21 arts and culture organizations go from surviving to thriving
“Because of this program, we are able to take small risks to move our art forward and increase our impact. With this program, we are able to free up space to grow.” – Amy Thomas, Penumbra Theatre
Today, we’re excited to announce we’re partnering with 21 truly incredible arts and culture organizations across the state to transform their finances and in turn, amplify their ability to lead and innovate. The Equity Builder Loan Program is an unique program that adds money to the balance sheets of organizations serving as cultural anchors in their communities. Our longer-term goal is to create more equity in the arts and culture nonprofit sector and position these organizations to be sustainable institutions in their communities.
After years of making loans (all told, over $40 million) to arts and culture organizations, especially those working in communities of color or in Greater Minnesota, we saw a familiar pattern: artistic leaders were being bold, visionary thinkers even when facing short-term funding cycles and other operating obstacles. We’ve also seen how these organizations bring communities together, spur new energy, lift up underestimated voices, and enrich our state. Propel Nonprofits’ Equity Builder Loan Program evolved through the process of imagining what these organizations could achieve if more unrestricted financial resources were available to them.
A multi-layered approach for systemic challenges
At a recent gathering of Equity Builder participants, we heard similar concerns voiced, even amidst the diversity of their programming, size (budget and staff), and geography: the rising cost of rent or the financial realities of owning a space, keeping momentum through leadership changes, the need to shift business models as funder and community priorities shift, continually tight margins amid organizational growth, and other concerns tied to long-term sustainability. But as one theater art director pointed out, “At some point, we need to stop thinking it’s our fault – the current structure is set up to profit a certain kind of organization.”
“At some point, we need to stop thinking it’s our fault – the current structure is set up to profit a certain kind of organization.”
In 2017, we published a report with the National Center for Art Research that confirmed our experience and aligned with national research: culturally specific nonprofit organizations operate in sectors that traditionally work with lower annual budgets (community-based, educational, dance, and theatre).
To counter these systemic issues, the Equity Builder Loan Program weaves together multiple components to not only add equity to participants’ balance sheets, but to shift how these organizations approach their financial operations going forward:
- Working Capital Loan, of which 20-40% converts to a grant over the three-year repayment period, from a loan fund of $2.6 million.
- Monthly savings by the organizations, which not only adds to a reserve fund, but helps create a habit of savings and a shift in long-term financial management practices.
- A partnership with Propel Nonprofits’ staff that helps strengthen financial management systems and leadership capacity.
- Cohort learning, where all participants come together a couple times a year to learn from each other.
Freedom for bolder goal setting
After piloting the Equity Builder in 2016, we’re already seeing how this program is fulfilling its aspirations. “Because of this program, we are able to take small risks to move our art forward and increase our impact. With this program, we are able to free up space to grow,” said Amy Thomas, managing director of Penumbra Theatre.
“This is not just a loan,” said Martin Ludden of St. Paul Neighborhood Network (SPNN). “There’s also a cohort-based support structure, a commitment to deeper financial analysis, and a lot of backing behind the money. As you’re paying the loan back, you’re also putting money in your reserves. We can look at our cash flow, predict where there might be a crunch, and build reserves for those times.”
Through cohort meetings and ongoing financial training from Propel Nonprofits’ staff, participants are learning from each other, working to build financial leadership skills throughout their staff, evaluating true program costs, and pulling in board members as they go. They’re thinking optimistically and creatively about new ticketing and donor management systems, strategic planning, staffing capacity, and other infrastructure supports to change not only their bottom lines, but their way of doing business and fulfilling their missions.
We’re hoping the Equity Builder Loan Program will be part of a systemic change for the organizations. We feel this unique approach to investing capital is shifting the landscape and has the potential to serve as a model nationally. The Equity Builder program would not be possible without the support of its visionary funders: the Bush Foundation, The Kresge Foundation, the Patrick and Aimee Butler Family Foundation, and the Surdna Foundation.
We’ll continue to evaluate the program and report out – stay tuned.
Learn more about the Equity Builder Loan Program and follow us on Twitter at @PropelNP/#EquityBuilder.