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    In early 2004 Philanthropy Squared was invited by the Victorian Arts Centre to review the work of its Development office.

    What emerged was in many ways a familiar story. Over recent years the strategy, structure and programs of the Arts Centre had changed, some sources of income had declined, and there was growing pressure to build philanthropic income to help sustain a bold institutional vision. But for some time Development had seen low revenue growth and targets not met, despite considerable effort. After five weeks of meetings, interviews, examination of plans and reports, and comparison with the approaches of similar institutions elsewhere, it was clear that the reasons for this scenario were neither obvious nor simple.

    Our review found a mix of factors inhibiting revenue growth. For example, a common approach to both corporate and individual supporters wasn’t addressing precisely enough the different needs and motivations of these two groups. Corporate supporters wanted more flexible access to Arts Centre programs to entertain their clients; individuals wanted more personal engagement and recognition for their support.

    Recruitment programs also faced other challenges due to resource constraints, the style of approach and changing regulations. The pressure to recruit new donors drew attention away from the need to deepen relations with existing ones, and widen the points of engagement. Typically, the style of approach to recruitment highlighted the immediate benefits to donors of becoming a supporter. But the risks here were threefold: such an approach might raise false expectations of service levels for
    donors; the prospect of contributing to the institutional cause in more satisfying ways were left unexplored; and a toughening Australian Tax Office policy ruling out donations in exchange for tangible benefits set limits on what potential donors could be offered in this kind of relationship.

    Other factors impeding potential growth were about the degree of strategic alignment and management integration of Arts Centre fund raising activities and the way donor funds were actually spent on programs. For example, external communications typically addressed non-philanthropic audiences such as Trust members, executive management or government funding bodies. As such they did not specify how donor support translated into successful events and programs; nor did they spell out the full range of opportunities for donors to pursue special interests and extend their support. Internally meanwhile, the role of Development in the institution’s overall structure and strategy was unclear. Donor support programs typically worked at a distance from the performing arts programs, and the focus of leadership was more on government relations and earned income programs.

    This meant that program sponsorship opportunities were often missed, important donor relationships were left to the Development office to manage, and few strong corporate sector relationships were being cultivated at a board room to board room level. All this left the Development office under pressure to meet unrealistic income targets, but without a clear strategy or institutional position from which to build.

    Our review recommended some steps to refocus and reintegrate Development programs, with the aim of building donor relationships and lifting revenue over time. We identified the Arts Angels Program as the main platform for this, but recognised that it too was in need of an overhaul after a decade of operation. Among the main tasks here were unbundling the corporate and individual programs to create distinct offerings for each, and reviewing the range and substance of benefits and service provision in line with the ATO ruling.

    Yet another priority was to restate the Arts Centre’s case for philanthropic support more explicitly, and then build this into the way programs were actually planned and reported. In this way, current donors could be reassured that their support made a genuine difference; prospective donors could identify ore clearly the institution’s vision and its need for support, and planners and managers would have clearer guidance in program design and delivery. This more explicit and transparent approach would also offer a basis for rallying volunteer leadership in support of the institution, show how philanthropic funds were being spent, and illustrate results.

    Yet another important task was to reposition the Development role within the institution, and create a more realistic balance of efforts and expectations. This meant lifting the professionalism of the design and delivery of programs, putting donor engagement on a par with government relations in Arts Centre leaders’ roles, reviewing the pricing and value of sponsorships, handling non-philanthropic income programs separately from philanthropic ones, and devising better models to build budgets and track success in meeting targets.

    The review also recommended more direct involvement from the Arts Centre’s Trust and its Senior Executive group in Development planning and promotion. This would mean adopting policies that highlighted the role of Development in the institution’s future, and committing enough time and resources to enable Development programs to flourish. Between them the Trust and Chief Executive were encouraged to focus on articulating the vision, setting the tone and ensuring a unified approach, encouraging and enlisting senior volunteers and donors, seeking major gifts and closing negotiations, and guaranteeing effective stewardship of donations.

    In concert with Arts Centre management, Philanthropy Squared developed a three year Philanthropy Plan, adopted by the executive and endorsed by the Trust in late 2004. The main goal was to build long term philanthropic income streams by creating the right kind of institutional systems and culture. The plan set out strategies, actions and measures geared to important themes such as connecting donors to the Arts Centre cause, increasing volunteer engagement and advocacy for philanthropic programs, demystifying philanthropy for Arts Centre program staff, and balancing and building philanthropic revenue streams.

    Management then took up the detailed and difficult work of realising this plan. Their success relied on strong leadership support and very clear internal communication of both the vision and the strategies for development. The Development agenda was summed up in a short sharp statement of what success would look like. “We will know when have succeeded when:

  • Our existing donors are making larger gifts on a regular basis because they feel motivated, engaged and inspired
  • Our existing donors are inviting their family, friends and colleagues to make a contribution
  • We are attracting new donors because our mission is inspiring, relevant and accessible
  • Our donors feel respected and believe their contribution has been recognised
  • Other arts organisations are asking “how do we do it”!

  • By 2008, after much work on the part of many people at the Arts Centre, it was clear that the new Development structure and strategy were working. The turnaround had taken time as both staff groups and donor groups were introduced to a different philosophy of explicit engagement with a compelling purpose, as expressed through new programs. This realignment was tough work, since it meant sustaining confidence over time until the growth became visible. As projected, net revenue actually fell in Year 2 of the strategy, and then began growing to new heights in Year 3.

    By 2008 the Arts Centre had more than doubled the number of donors, with many existing donors making larger gifts, signifying a stronger connection and commitment to a clearer cause. More than 200 individuals had made founding donations to the First Call fund, which will help bring performing arts programs to schools whose students have limited access to the Arts Centre due to cost or distance. In 2007-08 total donations had increased by one third and net contribution had increased by more than two thirds. The Trust received more than $3.6 million dollars from individuals, trusts and foundations including $1.7 million towards endowment, with further pledges of $3m.

    For Philanthropy Squared, the Arts Centre story highlights how complex life is for public institutions that must cater to multiple constituencies and rely on a mix of public funding, commercial revenue and donor income. Their challenge is to view Development as an integral part of realising their higher aims; and to craft a robust, transparent and nuanced set of strategies to build solid donor support. This means working within the organisation at every level to maintain confidence, as well as engaging in outreach to potential donors, to foster a shared view of the achievements and benefits that strong donor support can make possible in a public purpose institution.

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