Change is Inevitable: Funders Join Forces to Help Arts Organizations Prepare for “Shifts in the Cultural Sector”

Here’s a question that's bound to keep directors at nonprofit arts organizations up at night: “When the bottom drops out of the economy, how can arts and cultural organizations remain as bold as their artists?”

The question, posed by the Barr Foundation, is becoming increasingly urgent, as economists warn that we’re overdue for a downturn. Small to midsize arts organizations have enough to worry about as it is. How can they brace themselves for a bad economy while simultaneously addressing challenges like the threat of displacement, the need to roll out compelling programming, and more mundane tasks like keeping the lights on?

For a possible answer, we turn to the Barr and Klarman Family foundations’ new $25 million Barr-Klarman Massachusetts Arts Initiative, which provides a roadmap to help organizations prepare for “shifts in the cultural sector and the communities in which they work.”

The initiative is built on the foundations’ belief that “adaptive capacity,” defined as “a set of skills and competencies that bolster an organization to take bold steps in response to external conditions,” can be best achieved by focusing on capitalization and “cultural competence.”

The initiative announced its first round of winners—29 Massachusetts-based organizations “representing diversity across artistic disciplines, geographic reach, stages of organizational development, and budget sizes.”

While the Barr-Klarman initiative is a regional program, the challenges it seeks to address—catalyzing communities through arts experiences, fostering connections across disparate issue areas and personal difference, and adding value to the cultural vibrancy—certainly aren’t relegated to Massachusetts-based organizations.

What’s more, while the initiative doesn’t posit capitalization and cultural competency as the miracle cure for what ails arts organizations, it’s nonetheless a provocative strategic stake in the ground from two foundations dialed into what’s happening across the Greater Boston area. As a result, arts organizations—and for that matter, other funders—should take note.

I’ll explore the initiative’s line of thinking in greater detail in a moment. But first, some background is in order.

Prelude to the Massachusetts Arts Initiative

In 2012, the Barr Foundation and the Klarman Family Foundation launched the Barr-Klarman Arts Capacity Building Initiative, a multi-year investment to provide “rainy day” and investment funds to 30 Boston-area arts organizations.

Over five years, the Barr-Klarman Arts Capacity Building Initiative supported two cohorts of mid-sized arts and culture organizations and “youth arts mastery organizations” through multi-year grants, training and technical assistance totaling $22 million.

At the conclusion of the initiative, the foundations commissioned an extensive evaluation that surfaced important takeaways, many of which related to the importance of capitalization for arts and culture organizations, particularly when “trying to adapt artistic practices and businesses in the face of changing audiences and stakeholders.” The findings informed the contours of the Barr-Klarman Massachusetts Arts Initiative.

In 2015, both foundations committed $700,000 each to support early planning work for Boston Creates, the city’s cultural plan.

Klarman’s forays into the art world were particularly intriguing. The foundation’s main focus areas have traditionally been health and illness, supporting the global Jewish community and Israel, and expanding access to vital services and enrichment opportunities in and around Boston. The foundation’s partnership with Barr and its support for Boston Creates signaled its emergence as a major cultural force in the region.

Given the foundation’s involvement in the new Massachusetts Arts Initiative, coupled with the fact that billionaire hedge fund manager Seth Klarman and his wife Beth are Giving Pledge signees, expect the foundation’s arts footprint in Boston to expand further in coming years.

As for Barr, 2015 saw the funder undergo a major strategic refresh. According to President Jim Canales, stakeholders asked where Barr could have the greatest impact over the next seven to 10 years across Barr's three main interest areas of the arts, education and climate change.

As a result of the exercise, Barr's newly-named Arts & Creativity program focused on three strategies to “engage and inspire a dynamic, thriving Massachusetts.” They included “advancing the field’s capacity to adapt, to take risks, and to engage changing audiences in new ways; fostering opportunities to connect the arts to other disciplines and sectors; and activating public support for the arts.”

Soon after, IP's David Callahan spoke to Canales for further context. Barr’s “commitment to Boston won’t diminish in any significant way,” Canales said. True to form, in May of 2018, Barr launched the Arts Amplified initiative, a $30 million, six-year capacity building effort focused on “powerful art and bold leadership by Massachusetts arts organizations to create more vibrant communities.”

One of the big takeaways was that Barr, like countless other arts funders, made the connection between art and social change. “Unless we're questioning what's happening now,” said E. San San Wong, director of Barr's Arts & Creativity portfolio, “then we're not actually moving forward as a society.”

The Power of Capitalization and Cultural Competence

Echoing Wong’s commentary, the new Barr-Klarman Massachusetts Arts Initiative acknowledges that “to remain relevant and to thrive, compelling artistic programming that engages diverse artists and audiences is necessary.” That said, arts organizations need to do more. Specifically, “organizations also need a sound operating model with adequate and appropriate capital and staff and board members who embrace change and cultural differences.”

Enter the Massachusetts Arts Initiative, whose overarching frame is “adaptive capacity with two focus areas of capitalization and cultural competence.”

Barr and Klarman define “capitalization” as the “accumulation and application of resources on the balance sheet to support the achievement of an organization’s mission over time. Its absence, undercapitalization, is one of the most pervasive barriers to organizations developing adaptive capacity. With improved capitalization, organizations are able to allocate resources as needed.”

Translation here? Arts organizations need cash. We already knew that. But not all cash is equal. A big grant earmarked for a training initiative or capital project can box in organizations if conditions change or the economy tanks. And so the initiative provides organizations with critical—and relatively rare—unrestricted support to flexibly allocate resources and build adaptive capacity.

The initiative also understands that while arts organizations appreciate the financial flexibility, they may not be entirely sure where to allocate capital when conditions change. Therefore, the initiative provides recipients with customized training, coaching and technical assistance. Recipients are also eligible for supplemental funds for targeted research, capacity building, and/or pilot projects.

Another key idea driving the initiative is cultural competence, which, according to the Barr and Klarman foundations, involves “understanding and responding appropriately and respectfully to the unique combination of cultural variables and dimensions of their communities.”

This is a hot topic in the arts funding world right now. Major foundations—including Ford, Mellon and Walton—have made boosting diversity at the highest level of arts organizations a priority, reflecting the view of Ford’s Darren Walker that “to fulfill your mission, you’ve got to be credible, and in order to be credible, the community needs to see themselves represented among you.”

Meanwhile, creative placemaking proponents like Kresge have published white papers addressing the issue of gentrification and how arts organizations can position themselves as partners in neighborhood redevelopment, rather than agents of displacement.

This is tricky stuff, and through a grant to the consulting and research group TDC, Massachusetts Arts Initiative organizations will participate in a learning program focused on cultural competency in addition to capitalization and adaptive capacity.

According to the Barr and Klarman foundations, all components of the initiative will be iterative, informed by ongoing learning and evaluation. Along with convenings and informal conversations, annual check‐ins between grantees and the foundations are planned to “serve as opportunities for grantees to provide feedback on the initiative’s learning and support services, relationships with the foundations, and potential impact within their communities.”

It’s a Matter of When, Not If

The Barr and Klarman Family Foundations identified candidates by accessing information via the Cultural Data Project and Guidestar databases and developed eligibility and selection criteria based on its first cohort.

Eligible organizations must be at least five years old, have at least two full-time permanent employees, run an operating budget of $350,000 to $10 million, and have a “satisfactory health position and diversity of revenue.” Recipient organizations possessed a “strong articulated artistic point of view,” a “clear articulation of the organization’s financial status,” and senior leadership that “has a point of view regarding community impact and seeks relevancy to multiple constituencies, such as audiences, neighbors and community, and national colleagues.”

The initiative comes during a time when institution funders continue to provide critical support for small to midsize arts organizations.

A few months back, the Andy Warhol Foundation announced the 42 recipients of its spring 2018 grants, totaling $3.6 million. Around the same time, the Kenneth Rainin Foundation presented the results of a two-year strategic review of its Bay Area grantmaking, which included a “rigorous investigation of existing and alternative organizational models and support systems.”

And Bloomberg Philanthropies has been methodically rolling out funding for small to midsize organizations through its $43 million Arts Innovation and Management program.