Art & Humanities Council of Montgomery County
HomeAbout usCalendarFundingGet InvolvedResourcesPartnersContact
 
Findings and Recommendations on Critical Issues

1. Funding and Sustainability: FINDINGS

Introduction
The system of arts and humanities funding support in Montgomery County comes from earned income and a mix of private and public resources. On average, foundations, corporations and individuals each contribute around 5% of the total operating revenues of cultural institutions. Local government support is in the same range, but it tends to be concentrated very heavily toward the largest arts and humanities nonprofits.

Public Sector Support

As discussed in the chapter on Planning Context, County government funding for the operating needs of arts organizations was firmly established after an important advocacy effort by a group of the larger arts organizations. The County government appropriated increasing amounts of funds beginning in 1996 for allocation to the “majors” based on their prior fiscal year’s revenues. These operating grants have been distributed on the basis of a relatively short application form without any narrative about the organization’s goals or what they intended to accomplish with these funds. Unlike other categories, grant applications for this funding were not reviewed by peer panels and have come to be seen as an entitlement grant without competition among organizations.

The County government also appropriated a smaller amount of funds to support grants to organizations under $100,000 in revenues. These “organizational enhancement” grants were limited to $3,000 each. Applications have been reviewed by a peer panel to determine the distribution of funds. Due to the limited amount of funding, organizations often have been awarded less than $3,000. For these smaller organizations, funding has been a competitive process.

In addition to operating grants, the County Executive instituted a process for funding one-time Cultural Facility Improvements Grants. Although funded from the County’s operating budget, these grants are only for use in purchasing equipment, renovating space, or constructing new facilities. The “one-time” nature of this grant is favored by elected officials because it does not constrain the government to fund them year after year. In changing economic times, they can be increased, reduced or eliminated to reflect funds available. They do not have the same impact on the budget as support for operating expenses where ongoing and increasing expenses would appear to call for ongoing and increasing support from the County government.

Private Sector Giving

Private sector funding is also an important part of the mix. It should be noted, however, that private sector support generally lags behind comparable regions of the country. This is true for two important sectors – individual giving and business/corporate support. The exception is in the area of foundations, where funding seems to be in line with national trends and averages. This shortfall of funding from the private sector represents something of a paradox in that Maryland is home to many nonprofit organizations. According to a 1997 study, nonprofits provide one out of every 12 jobs in Maryland, and new organizations are being created at a rapid rate. While that employment pattern could be an indicator of higher levels of private giving, it may more accurately be an indicator that private charity is spread thinly among many charitable purposes, according to David P. Hutchinson, President of the Greater Baltimore Committee.

Cultural purposes face particular challenges in Maryland. Charitable contributions to the arts and humanities are the least popular among fifteen causes, according to the definitive statewide study of charity, Maryland Gives. Only 30% of donors give to the arts and humanities, contrasting with an 81% rate for persons in need, 76% for youth and 72% for health and medicine. Cultural giving even trailed behind giving to other countries. The Maryland Gives survey recorded responses like “the arts are not warm and fuzzy” and “not everyone benefits from a museum.”

Foundations
There is a generalized perception that area foundations are doing their share of the cultural funding, given their relative sizes and the demands for funding that they are experiencing, not just in the cultural realm, but from all charitable causes. This is most true of the large, general-purpose foundations. Many respondents in the planning process noted that Montgomery County cultural groups should go beyond the larger, well-established foundations and develop relationships with the numerous family-designated funds that collectively hold sizeable wealth, but that are currently more aligned with nonprofits in Washington, DC, or in Baltimore.

The foundations interviewed in the planning process expressed considerable concern about the large number of capital campaigns in the pipeline for nonprofits in the DC area – more than 60 at the present time, ranging from $500,000 to $200 million (not including area universities). Foundation representatives expressed some concern that they would not be able to support this many fund-raising efforts, however worthy the purpose. Several interviewees indicated they would be more inclined to support a package proposal from Montgomery County cultural institutions at a higher level than the sum of smaller gifts to multiple campaigns. They stated that the Arts and Humanities Council would be the logical agency to advance such a package proposal. This option was discussed with representatives of various arts and humanities groups that have or are planning capital campaigns. After much thoughtful discussion, the idea of a combined capital campaign was not adopted, with the groups citing the various stages of development and schedules of the individual campaigns and the differing abilities of the various cultural groups to provide support for a combined capital campaign.

Business/Corporations
Corporate support for cultural purposes in Montgomery County is low and disappointing. With the notable exceptions of Lockheed Martin, Giant Food and a few other businesses, cultural philanthropy is not a priority; indeed, civic giving is not a high priority. Corporate giving constitutes, on the average, about four percent of the budgets of arts and humanities groups in Montgomery County, with the larger, well-established organizations receiving the lion’s share of the funding. There are a number of possible explanations for this relatively low level of funding. One interviewee said that corporate civic responsibility died in the late l980s, with all the mergers and acquisitions, leaving few national and international corporate headquarters in Montgomery County. Thus, there is a lack of civic leadership emanating from the business community. Even some corporations that are headquartered in the county have an emphasis, not on civic concerns, but on certain well-defined causes. These causes align with corporate strategies and with issues that are important to corporate executives and owners.

This is not to say that Montgomery County does not have a strong business climate. The Department of Economic Development estimates that there are 30,000 to 50,000 separate businesses in the county, with a fair number of corporate headquarters, especially in the areas of biotech and telecommunications. They expect that the next great area of growth and business development will be in small Internet companies and firms that respond to the move toward federal outsourcing.

It should be noted that a significant transformation in the nature of the corporate community has taken place in the last two decades. Specifically, there has been a shift from “old economy” to “new economy” firms. Old economy businesses had to build direct connections to their local communities in order to succeed. New economy businesses may not relate to their local geographic communities at all, but may rely on national and global networks or systems for their success and prosperity. Most of the newer companies are high tech firms engaged in the biotech or telecommunications industries. Many of these young companies are not yet profitable and thus are not inclined to burden their already negative cash flow with a charitable giving program. Finally, entrepreneurs who are at the helm of these firms are still building their companies and their wealth. As they grow older, raise families and generally begin to sink deeper roots into the community, it can be expected that they may turn their attentions to local civic concerns.

Developing new philanthropic patterns in the high-tech world will be a significant challenge. One foundation officer stated that these new corporations might be responsive to the idea of a “venture capital” fund for the arts. In other words, it may be necessary to package requests in language that the corporations understand. Another interviewee thought challenging the corporate sector with public sector dollars might be a worthwhile strategy. For instance, the County government could support capital funding for new facilities with the private and corporate sector taking responsibility to create endowments for operating the new facilities.

Some corporate leaders interviewed noted heavy competition for scant corporate dollars from the larger, more nationally prominent cultural institutions in Washington, DC. Corporations believe they simply get more “bang for the buck” when investing in the national cultural institutions, especially when this also gives them local exposure. Most corporate representatives did not expect their philanthropic budgets to grow to meet the anticipated need for new cultural funding. While the proposed cultural capital campaigns were generally praised as worthwhile and complementary to one another, corporate executives felt that the collective total of private dollars being sought was daunting. Some expressed hope that the arts and humanities would join together in a single united capital campaign.

One corporate giving officer noted that the company receives more than 100 new requests for funding from nonprofit organizations every week, a number far beyond their capacity to support. Thus, the company has adopted a policy to limit giving to clearly defined priorities that allow them to quickly screen requests. One interviewee noted the lack of any cultural focal point around which Montgomery County cultural groups could come together. This absence could account for the lack of any “sense of urgency” in the area of arts and humanities funding. Contributing to the lack of a focal point is the feeling that it is more difficult to develop a sense of civic responsibility and pride in a county as opposed to a city. In general, business interviewees observed that stepping up charitable giving will be a tough sell in the foreseeable future, but that it would be most likely to happen if local employees are actively involved in the cause seeking support.

Individuals
Although it is the nation’s fifth wealthiest state, Maryland ranks at the bottom in several measures of giving, particularly among those who make more than $100,000 per year, the group with the highest disposable income. According to the Schaefer Center for Public Policy, University of Baltimore, Marylanders lagged $200 behind the national average charitable deduction on federal income tax returns in l997. Maryland ranks in the lowest 20% among the 50 states in the “Generosity Index.” Maryland’s wealthiest citizens contribute less, as a percentage of their incomes, than wealthy persons in other parts of the country. In 1997, those who had more than $200,000 a year in adjusted gross income (average $483,000) claimed an average charitable deduction of $16,455. Nationally, their counterparts claimed deductions averaging $20,398. Ironically, Maryland citizens who earned less than $75,000 a year actually gave more than the average American with a similar income. In terms of specific causes, Marylanders are most likely to donate to social welfare causes, religious organizations, police and fire groups and nonprofit organizations that work to cure disease. Organizations promoting the arts and humanities, drug and alcohol treatment, and overseas relief ranked lowest.

The gap in individual giving shows up dramatically in the budgets of Maryland nonprofit organizations. They receive on the average only 4% of their budgets from private giving, as opposed to 10% nationally. Several reasons have been cited for the individual giving shortfall. One is that many Maryland residents work outside the county, such as Montgomery County residents employed in Prince George’s County or DC, and thus

have divided loyalties. Another reason is that among the newly rich, stock market gains of growing companies have not yet produced a feeling of wealth, and, in many cases, young entrepreneurs are concentrating on building their companies, not giving away their new-found wealth. A third reason is that the region lacks a general “culture of giving” that characterizes the old established communities of the northeastern United States or the South.

Despite the current picture, maryland has historically been a center of philanthropic giving. At the end of the 19th century, wealthy leaders such as Johns Hopkins, George Peabody and Enoch Pratt made large gifts to found universities, libraries and hospitals. That tradition continued into the 20th century with families such as Blaustein, Meyerhoff and Strauss, who invested their fortunes in foundations that expanded the Johns Hopkins University and gave the Baltimore Symphony a home. William and Henry Walters left their Mount Vernon house full of European and Asian Art, creating the Walters Art Gallery.

For many organizations, though, individual giving remains an important source of funding, with private donors gaining in relative importance the smaller the organizations are. While these donations only make up 4% of the large cultural organizations budgets, they account for 14% of revenues of medium-sized organizations and 21% of revenues of smaller organizations. To be sure, this differential does not mean that individual contributions can make up for other types of support. Rather it indicates that mid-sized and smaller groups lack access to the public, foundation and corporate support and must make ends meet with whatever private donations they can muster.

Funding Needs of Montgomery County Cultural Groups

There are two important aspects of cultural funding in Montgomery County. First are the capital campaigns that include support for the construction of new facilities and endowments to guarantee the maintenance and operations money for those facilities. Second, but no less important, are the annual operating needs for the arts and humanities organizations.

Capital/Endowment Needs

Eight cultural institutions in Montgomery County have or will have major capital and/or endowment plans for the five-year period of 1999-2004. They are American Film Institute (AFI), Bethesda Academy of Performing Arts (BAPA), BlackRock Center for the Arts, Glen Echo Park, Olney Theatre Center, Pyramid Atlantic, Round House Theatre, and Strathmore Hall Arts Center. A total of $206,995,000 is required to construct the facilities currently on the drawing boards and establish endowment funds for future operations and maintenance. Facility construction costs are estimated at $167,495,000 and endowment proposals total $39,500,000.

It has been proposed by the cultural institutions that the public sector appropriate the majority of the capital dollars necessary. In combination, county, state and federal

sources are expected to finance $146,570,000 as follows: Montgomery County at $79,100,000, the State of Maryland at $61,170,000, and the federal government at $6,300,000. Private sector sources that are required to complete the projects and establish the endowments as planned total $60,425,000. As of the end of the calendar year 2000, the eight institutions report that they have secured $13,284,000 or 22% of the money needed to complete these projects and establish their endowments.

There is a critical need to ensure that the maintenance and operations monies required for new and renovated facilities will be available from a stable source. Without such a source, ongoing support for daily operations and long-term maintenance of the new venues cannot be guaranteed and will be left to vagaries of the annual budget cycles. All of the maintenance and operation funding flows through the AHCMC grants program. As noted earlier, there also is a significant demand on this source of funds due to the growth in the size and number of nonprofit arts and humanities organizations that qualify for operating grants.

The County government should investigate creating a designated source of funds specifically for operating grants. The source could be designated county revenue or could come from a cultural taxing district. Several other jurisdictions use the hotel-motel tax as a designated revenue source. The Denver Scientific and Cultural Facilities District is an example of a successful revenue district.

Public Sector Support for Capital Projects

During the interviews that took place during the early phases of this planning process, most arts groups were optimistic that the area’s vibrant economy, which has yielded significant state and county budget surpluses, will place their projects in a favorable position for public sector support at the proposed levels. Significant county and state dollars have already been appropriated for some of these projects. These appropriations have reinforced a positive outlook for the entire package of projects. Interviews with County government staff did not suggest the figures proposed were unreasonable, although some County Council members have expressed hope that the private sector would increase its level of giving for these capital campaigns. The County Executive has been very public in his support for construction and renovation of arts facilities. Despite these optimistic views, recent downturns in the economy suggest that the County’s elected officials will be carefully evaluating the cost of future capital expenditures for cultural purposes.

It should be noted that the County government has funded capital projects both from its capital budget and its operating budget. If a facility is owned by the County government, as is Strathmore Hall, then construction funds are appropriated through the County’s Capital Improvements Program (C.I. P.) budget. If a facility is owned by a nonprofit organization, the County government has provided support through appropriations in the County’s annual operating budget either as a direct grant or as a part of the Cultural Facility Improvements Grant program administered by the Department of Recreation. The review processes for the C.I.P. and for the operating budget are considerably different, but both clearly are subject to alterations necessitated by changes in the county’s economy.

Private Sector Support for Capital Projects

The private sector picture could be described as cautiously optimistic. Few interviewees could recall any previously conducted capital campaigns in Montgomery County for county-based nonprofits. The few identified campaigns were modest in size, ranging from $3.5 million to $11 million. The arts groups that are planning private sector campaigns are seeking an ambitious total of more than $60.4 million from corporations, foundations and individual patrons over a five-year period.

Most corporate representatives did not expect their philanthropic budgets to grow to meet this rather substantial need. While proposed projects were generally praised as “unique, worthy and complementary to one another” by corporate executives, the collective total of private dollars being sought was considered quite aggressive. None of the representatives from the private sector wanted to be in a position of responding negatively to any capital requests coming their way. For some, this concern was coupled with hope that the arts and humanities groups would join together into a single capital campaign. For other interviewees, however, targeted gifts more closely matched their philanthropic style; they plan to say “no” to some campaigns, despite their discomfort in doing so. For virtually all corporate representatives consulted, Lockheed Martin was identified as the corporation most looked to for leadership. A gift by Lockheed Martin to a particular project was seen as a very positive signal to other potential corporate donors.

One important factor in the business giving discussion that merits identification is the “amenities strategy” of the County Planning Board. The Planning Board sometimes requires the “giving” of an amenity as part of private development projects. Some cultural institutions have been the beneficiaries of this well-designed economic development approach including BlackRock Center for the Arts in Germantown and Round House Theatre in Bethesda. However, for the corporations involved, their position on capital campaigns for the arts is “I gave at the office.” There is no doubt that the amenities strategy has leveraged considerably more dollars from corporations than one or more campaigns would have leveraged. Nevertheless, the amenities strategy has taken some private sector prospects out of the potential campaign pool.

Regional (non-corporate) foundation representatives reported that the number of capital and endowment campaigns under consideration in the Washington, DC, metro area is “mind boggling.” One interviewee cited 60 campaigns in DC alone. Arena Stage, a prominent and nationally acclaimed cultural institution, was reportedly “backing off” from a $50+ million campaign proposal because of intense competition for philanthropic dollars. Notably, however, foundation representatives were more inclined to support a package proposal from Montgomery County cultural projects at a higher level than the sum of smaller gifts to numerous individual campaigns. Despite that fact, discussions with the affected institutions suggested that there are insurmountable barriers to such a combined capital campaign including confidential donor lists and widely differing time frames.

Representatives from corporations, foundations and cultural institutions were in universal agreement that the time had come for individual patrons to “come to the table” in significant ways. Without them, there was little confidence that the $60,425,000 in private sector support was possible. However, there was great confidence that individual families would rise to the occasion. There was widespread belief that the facility plans under development would attract the interest of affluent residents. Optimism prevailed that these new buildings would have the “panache” currently lacking in the cultural landscape to attract individuals of means. Unfortunately, no feasibility studies have been conducted to verify this supposition.

Public Sector Support for Annual Operating Revenues

Support from government is an important and growing component of the funding mix in Montgomery County. The State of Maryland has a strong Arts Council that provides important funding for local cultural groups. Federal funding is a small, but important piece in the budgets of several organizations, but in the public sector, Montgomery County government has been most important in recent years

The County government has provided about 5% of the dollars needed to support about 20 of the larger local arts and humanities organizations. At the same time, local government support has lagged behind other urbanized counties around the nation. As part of this planning process, Americans for the Arts, a Washington, DC based national arts service organization, was commissioned to develop a comparative study of Montgomery County Arts and Humanities Council and nine other county local arts agencies (LAAs) across the country. (A full copy of that study is included as Appendix D.) The other counties included five county LAAs that are part of county government and four LAAs that are nonprofit agencies, providing services under a contract with county government, as is the case in Montgomery County.

One of the most significant findings of this study was the dramatic difference in the budget levels among these agencies. The average budget for the nine study participants was $8,003,879, while the budget for the Arts and Humanities Council of Montgomery County was $729,469 for the last year in the study period. When including all county government spending for operating support of the arts and humanities, Montgomery County spent $2,949,040 as compared to an average of $11,426,155 for the other nine counties. This means that Montgomery County was spending $3.47 per capita while the other counties were spending an average of $8.14 per capita.

Many LAAs have a designated revenue source to support their operations. Four of the nine agencies receive a portion of the county’s hotel occupancy tax. Two receive a share of the local sales tax. Another two get a set percentage of the local property tax. One agency gets a share of the tax on video rentals and another gets a share of proceeds of

local ticket and admissions taxes. Montgomery County has none of these designated sources to support the AHCMC and other cultural activities in the county.

It should also be remembered that Montgomery County government is the “city” government for the urbanized areas of the county other than the incorporated areas of Rockville, Gaithersburg and Takoma Park. Densely populated areas like Bethesda and Silver Spring are not separately incorporated cities that have their own city arts funding and support programs. Thus, it falls to the County government to supply cultural support and services that might otherwise be provided by a city government.

Private Sector Support for Annual Operating Revenues

While most community leaders maintain a positive outlook on the financial capability of Montgomery County and its citizens to secure the capital funding needed for arts facilities, the outlook for increased annual revenues necessary to operate the new facilities was more cautious. Arts groups were applauded for proposing endowments to operate more expensive facilities and to increase the quantity and quality of programs. It was noted, however, that three-quarters of the endowment funds proposed are for the Strathmore concert hall and education center. There was skepticism that the remaining seven arts groups could grow annual resources quickly enough to meet their needs. Few of the cultural organizations interviewed by the consultant team had engaged in forward business planning that identified the sources of annual revenues needed to support their operations following construction. When asked about projected operating expenses after ribbon cuttings, most groups responded that they were in the process of conducting these analyses. The development of legitimate and objectively accountable business pro formas for each group may be the most important call for action in the process of evaluating the viability of these groups following construction of their facilities.

The development of these future business plans must include the examination of annual revenues. In Montgomery County, an analysis of annual revenues must begin with a discussion of earned income, e.g., ticket sales, class tuition. Cultural institutions of Montgomery County take great pride in their high levels of earned income (contrasted with contributed income and government support) as a percentage of total annual revenues. They are to be commended for an extraordinary entrepreneurial approach to revenue generation rarely seen in the nonprofit cultural sector. Earned revenues of six of the larger cultural organizations interviewed ranged from 71% to 83%. These figures are remarkably consistent across disciplines and across budget sizes. A comparison to national standards would probably find at least 10% less in most cases and significantly less in some.

Annual revenues of Montgomery County cultural groups are growing at significant rates. When asked if the rate of earned income could continue to climb, most arts leaders believed it could. Reasons often cited for the optimism were prosperity in the county, severe traffic congestion that makes local opportunities more and more attractive, and the advent of new and/or expanded facilities. Most interviewees suggested the need to direct more time and attention to annual fund-raising efforts to help fuel anticipated growth.

Individual patronage and corporate sponsorships are significantly lower across financial statements of arts and humanities organizations in Montgomery County than nationally. For example, individual contributions as percentages of total annual revenues ranged from 2% to 17% for six of the larger cultural institutions. These six institutions reported combined revenues of $5,144,000 in FY 97-98 actual end-of-year financial statements. The combined annual contributions of individual patrons were $415,000 or 8% of total annual revenues. Based on national averages, one would expect significantly higher figures both in dollars and corresponding percentages for individual contributions.

Analysis of contributions from individual patronage, corporations and foundations reported by the other arts groups suggests disproportionate support from foundations in the private mix. For example, three major cultural organizations derive 25%, 38% and 44% of their annual contributions from foundations. These would be extremely high numbers in any community.

Individual patronage usually goes hand in glove with ticket sales and other forms of earned revenues from participatory activities like board service. With strong ticket sales and tuition revenues reported by cultural agencies, one has to wonder why individual contributions have not followed suit. There does not appear to be sophisticated dialogue around the question of individual fundraising that would suggest that the arts and humanities groups have mature solicitation techniques and systems in place. Two larger organizations report the addition of full-time development staff as a relatively recent phenomenon. Arts and humanities groups are in critical need of additional training in fund raising techniques, as well as operating support for additional development, to achieve increased individual patronage.

Individual contributions and, to a lesser extent, corporate contributions have the potential to become significant sources of annual revenue for arts and humanities organizations in Montgomery County. Corporate executives have no recent history of leadership and involvement with local cultural groups and few major companies have headquarters in the county. Although the potential for increased corporate sponsorship exists with maturing marketing programs and better facilities, time and attention directed toward individual solicitation would seem to have a greater likelihood of success.

Grant-making and Funding Distribution Issues

The Arts and Humanities Council of Montgomery County, a private nonprofit organization, is the primary arts and humanities grant-making agency in the county. It is designated by an ordinance of Montgomery County government as the local arts and humanities agency for the purposes of distributing annual County government dollars for operating support. During the planning process, a number of issues emerged with respect to distribution of grants.

The County Council articulated one of the most important issues relating to this plan when it commissioned the study. The members expressed concern about the dramatic rise in the level of funding requests, particularly for capital purposes. They raised a fundamental question about what is an appropriate level of County government support and how should it be administered. Corollary issues include what processes should be instituted to evaluate the funding decisions with respect to particular cultural groups and the ability of each group that is funded to raise the needed private sector matching dollars. Fundamentally, these are accountability questions that can and should be addressed by empowering the AHCMC to increase the level of scrutiny of funding requests for both operating and capital support. One important means of achieving better accountability would be for AHCMC to provide technical assistance to arts and humanities groups in developing organizational business plans that will guide their fundraising and organizational development efforts.

Another set of issues that arose in the planning process could be described as “equity” issues. The equity or fairness questions came up in several contexts. The first relates to the method by which the level of grants for the larger cultural groups was set. The current system allocates funding to groups based upon their revenues. While one could argue that this system scales the funding in relation to the size of the organizations, others argue that the system favors institutions that charge higher ticket prices. Some organizations choose to keep their ticket prices low to ensure access to their programs by a broad cross-section of the community. By allocating dollars based on revenues, rather than audience size, quality of programs, community outreach, etc., the system penalizes some groups, they argue. A related concern could be articulated as a question of rewarding stability versus merit. Should the purpose of grants be to reward those organizations who have the most highly priced products to offer the community, or who have the best organizational practices? Or should the purpose of the funding be to ensure stability over time for the local cultural groups by giving reliable operating support from year to year? The answer to these questions must arise from a clear set of policy objectives that must be created and updated on a regular basis by the board of AHCMC.

The other “equity” issue has been raised by a number of small and mid-sized arts and humanities organizations. They point out that 95% of the County government funding goes to a small number of large-budget organizations that have historically received this funding. By and large, they characterize the issue by saying that “large groups get too much money.” However, it would be more appropriate to characterize the issue as a situation where the County government funding pie is too small to support the full range of large, mid-sized and emerging cultural groups. Looking back to the multi-county comparative study, it is clear that Montgomery County’s cultural funding is far below the level of arts and humanities funding that might be expected of a large, affluent, urbanized county.

Another important issue relates to the availability of technical or management assistance funding. To what degree should the support of AHCMC be linked to specific management assistance that could improve the operations of the arts and humanities

organizations and develop their capacities to raise money in the private sector? Universally, cultural groups interviewed during the planning process articulated the need for such technical support and, in fact, many concerns raised by local elected and appointed governmental officials spoke to the accountability that would come with improved organizational capabilities in the nonprofit cultural realm.

Technical Assistance

In addition to direct funding, there is a manifest need for technical assistance to arts and humanities organizations. Small and emerging organizations need help with basic issues, such as how to become incorporated. Organizations established over a longer period may need assistance in learning about sources of funding, such as corporate donations or individual gifts, that they have not yet tried to obtain. Organizations of all sizes and stages of development need assistance in preparing business plans. Specific types of organizations may have very specialized needs. Historical societies, for example, may need temporary help in stabilizing and creating inventories of collections; preservation groups may need help with building surveys or architectural and design assessments; and other groups may need to hire writers and researchers on a temporary basis. Virtually every kind of organization can benefit from consultants skilled in finance and accounting, fundraising, strategic planning, and other areas of nonprofit management. There also is a need to deliver technical assistance to grant applicants about the grants process, particularly those eligible for smaller funding levels at earlier stages in the funding process. Whether the Arts and Humanities Council itself needs to retain staff members with some of these skills or to compile a list so that it can refer organizations to reliable consultants is best left to future staffing decisions. But whatever the composition of AHCMC’s staff, there must be funds available to organize workshops, seminars, and training sessions that will build the capacity of arts and humanities organizations.

1. Funding and Sustainability: RECOMMENDATIONS

1.1 To support nonprofit arts and humanities organizations in Montgomery County, the Arts and Humanities Council of Montgomery County (AHCMC) must revise its grant funding allocation process to include operating grants based on a percentage of expenses, with increased accountability and some elements of competition built into the funding model. The revised funding model should encompass both the arts and humanities and should include:

  • Support for individual artists and scholars;
  • Organizational support, also referred to as general operating support;
  • Advancement support, i.e., support for organizations with specific growth-related needs;
  • Project support for specific programs and activities;
  • Technical assistance support directed to specific organizational needs, such as creating successful strategies for increasing contributed income and/or developing multi-year business plans; and
  • Incentive funding to promote specific goals, such as excellence in management or programming, or responsiveness to special initiatives, such as increased private patronage or creating partnerships and mentoring relationships with emerging artists and cultural specific groups.

Lead Agency: AHCMC

Timeline: FY 2002

Initial Steps:

  • In FY2001 budget proceedings, the County Council took action on the County Executive’s recommended budget and indicated that funding levels in future years would depend on a restructured grants program.
  • AHCMC convened a working group of stakeholders from the following community groups: grantees, prospective applicants, business, other nonprofit organizations, and the Cultural Plan Steering Committee to begin developing new funding categories.
  • AHCMC arranged technical assistance programs and offered them to local organizations at prices significantly below-market registration fees.
  • AHCMC developed guidelines for the FY2002 grants programs incorporating these recommendations.

1.2 The County government should ensure adequate funding to support each of the categories in the restructured grants program.

Lead Agencies: Office of Management and Budget

AHCMC
Timeline: FY 2002

Initial Steps:
§ AHCMC prepared budget request based on restructured grant process to the County Executive in November 2000.

§ County Executive recommends budget to the County Council.

  • County Council reviews budget requests.

1.3 The level of general operating support for cultural organizations by Montgomery County should increase over a period of three years from an average of five percent of the revenues of the larger cultural institutions to a level between ten and fifteen percent of the total income or expenses of all cultural institutions, in keeping with national standards for local government support.

Lead Agency: AHCMC

Timeline: FY 2002 through 2007

Initial Step:

  • AHCMC develops accurate figures for implementation based on new guideline categories as recommended in Recommendation 1.1.

1.4 In order to provide a stable and consistent base of funding, the County government should consider creating a designated revenue stream to support operating grants to arts and humanities organizations.

Lead Agencies: County Executive
County Council
AHCMC

Timeline: By FY 2005

Initial Steps:

  • AHCMC researches alternative models for designated funding for arts.
  • AHCMC initiates discussions with County Executive and County Council

1.5 The County government should increase funding, consistent with national standards, to support the administrative operations of the AHCMC as it evolves into a full-service local arts and humanities agency that offers the full range of grant-making programs, services and cultural development activities in response to the needs of the community. This level of administrative funding can be expected to range from eight to ten percent of the total County funding to AHCMC.

Lead Agency: AHCMC

Timeline: FY 2002

Initial Step:

  • Budget request submitted to the County government calculated as ten percent of the budget devoted to grants.

1.6 The AHCMC should serve as a convener to establish a strategic alliance with a consortium of local foundations interested in raising the thresholds for private contributions for cultural purposes, especially from corporations and individual patrons.

Lead Agency: AHCMC

Timeline: FY 2002-03

Initial Steps:

  • Research potential foundation partners.
  • Conduct initial one-on-one meeting with foundation directors.
  • Convene an initial meeting with key foundation stakeholders to develop a steering committee.

1.7 At some point in the future, the arts and humanities organizations in Montgomery County should consider a unified annual campaign to generate operating funds. This should occur only after other recommendations, such as technical assistance for improved fundraising programs, have begun to be implemented and higher visibility for the arts and humanities among local corporations has been developed.

Lead Agency: AHCMC

Timeline: Starting FY 2004

Initial Steps:

  • Research models for successful united arts funding programs in other cities and counties.
  • Convene a group of organizations to begin exploring the possibility of a united campaign.