How do you fund for resilience?

This week I was part of the panel at MMM/ERA21’s latest Peer-to-Peer event in Newcastle, the topic being ‘funding transition’. Chaired by David Carrington, the panel was myself, Penny Vowles from the Northern Rock Foundation and two leading American thinkers on funding and philanthropy, Clara Miller of the Non-Profit Finance Fund and Ben Cameron of the Doris Duke Foundation. (The audience was pretty stellar too, of course.)

It was a really stimulating conversation, encouraging and daunting in equal measure. Encouraging because it showed potential ways through the issues which seemed to face arts organisations on both sides of the Atlantic. Daunting because those issues are so deeply ingrained in the mental models of both funders and funded, and because of the political pressures we face in this country, given our public sector-leaning funding model. (Although, as Jim Beirne from Live Theatre pointed out, the issues of under-capitalisation, lack of focus on business growth and fluctuating revenue streams seem common to the UK and the US, where government funding is a very small percentage of income.)

Both Clara and Ben have a great turn of phrase. Clara described how NPFF had realised it could ‘either nurse the malaria patients one by one or drain the swamps’ and decided to try and deal with the underlying issues. She also introduced us to ‘the four horsemen of the non-profit financial apocalypse’ – Overbuilt, Over-endebted, Labour Economics and Disappearing Revenue.

If there was a single idea to take away and pass on from the very rich discussion it was this:

Both funded and funders need to acknowledge the difference between capital fund and revenue funds, and use them well. Capital is not just about buildings, but about building enterprises (organisations if you don’t like that word, though Clara also suggested we ‘learn to love our inner enterprise’.) The best definition I heard was ‘investment that builds capacity to attract reliable income'. Revenue funding is about ‘buying’ – of cultural value, or activity, or ability to take risks, depending on the funder. This is not an either or: for a resilient organisation and cultural sector, building and buying are necessary. Doing one without the other is the biggest risk of all for funders. Mistaking one for the other is unhealthy for organisations. It’s often – maybe always? – about survival and transformation. The task of being flexible and responsive enough is shared – and goes all the way through the system, which in the case of the UK, takes it right up to central government.

Video and recordings of the conversation will be available on the MMM site very soon. You can also catch up on the Steady State discussions last month.