restrictive and mre likely t recur year after year than ther streams. Als, many believe there is a large surce f untapped individual/family wealth in the regin, even amng existing dnrs. Sme barriers are likely t arise, hwever. Individual gifts are difficult t lcate and cstly t extract. In additin, sme large lng-time dnrs may be experiencing dnr fatigue, and giving habits n the part f yunger dnrs d nt tend t fcus n arts and culture. Clear visin and sund business planning. A large cntingent f ur infrmant pl agreed that visinary leadership and clearly-structured business and management plans are precnditins fr attracting dnr supprt. This suggests that philanthrpic capacity is elastic, and is able t expand r cntract depending n hw well a given prgram/prject captures dnr passin and cnfidence. Cllabratin. Funders yearn t see cllabrative partnerships amng arts and culture rganizatins. Whether in the frm f full mergers r prgrammatic partnerships, such cllabratins are seen as an pprtunity t stretch giving dllars farther, capitalize n dwntwn develpment, and allcate resurces where they can d the mst gd. Messaging. Our research uncvered tw specific messages believed t be especially effective in attracting dnrs t arts and cultural causes: their links t arts educatin and their cntributins t the reginal ecnmy. 6

8 Threats Transfer f accumulated wealth. Infrmants asserted that the regin s arts and culture sectr is built n the accumulated wealth f a high cncentratin f lder dnrs. The sectr s sustainability hangs, therefre, n an uncertain future few can predict whether the next generatin f dnrs and cmmunity leaders will have the will r ability t replace the lng-standing supprt f the sectr s current majr dnr base. Prliferatin f nnprfits. Many believe the nnprfit arts sectr has grwn at a faster rate than the cmmunity s ability t sustain it with philanthrpic dllars, fueling fierce cmpetitin fr funding. This perspective illuminates an idelgical divide in the regin ver whether we shuld be funding fr depth (cncentrating resurces n a few large institutins) r breadth (spreading ut funding t supprt an ecsystem serving a diverse audience). Lw endwments. The need t expand endwments acrss the sectr is acute, with sme cultural institutins in danger f flding withut substantial grwth in their endwments. But endwments are ne f the mst difficult, cstly, and unpredictable aspects f nnprfit wrk fr which t raise mney. Weak internal fundraising capacity. Many arts and cultural rganizatins lack the necessary staffing and expertise in their develpment ffices t build lng-term sustainability. In particular, in rder t capitalize n an unprecedented pprtunity t raise funds ver the next decade r tw, many institutins must blster capacity in general dnr cultivatin and management, planned giving, and marketing. Narrwing f funder fcus away frm arts and culture. As discussed abve, several stalwart arts and culture funders increasingly are narrwing their giving t fewer arts and cultural rganizatins and/r shifting t ther pririty areas. A lack f civic pride and cmmunity visin. Sme infrmants believe Milwaukee suffers frm a cllective lack f cnfidence in what they see as an exceptinal array f assets. We heard a desire t see the regin take pride in what it already is and has and t use that pride t fuel (and fund) an expansive, unifying visin abut what the city culd be. Additinal Themes Capital needs and campaigns. Sme rganizatins see capital fundraising as a majr challenge affecting sustainability, while thers place it amng many ther pririties. Thse wh dwnplay its significance tend t see capital campaigns as an pprtunity t develp dnr relatinships. Thse wh see it as a threat tend t be relatively smaller institutins that feel large campaigns divert substantial resurces ut f the philanthrpic pl. Impact f UPAF supprt. Perceptins abut the impact f UPAF funding ranged between views that it is a vital vehicle fr rdinary citizens t supprt majr cultural institutins and bservatins that it may be detracting frm the willingness f crpratins t supprt individual entities. In additin, there is n cnsensus n whether UPAF allcatins are t widely distributed r t limited t a select few. 7

9 The impact f Milwaukee Cunty supprt. Sme infrmants see Milwaukee Cunty supprt f cultural institutins as an essential funding cmpnent alngside private philanthrpic supprt, while thers believe the Cunty s failure t maintain sme f its cultural assets calls fr sme degree f divestment r pursuit f public-private funding mdels. Relevance and audience develpment. Relevance t specific audience demgraphics, crprate funder bjectives, price-pints, and cmmunity pririties all were cited as ptential ways rganizatins culd shre up accessibility and sustainability. Infrmants cited cncerns, hwever, that rganizatins striving t be relevant t disparate stakehlder grups might stray frm their cre missins. Cnclusin Our quantitative and qualitative explratin f factrs likely t affect the future f philanthrpic giving t Greater Milwaukee s arts and culture sectr suggests that there is sufficient capacity t cver majr arts and cultural assets and prjects, but that future supprt fr lwer-prfile needs (e.g. maintenance and endwments) and smaller rganizatins may be lacking. Overall, we cnclude with the fllwing bservatins: Individual giving pses the greatest pprtunity fr cntributed revenue grwth fr arts and culture, suggesting a need fr arts and cultural institutins t invest in resurce develpment capacity. Private philanthrpic dllars will flw t rganizatins whse leaders articulate bth visinary prjects and realistic business plans. Cnversely, dllars fr imprtant but less inspiring needs such as capital maintenance and general perating supprt (particularly fr smaller rganizatins) will be harder t cme by. Greater Milwaukee is grappling with a deep philsphical divide between depth and breadth f arts and cultural fferings. On the depth side are thse wh believe we have mre fferings than the cmmunity can sustain, and that resurces shuld be fcused n large crnerstne institutins. The breadth camp prmtes an arts and cultural ecsystem numerus entities serving a diversity f audiences. Reslving this divide cnstructively will require pen cllective discussins abut the risks and benefits f either apprach. Inadequate endwments pse a substantial threat t the sustainability f Greater Milwaukee s arts and culture sectr. We heard deep cncerns that few rganizatins have endwments f sufficient size t carry them thrugh the uncertain nature f bth patrn and dnr supprt frm year t year, suggesting a need t build capacity t secure planned gifts. The public sectr's rle in wning and supprting cultural assets will help determine whether ur regin pssesses sufficient philanthrpic capacity. Sme advcate that the Cunty divest frm its cultural hldings t allw them t mre easily secure private supprt, while thers fear this culd destry the necessary public-private funding balance that has traditinally supprted the regin's cultural assets. In light f the magnitude and nature f the regin s existing cultural needs, we bserve that sme level f cntinued public financial supprt, at least fr the shrt term, will be necessary t address maintenance backlgs and the sectr as a whle. 8

10 The answer t the title f this reprt Hw Much is Enugh? inspires larger questins abut what rle arts and culture shuld play in the regin s character and identity and what we need t cllectively invest t achieve that visin. We hpe the bdy f research we have cnducted n bth public and private funding dynamics will help advance cnversatin arund these tpics and prduce a unified cllective visin fr the regin. 9