You may be aware of the many program services ArtsFund provides to promote organizational excellence among arts groups and to support the cause of the arts in the public arena.  These services are hugely important, but our primary mission remains raising and responsibly allocating funds to arts organizations for general operating support.  You may ask, “Why general operating support?”  This letter tackles that question.

 Ben Cameron of the Doris Duke Charitable Foundation (formerly of the Theatre Communications Group) provided a concise answer in a speech he gave at the Greater Tacoma Community Foundation’s 2005 annual meeting:

“No corporation could really function if every stock buyer specified how the corporation could use the money—that my money can only go to developing shaving cream, while mine can only go to toothpaste, especially if no one wanted to pay to turn on the lights or pay the plumbing bill…[General operating support] is fundamentally flexible working capital—money that can be used as opportunity arises …[T]he organization without access to such capital …misses the opportunity and quite possibly cannot survive.”

 In these financially gloomy times, funders around the country are beginning to recognize that general operating support provided to nonprofits after careful evaluation of their business operations has renewed importance.  In a recent article in the Wall Street Journal, Palo Eisenberg, senior fellow at the Center for Public and Nonprofit Leadership at Georgetown University, questioned whether current charitable giving meets the needs of nonprofit organizations or addresses some of our most urgent public needs.  Among Mr. Eisenberg’s top recommendations (the second, in fact) is that funders should increase general operating support (i.e. grants not earmarked for specific purposes).  Eisenberg presses the point that unrestricted funds provide organizations the flexibility to engage in new directions and opportunities.  He notes an increase in conversations on the virtues of operating support, perhaps spurred at least in part by the struggles many nonprofits are facing during these times.

 After our allocations process this past summer, we decided it would be a good idea to ask the arts organizations who applied for funding from ArtsFund what they think about our allocations process and how it might be improved. Among the questions asked was “Should ArtsFund maintain the purpose of its grants as general operating support as opposed to funding for specific programs?”  Forty-four arts groups specifically responded; of that number 43 responded vigorously “yes;” one responded “maybe both;” none responded “no.”  The 23 written comments repeated over and over how difficult it is to obtain operating funds.
 
 So, at ArtsFund we will continue to evaluate carefully all applicants for grants and then permit those who are eligible and qualified to determine how best to use the funds.