SMU DataArts Fundraising Report Reveals It Takes Money to Make Money
Study Finds as Arts Organizations Spend Less on Fundraising, ROI Drops
SMU DataArts today released its latest report on national fundraising trends in the arts and cultural sector. The report finds that organizations are spending less on fundraising, and getting less in return per dollar spent. Overall, the amount of contributed revenue generated from every dollar of fundraising expenses went down from $8.80 in 2014 to $8.56 in 2017.
The study also found a vital source of contributions for organizations was the individual donor. Individual donor contributions increased in the past four years. Average individual contributions rose each year – donors were fewer, but they gave more. This could be explained by the average organization allocating 62.4 percent of fundraising expenses to staff, up from 54.4 percent, which allows for further relationship development with donors.
“Our analysis has shown that when organizations invest more in fundraising, they raise more money, indicating that smart investment is key,” said Dr. Zannie Voss, director of SMU DataArts and professor of arts management in SMU’s Meadows School of the Arts and Cox School of Business. “We encourage organizations to use this report as an effective management tool to set goals, make strategic decisions and contextualize their performance with key stakeholders.”
Highlights of the Fundraising Report
Findings by Sources of Contributions:
- Individual donors save the day. They are the most important source of contributions for the average organization, and their giving relative to expenses has gone up in the past four years. Average individual contributions rose each year – donors were fewer, but they gave more. The average number of donors per organization dropped from 480 in 2014 to 462 in 2017, while the per-donor average went from $327 to $436.
- Support from other sources – trustees, corporations, foundations and government – varied less than 1 percent annually and over time, relative to expenses. This indicates reliability and stability of relationships and consistent commitment.
- Government support remained fairly stable, with 68 percent of the total coming from local sources, 18 percent from state funding and 14 percent from the federal government.
- In 2017, corporate contributions covered 2 percent of arts organization expenses; trustees 4.1 percent; foundations 4.3 percent; government funding covered about 6 percent; and individuals 8.3 percent.
- More state and federal grants in a market led to higher giving from individuals, trustees and corporations, but lower giving from foundations.
Findings by Sector:
- Seven sectors saw an increase in return on fundraising over time: arts education, community, general performing arts companies, music, opera, orchestras and other museums. Four sectors saw a decline: art museums, dance, performing arts centers and theater.
- Art museums had the greatest decline in return on fundraising at 20 percent.
- Numerous sectors hit a ceiling of about $8.50 raised for every dollar spent on fundraising.
- Opera companies covered more of their budgets with support from trustees than any other sectors did. Trustee giving supported 9 to 12 percent of opera budgets each year.
- Orchestras and art museums received more money from individuals in 2017 than 2014, but equal or less money from all other sources.
- Theaters received more money from all sources in 2017 than in 2014, except for trustees; trustee giving to theaters declined.
Findings by Organization Size:
- Small and medium organizations’ return on fundraising rose over time – they became increasingly effective and efficient.
- Large organizations’ return on fundraising declined steadily over time.
- The larger the organization: 1) the more diverse its portfolio of contributions; 2) the less reliant it is on cash contributions given in the current year for current activities; and 3) the better able it is to do multi-year planning and attract funding for future projects. Large organizations covered 22 percent of expenses with contributions made this year for this year’s projects and another 19 percent with gifts made in a prior year for this year’s projects. By contrast, small organizations covered 47 percent of expenses with current year gifts and 3 percent with prior year gifts.
Findings by Geographic Location:
- New York had the highest percentage of expenses covered by government support, 9 percent. Washington, D.C. had the second highest amount at 8 percent. Medium markets had 6 percent. Chicago had the lowest amount, at 2 percent.
- New York organizations had the highest average number of corporate donors, 12; Los Angeles had the lowest, at 4.
- Foundation support was strongest in Chicago, covering 7 percent of expenses. New York organizations got more foundation grants than those in any other market, but they only covered 3 percent of expenses.
Recommendations for next steps are provided for report readers and for arts organizations who want to grow. Dr. Voss suggests they “consider an audacious project in the future and galvanize people around it now.” She said, “The ability to generate excitement among donors now for a project in a future year – multi-year planning – looks to be a key to growth.”