Endowments – A Legacy for the Future?
7 July 2011 | By Cause4 staff
Jeremy Hunt, Secretary of State for Culture, Media and Sport, this week announced the third pillar in the Government’s philanthropy policy for arts and cultural organisations – endowments.
Central to this policy is a £55m endowment fund from which arts and heritage organisations can begin to build a larger fund, held in perpetuity, which they can use for annual running costs through the interest earned. The Secretary of State believes that this policy will help secure the long term financial resilience of cultural organisations.
Organisations will be able to bid for grants from £50,000 up to £5 million to support endowment fundraising as match funding raised from private philanthropic sources. Broadly, those seeking grants will be expected to match every £1 of public funding with a further £2, although smaller grants will be matched by less. This is to reflect that every arts and heritage organisation is at a different stage in their philanthropic journey and to encourage organisations of all sizes to apply to the fund.
Following hot on the heels of the Arts Council’s announcement last week about Catalyst Arts, a £40m fund to increase private giving and to help arts organisations increase their ability to successfully fundraise, today’s announcement increases the £80m investment into philanthropy already announced by Government to £100m.
Of course, endowments are often used in the US by large cultural organisation but they are less common in the UK. Therefore the question is, will the arts and heritage sector, philanthropists and corporations take the up challenge and make Hunt’s vision a reality?
The Secretary of State is right in thinking long term – Government should always be thinking about the future and providing the framework in which a sector can successfully grow. He is also right to advocate that cultural and heritage organisations must build a more diverse portfolio of funding to provide better financial resilience in the future.
For many organisations, however, surviving financially year to year is a significant challenge and any strategic investment of money and resource to set up an endowment is not realistic. At a time when many cultural organisations have had to cut budgets there will be little appetite to dedicate precious resources to apply for funding and to secure the match funding for 10, 20, or 50 years hence. Furthermore, the current state of the financial markets and their recent yields may also mean that even the most established institutions and philanthropists may question the potential success of such a policy.
Further questions also remain over whether philanthropists and corporations want to invest their money in a general endowment fund in which they may not see direct tangible output nor see their name in lights. An endowment is truly philanthropic and organisations will need to find philanthropists with a shared aspiration for this kind of legacy. It also remains to be seen whether Government can shout coherently enough to convince private donors that they have done enough to make giving attractive through the tax system, to change their giving habits.
Only time will tell but if this policy is successful, future generations may look back on this day as one of the most significant in the history arts and heritage funding.
That only leaves one remaining question - what about sport? While it is often said that 90% of sponsorship money goes to sport, and of course the wealthy love to buy our sports teams, in reality not enough of this funding is invested into sustaining grass roots sports. Sport also needs new philanthropists and the Government must recognise while sport, arts and heritage are different, they should all be a part of the philanthropic strategy being developed at DCMS – only then will it fully fulfill its vision for a society that truly cares about itself.