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Signup for updates cultural venture fund
five-year overview
The Bronx Council on the Arts’ (BCA) Cultural Venture Fund (CVF) introduced a change in thinking for community arts groups – shifting their focus from deficits and needs to assets and capacities – based planning. Launched as a pilot in 2000, The Cultural Venture Fund (CVF) is a primary development tool that works by assisting arts organizations to further develop their assets, strengthen their entrepreneurial capabilities, create cultural ventures, increase earned income, and thereby build capacity, growth, and sustainability. The strategic planning process the Cultural Venture Fund uses defines cultural “assets and capacities” as the valuable investments of skill, talent, resources, and unique qualities that exist in individual arts organizations, built through their time and commitment.
Grants, seed monies and business development consultants are provided by the Bronx Council on the Arts throughout the process. It takes three to five years for a participating organization to progress through the planning and implementation process, from identifying their principal assets, developing a business plan for an entrepreneurial project, and launching the cultural venture, to deriving increased earned income from it for their creative pursuits.
Rising from and serving widely diverse populations, Bronx cultural organizations are a unique creative force. They are a well-recognized source of pride and strength to the borough’s predominantly low-income, minority communities. But, like all community arts entities, these large and small museums, theaters, literary arts, dance, and music groups operate in an environment of stress and uncertainty.
Working within the traditional non-profit model, their economic survival has required dependence on local contributions and grants from outside sources. Local contributions are necessarily spare in low-income communities and grants from outside sources require Bronx arts groups to compete with the more visible Manhattan-based organizations. To ensure survival, it is necessary to overcome these obstacles and provide a means for self-sustainability and growth. The Cultural Venture Fund was designed to enable each participating arts organization to initiate new income generating ventures and audience development strategies through a planning process based on their inherent strengths.
The Bronx Council on the Arts exists to facilitate the professional advancement of artists and arts organizations in the Bronx. BCA views the enormous cultural resources present in the borough as an important catalyst for community revitalization. Therefore, BCA developed the Cultural Venture Fund as an earned income strategy for generating economic development in and through the arts.
*Cultural Tourism Venture Fund,a BCA/Bronx Empowerment Zone partnership
CVF’s CONCEPT DEVELOPMENT
The strategic planning process of the Cultural Venture Fund adapts the fundamental approach of Asset Based Community Development (ABCD), a proven model for community economic development that has been successfully implemented over the last two decades in underserved urban environments.
ABCD begins by conducting a survey of the community to inventory undiscovered assets, and then encourages the development of entrepreneurial ventures from the inventory. The Cultural Venture Fund facilitates a self-survey within each participating cultural organization, and then supports earned income initiatives evolving from their institutional assets. These may include capacities and strengths in the following areas and more:
- Administrative
- Audience
- Creative experience
- Real Estate or other property
- Rights/licenses/intellectual properties
- Technology
CVF’s SEVEN STAGE DEVELOPMENT PROCESS
1. Orientation Seminar. Interested cultural groups are introduced to the principles, process, and objectives of asset-based planning.
2. Survey for Assets. Each group undertakes a comprehensive, self-administered survey designed to foster awareness of its strengths as an arts organization. These are identified as its assets.
3. Analysis of Assets. To facilitate development of an entrepreneurial approach, CVF and the organization together conduct an in-depth analysis of identified assets, from the vantage point of investors, cultural consumers, and the potential for growth within the community and beyond. Principal assets are identified at this stage.
4. Professional Consultants Engaged. Professional business consultants are assigned by CVF to work with each organization to determine how its principal asset(s) can be used to develop earned income through an entrepreneurial venture. The consultant familiarizes the principals with relevant business practices: evaluating the competition, financing options, market research, and promotion opportunities
5. Business Plan Development. CVF works with organizations as they embark upon development of a full-fledged business plan that analyzes management, marketing, competition, promotion, start-up financing, and financial projections for the venture (product or services). The assigned consultant guides them through this process over the course of one year.
6. Start-Up Funding for Implementation. Once business plans are submitted and approved by a panel of financial, marketing, and other consultants appropriate to each field of endeavor, first year start-up funds are provided by CVF toward the new venture.
7. Ongoing Business Consulting. CVF assigns one or more specialized consultants to help implement ventures that are moving forward. Additional year(s) funding and consultant support is provided by CVF to ventures that demonstrate how the new business would benefit from additional cash investment.
CVF: THE CHALLENGE
Economic trends of the past 5 – 10 years assert the need for earned income as a necessary income generator for nonprofit arts organizations. But their traditional reliance on grants has them mired in a culture of dependence alien to the business processes related to earned income projects. Bronx Council on the Arts decided to meet the challenge of changing the grants-dependent culture.
CVF was established to provide a resource that enables non-profit Bronx arts groups to increase capacity and become stronger, more financially independent and successful organizations by developing consistent, sustainable earned income sources.
There were many challenges, least of which is teaching new skills and breaking old habits. For a third of the groups the impact was minimal while the last third exceeded our expectations. The middle third is still a work in progress. Of the $250,000 allocated by the New York State Council on the Arts for direct support of fifteen Bronx arts organizations, to date $613,550 has been generated in new income and we expect it continue to increase.
Successes
- An introduction and initiation into the world of business entrepreneurship.
- Adoption of new business principles
Institutional change
- A process was established for providing seed money and technical assistance to help organizations launch earned income projects
- Works better than anything out there – with a 30% - 40% success rate for start-ups vs. the national average of 20%
Shortcomings
- Not enough money - suffered from too-low investment
- Not enough time - grants linear time frame vs. small business development as an ongoing process
- Organizations were not sufficiently ready for the new experience of an entrepreneurial venture
- Entrepreneurship not part of the thinking of non-profit arts groups and not why many chose to participate in the program. They applied to get the “grants” money, and once it dried up, and the business plan consultants were gone, fell back on old habits.
CVF RECOMMENDATIONS
CVF has benefited from recommendations generated by the extensive evaluation and assessment activities conducted by BCA staff, CVF consultants, and independent sources. The most valuable lessons learned are described below:
- Successful non-profit ventures receive significant multi-year support and have a long-term commitment from the funder, e.g., Robin Hood Foundation provides organizational support for more than five years.
- Successful ventures received adequate amounts of technical assistance which allowed them to reach their goals. According to a study by the Morino Institute, venture philanthropy funds spend from 150 to 400 hours per year working with grant recipients
- Successful ventures are based on solid planning and a realistic definition of outcomes, and require the ongoing assessment of stated benchmarks.
- Funds should be distributed according to benchmarks. Tying money to successful outcomes formalizes the process. This method is used by government funding agencies, foundations and venture capitalists alike.
- More extensive internal assessments must be performed before starting an earned income venture to determine readiness. Assessments would examine:
- Is staff sufficiently trained in business skills and is there an adequate number of staff members who can devote themselves to the venture?
- Level of organizational commitment - the ability to successfully manage a nonprofit’s enterprise depends significantly on the strength of its board, staff support and its ability to manage change.
- A steward for the earned-income project. The Enterprise Fund Initiative Report notes that although the presence of an enterprise champion is crucial, that individual must be supported by board and staff for the venture to succeed.
- Nonprofit organizations that commit to entrepreneurial ventures must be prepared to experience organizational, personal, and professional changes.
*The Venture Fund Initiative: An Assessment of Current Opportunities for Social Purpose Business Development and Recommendations for Advancing the Field, December, 1998.
CVF: A CHANGE IN THINKING AND APPROACH TO HOW BUSINESS IS CONDUCTED
- Business Procedures Compared and Contrasted
- To Common Non-Profit Arts Model
- Accepted Business Development Procedures vs. Common Non-Profit Arts Practices
- Focus on assets, building up investments vs. Focus on needs
- Entrepreneurial mindset: to earn money vs. Reliance on donations and grants
- Examination of market forces at play vs. Myopic, self-absorbed belief in your work as the only show in town
- Pricing analysis – price new ideas out vs. Static approach to pricing and costing
- Understanding of direct and indirect expenses vs. Poor budgeting skills
- Management Planning vs. Crisis management
- Clearly defined corporate strategic, policies, procedure vs. Lack of or ineffective strategic planning
- Succession planning vs. Avoidance of issues
- Professional staff development vs. Staff incompetence, time lost
- Board selection strategy vs. Board members unmatched to growth needs of organization
CVF SUPPORT
The Cultural Venture Fund is supported by:
- New York State Council on the Arts
- National Endowment for the Arts
- New York City Department of Cultural Affairs
- Citigroup Foundation
- The Bronx Empowerment Zone
- BCA would like to acknowledge the valuable assessment report prepared by the Robert J. Milano Graduate School of Management and Urban Policy of the New School University
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