“Be Open to Evolving.” How a Regional Arts Funder Centered Equity, Increased Payout, and More

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In October 2020, Bonfils-Stanton Foundation President and CEO Gary Steuer told me about how the Denver-based arts funder increased support for organizations led by and serving people of color by 670% — from $75,000 in 2013 to $578,000 in 2020. As I noted at the time, the foundation’s evolution offered an instructive case study of a regional funder that closed the funding equity gap without completely cutting off support for existing larger and wealthier grantees.

But the foundation’s work wasn’t done. I recently caught up with Steuer and he told me that the seven-year racial equity journey, while both extensive and impactful, “wasn’t the same thing as a strategic plan. We needed to layer a new process on top of that.” And so, in November 2021, the foundation embarked on its first strategic planning process since 2016. Working with the nonprofit consulting firm La Piana, Steuer and his team worked to set up new initiatives, recalibrate existing programs, and settle on the right annual payout rate, beyond the IRS-mandated minimum of 5% of assets.

In early June, the foundation presented the final product — a new strategic framework centering racial equity and focusing on supporting the area’s cultural organizations through grantmaking, cultivating a pipeline of nonprofit leaders and artists, investing its assets toward mission-aligned investments managed by BIPOC owners, and elevating the “value of arts and culture through increased storytelling.”

As a small, place-based arts funder, Bonfils-Stanton Foundation may seem a bit “niche-y” to serve as an example for the rest of philanthropy. But I’d argue that leaders representing foundations of all shapes and sizes can learn a lot from the way Steuer and his team tackled a host of timely challenges — how to identify and support BIPOC organizations, the calculus behind funding new focus areas, the 5% payout debate — all without having to reinvent the wheel.

“Here within the foundation, we often talk about this new strategic framework as ‘evolutionary’ rather than ‘revolutionary,’” Steuer told me. “And that’s because in many cases, it builds on work we’ve been doing for years.”

A new Equity in Arts Education grantmaking initiative

We pick up the story in the fall of 2020. It was around this time that foundation board and staff members underwent racial equity planning, training and self-reflection with the Gemini Group, a racial equity consultancy. This served as the groundwork for the year-long strategic planning process that commenced the following November. Working with reps from La Piana, Steuer and his team took a deep dive into existing practices, researched peers’ grantmaking models, proposed new ideas and bounced them off internal and external partners.

“We’d say, ‘We may want to step into the arts education support space, and here’s our idea. Does it work?’” Steuer said. “The people we asked had expertise in arts education. They might be grantees, but many weren’t, since we hadn’t historically supported arts education.”

This discussion led to the creation of a new Equity in Arts Education program, one of the slew of new initiatives that emerged from the strategic planning exercise. For Steuer, it was a good example of the evolutionary nature of the process since he and his team were able to draw from previous experience.

Six years ago, leaders began to look at intersectional work in the arts and culture field, such as exploring ways that the arts can support mental health. However, the board feared that by expanding its charter, its small staff would be inundated with applications. In response, the foundation partnered with the Boulder-based Hemera Foundation to create a program, Arts in Society, supporting the connection between the arts and other civic issues. The Denver-based RedLine Contemporary Art Center selects the recipients and administers the program.

The foundation’s new Equity in Arts Education program will follow a similar model. The Denver-based Think 360 Arts has signed on as the regrantor and will operate the program, while Bonfils-Stanton will fund the administrative and grantmaking components.

“We need to go upstream to address the challenge” of engaging children who don’t have access to the arts experience, Steuer said, noting that the foundation will also forge new ground by directly making grants to arts education policy and advocacy organizations.

Targeted support for distinct sets of organizations

Steuer laid out other ways the strategic planning process is shaping operations. For example, stakeholders acknowledged that new programs and the accompanying barrage of new applications could put an added burden on time-constrained board members. In response, Steuer oversees a new policy in which grants of $20,000 and under can be approved at the staff level, freeing up board members to focus their attention on larger grants.

The process also revealed types of organizations that had been frequently underserved by the region’s funders. These were what Steuer called “nascent organizations, like independent choreographers who were thinking about forming a company, who weren’t ready to be funded by us, but they still needed help.” Previously, the foundation didn’t have the capacity to provide such organizations with strategic planning support. Now they do, thanks to its new Technical Assistance grant program, in which organizations fill out a brief application and funding flows on a rolling basis.

Similarly, the process highlighted three distinct sets of BIPOC-focused organizations that fall under the foundation’s purview. The first were established organizations that were receiving general operating support at much higher levels than they had given in the past, Steuer said. The second were small organizations that have been around for many years, are volunteer- and board-driven, and could apply for $5,000 general operating support grants.

Then there were organizations that were in the middle — groups with staff of one to three that serve an important segment of the community and are poised to grow. Steuer and his team identify ways to support these organizations moving forward, such as providing technical assistance, consulting, general operating support and convenings. “We realized we didn’t have something that was providing a distinct group of organizations with stability and capacity to serve their mission,” he said.

Above and beyond 5%

The foundation upped spending in response to COVID and the uprisings following the murder of George Floyd. But its leaders realized during the strategic planning process that “there was no way we were going to be able to do all that we wanted and stick to the 5%” annual payout amount, Steuer said.

They weren’t alone. Ever since the transformational events of 2020, trustees have been revisiting both sides of the perennial payout debate. At a time of unprecedented need, do organizations owe it to their communities to move more money out the door, even if it threatens its perpetuity? Or should trustees stay the course, ensuring that organizations can tackle challenges 10, 20 and 50 years from now?

Steuer walked away from the exercise with the realization that this wasn’t a binary choice. “There’s an impression that foundations are either perpetual or must spend down within 10 years because the donor said so,” he said. “But when you run the numbers, foundations could give away significantly more and still have a runway that’s decades long.”

The board landed on a plan to spend between 6.5% and 7% annually over a three-year period. At the conclusion of that timeframe, they’ll determine whether to roll back certain programs, stay the course, or revert to the 5% benchmark. Steuer noted that it won’t be an empirically precise exercise since some of the new programs won’t be launched until year two or three, and trustees may not have sufficient data to gauge impact. That said, they’ll make the best decisions they can based on the data at hand.

Should trustees decide to keep the spend rate at 6.5% or 7% after the three-year period, the math suggests the foundation will transition to what Steuer calls a “long-term spend-down” posture. “We’d be around for roughly another 30 years, depending on returns,” he said. His team also revisited the foundation’s impact investing strategy throughout the strategic planning process. “Like a lot of other funders, we were asking questions about ‘the other 95%’ of our investments and how we could align them with our values,” he said. You can read more about the foundation’s impact investing strategy here.

“Be open to evolving”

It’s been an eventful three years for Steuer and his team, and I asked him what advice he’d give to peers who are about to embark on a similar process.

“The hardest part was being humble and open to learning,” he said. “I think we’ve all developed, throughout the course of our careers, preconceived notions about the right way to do things, and I think you need to set that aside when you’re doing this work and be open to evolving, especially when you’re doing work around racial equity.”

Steuer said he had conversations with peers about this very issue at a recent conference, and the big takeaway was the importance of moving beyond the required training and buzzwords to fundamentally revisit one’s approach to the world.

“It means figuring out how to do that, and then, as a leader, bringing your team along for that journey, so this work isn’t just about executing a strategic plan, but changing the world,” Steuer said. “That’s been both the biggest challenge, but also the most exciting opportunity for me and the organization.”