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New William Penn Foundation Study Highlights Criteria for Sustainability

The latest research report from the William Penn Foundation (Capitalization, Scale, and Investment: Does Growth Equal Gain?) examines how 160 Philadelphia cultural groups are coping with the challenges of maintaining and expanding operations despite the current philanthropic environment—marked by decreased corporate and foundational support—and ever-increasing competition from the growing number of organizations.
Some of the key takeaways from the report include:
  • Many organizations remain financially weak and under-capitalized, hampering the sector’s ability to sustain itself, let alone grow.
  • Growth (and sustainability) is dependent on external factors including audience demand. Artistic quality alone will not guarantee increased attendance, especially in an environment with increasing competition for leisure time.
  • Succcessful growth needs to be aligned with the mission and goals of an organization, and those goals should align with the goals of funders.
  • Growth is largely driven through investment from a relatively small group of philanthropic investors. Funders and organizations both have a responsibility to evaluate when growth is wise and sustainable; and how best to plan or support downsizing, mergers, or appropriate exits for nonprofits where appropriate.
As the Philadelphia Inquirer and Newsworks WHYY have highlighted, the report raises key questions such as whether the market is oversaturated; whether individual donors are contributing enough to sustain the sector; how to deal with changing audience consumption patterns; and how to ensure an organization can be sustainable over time (and if it cannot, how it might exit gracefully).
We applaud the William Penn Foundation for commissioning this study, which explores data from 2007 to 2011. We also encourage arts and culture supporters to look at our 2014 Portfolio, which includes data from 473 cultural groups in the most recent fiscal year, and trend data from 298 organizations covering 2009 to 2012. Portfolio tracks hopeful signs in the cultural sector's overall improvement in  earned income and increasing attendance, but documents that overall contributed income has remained flat since the recession, with significant declines in local, state, individual and corporate funding.  
Both reports provide a wealth of data that should spark further discussion. We would like to encourage open community conversations between our supporters, artists, organizational leaders, cultural advocates and the William Penn Foundation and other funders. We also invite you to engage with us on Facebook and Twitter around the issues raised in these reports.
Here are a few ideas and potential strategies we'd like to pose as jumping-off points to continue the discussion:
  • How should we measure the success and worth of our sector, in ways other than financial growth?
  • What further research would shed light on market demand for arts and culture, to help organizations to attract audiences and/or supporters?
  • What would help organizations to evaluate their business model drivers and their prospects for success
  • What could funders do differently to encourage organizations to plan for realistic sustainability, including down-sizing?  
  • What would motivate individual donors to more strongly support arts and culture?
Let us know your thoughts. We look forward to continuing the conversation.