Arts, heritage and culture organisations must diversify their income streams now or face losing vital support, says Paul Marvell

The funding environment for the charity sector has changed dramatically, and this is particularly true for arts, heritage and culture organisations. Previously many have relied on grant funding, but are now in danger of being completely marginalised in the current climate of budget cuts.

Arts organisations need to act now to diversify their income sources to ensure their future. But one of the problems they face is how to persuade the general public that their support is needed: that the arts are just as important to communities as other causes.

Suzie Bissell, principal of US-based International Philanthropy Services, says that the time has come for innovative thinking in cultural arts organisations worldwide, adding: “aren’t we in the business of creativity anyway?”

When Suzie spoke at our first IoF Fundraising for Arts, Culture and Heritage Causes conference recently, her stark message to delegates was that when corporate or government support dries up, their doors will close. Survival, she says, depends on “developing new revenue streams along with strategic stewardship programmes. Once donors are acquired, develop a plan to keep them. Your entire organisation needs to start thinking about creative ways to fundraise”.

Fern Potter, development consultant and senior development manager from Index on Censorship, also spoke at our event. She agrees with Suzie that arts organisations need to start getting smarter about making the case and providing impact analysis and evidence for the arts sector. She believes the sector will certainly not be able to compete with those health, human rights, social and education charities that have learnt how to make the case and have been doing it successfully for a long time

That’s why the IoF decided to address this issue head on, and design a conference specifically for the arts sector. We want to educate a new generation of arts and culture sector leaders versed in the most effective methods of fundraising, and act as a channel for the cross-fertilisation of ideas and learning between the mainstream charity sector and the arts – strengthening the links between the arts sector, business communities and the wider professional fundraising communities.

Learning what works

There is no ‘one-size-fits-all’ guide to how to diversify income streams successfully. What may work for an orchestra may not work for a dance company or a museum.

Rambert Dance Company’s successful £19.6m appeal to build a new home on the South Bank in London, for example, received invaluable support from trusts and foundations, and endorsements from people with the right connections proved crucial in giving confidence to would-be funders.

In contrast, the Scottish Chamber Orchestra (SCO), which benefits from a ready-made audience support base to call on, decided to focus much of their fundraising on their ticket buyers, and embarked on a series of highly successful telephone fundraising campaigns using an external agency.

SCO’s sponsorship and fundraising director Barry Ferguson says that by using telephone fundraising they increased the number of patrons from 250 to 850, raised £180,000 over four years and produced a lot of goodwill. He explains that the telephone contact maintains a positive relationship with people: “Through telephone fundraising, we pick up on a lot of love for our orchestra.”

Interestingly, Barry says that the reception to the calls was very different to his experience in higher education, where the feedback from using telephone campaigns could be quite negative.

Planning ahead

Too many arts organisations have not fully grasped the importance of a vital, and undervalued source of unrestricted income – gifts in wills. Mainstream charities and museums, such as the Horniman in south east London, have successfully begun to realise its potential. Many more in the arts sector could make a significant return, too, if they capitalised on the power of gifts in wills.

However, Rambert Dance Company’s experience is a telling one. Zoe Crick concludes that public funding must continue for the long-term survival of the arts sector: “Without the £7m award from the Arts Council we simply would not have been this successful with our campaign.”

Paul Marvell is director of professional development and membership at the Institute of Fundraising

This article first appeared in The Fundraiser magazine, Issue 27, March 2013