Building Organizational Capacity
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EARNED AND UNEARNED INCOME

EARNED INCOME

Arts organizations benefit by taking a careful look at their earned income potential.

Greatly accelerated competition for donations and funding has forced not-for-profits to look for new ways to generate revenue. Arts organizations are no exception. In developing a strategy for earned income generation, the effective arts organization will consider establishing a revenue base consisting of multiple avenues all leading to the same destination: earned income. The successful arts organization continually must seek unique and innovative ways of earning money. Arts organizations, however, face major challenges in many communities if they want to avoid competing for scarce dollars with their members or others in the community whose support they need and value.

During the planning and budget process, an arts organization should take a careful look at its earning potential. While many programs and services do not lend themselves to the generation of income, it is wise to consider ways to package programs and services that will provide some revenue support, while at the same time serving the organization's mission and constituency. The object is to maximize the potential for earned income inherent in the program and service base of an organization.

UNEARNED INCOME

To achieve a level of unearned income sufficient for their needs, arts organizations must carefully examine their programs and services, in order to communicate to others their need for support.

Program Planning
The planning process is critical to all areas of management, and especially to the area of unearned income. If program planning is sound, it will greatly facilitate fund-raising. Programs and services should first meet the needs of the arts organization, before they are considered from the standpoint of a particular funder's needs and requirements. The best and safest way to fund-raise is to find the right source to support a program that fits well and comfortably within the organization's mission and goals.

Fundraising
As nonprofit organizations grow and funds become more scarce in all sectors, competition for philanthropic support becomes increasingly strong. For arts organizations, the need for contributed dollars is magnified by the fact that in many communities, there is competition from other organizations, even members, in seeking funds. The successful arts organization, therefore, continually seeks innovative and new ways to raise funds-ways that serve the community.

Fundraising's Relation to Program Planning
Programs and services of arts organizations should meet the needs of the organization, rather than the needs of the funder. While it may be understandable that an organization tailors certain programs to meet the criteria of an important funding body, the prime directive for long-term success in fundraising is to search for, and find the right source to support programs and services that have been developed because they clearly serve the mission of the organization. It is reasonable however, to position a particular program so that it addresses a funder's criteria for support without compromising the integrity of a program.

Board Participation
As the organization's primary "sales force," the board plays a major role in an organization's fund-raising success. The willingness of board members to get involved in helping the executive director and development staff raise funds for the organization depends on many factors. Prominent among these is the extent to which trustees are informed about the organization's mission and goals, and the degree to which they personally identify with the mission and goals. Through the planning process board members can become "invested in" and part of the mission and goals set forth for an organization.

The Alliance of New York State Arts Organizations has a 28-year history as New York's primary service association for community based arts and cultural organizations. The Alliance provides leadership and vision, and delivers services, resources and tools that strengthen community cultural organizations. The Alliance monitors, informs and mobilizes the field on statewide and national issues affecting the arts and assists local arts agencies in building community support and developing effective grassroots public policy.

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