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Diversifying Revenue Learnings from participants in the Department of Canadian Heritage’s Endowment Incentives Program.

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Presentation on theme: "Diversifying Revenue Learnings from participants in the Department of Canadian Heritage’s Endowment Incentives Program."— Presentation transcript:

1 Diversifying Revenue Learnings from participants in the Department of Canadian Heritage’s Endowment Incentives Program

2 About Canadian Orchestras 150 orchestras, 50 of which self- define as professional or semi- professional Annual revenues of $175 million Audiences of ca. 2.6 million people Revenues split between earned (38%); government (33%); private giving (29%) Focus on endowment building is relatively new

3 Canadian Heritage’s Endowment Incentives Program - History Launched in 2001 It has survived a change of government and two program evaluations It focuses on professional, not-for- profit arts organizations.

4 Canadian Heritage’s Endowment Incentives Program – Desired Outcomes To “foster a climate that encourages private donors to contribute to endowment funds for not-for-profit professional arts organizations in order that they may have access to new sources of funding in the future.” To “give these organizations greater capacity for realizing artistic expression by supporting their long- term stability.”

5 Canadian Heritage’s Endowment Incentives Program – How Much? Funding available in 2013-14: $18.9 million CAD Total funding since 2001: $156 million ($31.75 million has gone to orchestras) Grants are based on dollars actually raised during a certain period Grants have rarely been dollar for dollar - % of match depends on applications received

6 The Role of Tax Policy Since 1988, individual donors have been able to claim a tax credit rate of 15% on charitable donations up to $200 and 29% on donations above $200 Since 2006, donors of shares in publicly traded companies to charities have been exempted from paying capital gains tax on any increase in value of those shares. Many organizations saw significant gifts of this nature from 2006-2008 – less after the downturn.

7 Canadian orchestras and Endowment Incentives 33 orchestras have participated in the program since 2001 Since OC began collected endowment information in 2005, orchestras’ endowments have grown from $84.4 million to $164 million (12/13 FY) Private sector endowment giving: 43% was from individuals 21% from corporations 36% from “other sources” (foundations; the orchestras themselves)

8 Learnings from Leaders – the Target Group 7 orchestras with annual revenues between $600K and $13.7M Endowment growth, 2006-2013, between 100% and 1000% What were their “secrets”?

9 Common Characteristic of Successful Participating Orchestras Management stability Strong governance Market and “mind” share in their geographic catchment area Acknowledged internal leadership for the campaign – paid or volunteer

10 What’s Worked - I Engaging boards and musicians at the outset Doing a feasibility study (and paying attention to the findings) Staffing appropriately: endowment campaigns are labour-intensive Keeping the learnings “in-house”, so that new/enhanced donor relationships can be built on Learning more about donor capacity: many CAN give more for limited-term causes and campaigns they believe in

11 What’s Worked - II Ensuring strong stewardship and management of the funds: balancing preservation of capital AND maximizing annual returns Thinking long-term (and communicating that message to potential donors) Balancing endowment and annual campaigns Seeing endowments as PART of a revenue diversification strategy Using bequests strategically Leveraging provincial matching funds programs (where available): the potential to triple one’s gift has been very compelling!

12 What Has Raised Questions - I Operating funding vs. endowment incentives: at the outset, most orchestras would prefer to have seen enhanced operating funding from government Focus on “making the match” this year may have distracted some from longer-term development activities, such as planned giving Making the choice to prioritize future needs over current needs

13 What Has Raised Questions - II Inconsistent yields from endowments: 2008 was a tough year Balancing competing priorities (orchestras and donors): Endowment building vs. the quest for adequate operating reserves Transformative projects in the present-day vs. future stability Implications for collective bargaining

14 Quotes from Participants “The campaign was one of the best things that has happened for this organization in the past 25 years.” “Going through a campaign taught us (staff and Board) to significantly improve our research and “asking” skills.” “You will be surprised as to how much money you can raise from people who are giving you relatively small annual donations.”

15 Thank you! Katherine Carleton Executive Director Orchestras Canada

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