As director of the Arts Program at The Doris Duke Charitable Foundation (DDCF), Ben Cameron led a partnership with the Nonprofit Finance Fund from 2007 to 2013 to establish the Leading for the Future initiative, which provided $10 million in change capital and consulting support to ten performing and presenting arts organizations. This interview is the latest in our series on this way of giving.
We’re talking about change capital, which is intended to make fundamental changes in how the organization does its work so that it can be healthy for the long term, rather than to projects or to programs. What’s at stake? Is change capital important to arts organizations, and if so, why?
The bottom line is we—the philanthropic sector as a whole—have created a dysfunctional funding dynamic. We discourage candor; we have woefully under-invested in infrastructure and personnel; we have forced people to a poverty mentality where they have to budget to zero; and we’ve used potential surplus as justification to cut a grant or pull back on our contribution.
We’re now in a new moment in the arts—a moment that may be a kind of arts reformation, not unlike the Religious Reformation. We’re going into a chapter where we will have to solve problems and confront issues and challenges for which there are no known answers.
And it’s a disorienting shift. For the last 30 years, if we needed to build a building, we knew how to raise a capital campaign, or if we found we had a structural deficit, we knew how to raise an endowment.
We’re not going into technical changes—and I’m using language from Ronald Heifetz—we’re going into adaptive changes, attempting to address problems for which there are no known answers. Adaptive changes are, I think, increasingly the issues of the day. And in this quest, we’re going to fail more often than we succeed, which can be expensive to do, and sometimes we have. Organizations will be increasingly asked, like artists, to deal with intuition, ambiguity—a shift that will require us as funders to invest in a new dynamic in which we reward not cosmetic success, but instead clarity of values, curiosity, diligence, and ultimately depth of learning. And that’s what we’ve got to talk about.
What is your perspective on the future of change capital, in this universe where people who have money are being enticed by the idea of getting both a financial and social return?
Venture capital philanthropy was once explained to me as the following: you find an organization that’s identifiable by the excellence of [its programs]; you pump in significant resources for a relatively short time; and you take it from being an individual dependent entity, to a systemic, financially viable system. The example I was given was, you find a really good malaria clinic, you pump a bunch of money into it to replicate the clinic, and you end with a network of malaria clinics that are covering southern Africa and have their feet under them and then you can pull out and move on to another cause.
As we know, that falls apart in the arts for two basic reasons. A, the nonprofit arts are never going to be self-sustainable. The idea that you’re going to have a system that’s going to be self-sustainable is probably a misplaced notion. Even in the commercial sector, for example, only a handful of Broadway shows every season return money to the investors. And it gets worse when you get into in fields that have no commercial equivalent—opera, modern dance and all that—the likelihood of financial self-sustainability is almost impossible to imagine.
B, the premise of replicability for the arts is antithetical to what the arts are about, because the arts inherently prize the individualistic and the idiosyncratic. I mean, we love Picasso because there’s only one of him, or Martha Graham because there was only one of her, and we all know that the fifth cast in West Side Story is infinitely less satisfying than the first.
Especially in this moment when the market so often is used as the barometer of worth, we have to articulate a value shift: one that positions the market as a backdrop rather than as a determinant to value, one that allows us to collectively prize the uniquely individual and the individually inspirational, rather than looking for the systemic or generic.
We’ve been giving a lot of thought to how we describe this kind of capital grant-making. At Heron and to an extent at Nonprofit Finance Fund, the focus is on the “enterprise” rather than specific programs. What are your thoughts on this?
If you say to me, “Ok, here’s your chance to invest in a breakthrough idea” as opposed to “invest in an enterprise,” in terms of just the animating energy around those two things—for me, it’s very different. Besides, the word enterprise always conjures up Star Trek, and we can get lost in language.
But ultimately we are investing in an organization’s ability to execute ideas. It is more galvanizing to cut all of that mid-tier language and cut right to the bottom line: we’re investing in breakthrough ideas or potential transformative ideas, whatever you want to call it, and we need an organization with the long-term ability to execute to do that. It just feels different. It’s perhaps using programs to identify optimal candidates for investments but then investing in the enterprise itself.
As you know, funders are often concerned about risk. In the world of venture philanthropy and more specifically with the Leading for the Future initiative with NFF, grantees are required to develop a plan that articulates metrics to determine whether the organization’s on track. Serving on a grantee’s boards of directors is somewhat common among growth capital investors. What is your current thinking about the ways to mitigate risk that a funder’s dollars are being put to their best use?
“Not all of these things are going to work. We absolutely promise you if they all work, we were too conservative in what we chose to do.”
Number two, new funding models will require new metrics: At a convening of our Innovations Lab, we had a presentation by Jamie Gamble, [whose paper was published by] the JW McConnell Foundation in Montreal. His session was about his paper, the “Developmental Evaluation Primer.” As he spoke, everybody in the room sat up. There was a level of hunger for a fuller discussion about that alternative metric system that was really compelling—and we saw the same response at the national service organization meeting that we convene every year when this same information was shared with them.
I have multiple responses to that question. One is, at DDCF, we’re not risk-averse. As we articulate strategy, we have repeatedly said to our board, “Not all of these things are going to work. We absolutely promise you if they all work, we were too conservative in what we chose to do.” And tapping into what they know in their own lives about the value of experimentation in their own business, and testing strategies and incremental sorts of testing—they know that everything doesn’t work. So [we remind] them, especially now in a time of redefinition of an entire sector, of the value and the necessity of being aggressive. And we also believe we should model the values we’re trying to encourage. So if we’re saying to the arts sector, “Be bold! And don’t be afraid to fail!”, then we can’t choose only people that we know won’t fail. We can’t create funding initiatives that are risk averse or be afraid that the initiatives themselves won’t work. We see initiatives as inquiry in action, as opportunities to learn, rather than imposing answers we think we have discovered. We should model what we’re trying to support, so we should be bold and be aggressive, number one.
“[I]n moments of redefinition and change, proper evaluation may be less like scientific measurement than about how we evaluate parenting.”
His basic argument was that typical metrics revolve around cause and effect—the “if we do A then B will happen”. But in moments of redefinition and change, proper evaluation may be less like scientific measurement than about how we evaluate parenting, for example. If it was just as easy as saying, “Feed the child three times a day, and read to them an hour at night, and we guarantee you the kid will turn out well”, everyone would have good children. We know it’s not that simple. We know that the cause and effect things don’t play out in many degrees, in terms of, just things around parenting or what makes a good marriage, or whatever. And a lot of the mess that you guys have is more equivalent to that kind of standard than it is around launching a model car or something very step-by-step. Essentially a lot of the metrics in the arts field have been scientific rather than developmental, more appropriate for the technical changes I referred to earlier than for adaptive changes. I think that as a field we need a different way of measuring.
And then the third thing: All this is messy and ill-defined at times and ultimately thrilling. But I think maybe we just have to confront people and say, “With all due respect, if you’re not risk-positive, then perhaps this game is not for you. Perhaps this isn’t your optimal area of funding. Because if you’re not risk-positive about this, you’re going to set yourself up for a big old failure initiative, and you’re going to quit the nonprofits, and push grantees in ways that they will endure because you’re the funder and they need the money short-term and the potential relationship long-term but frankly that they have neither the time, nor the energy, nor the appetite for. And that’s not fair to them, and it’s not fair to you. So how do you understand your own risk tolerance?”
Haha, print that one! “Get out of the game!” God knows, there are enough ongoing needs about behavior that is sustained, even while change is being attempted, that need funding.
You mentioned that self-sustainability is elusive in the arts. What are your thoughts on the wisdom and possibility inherent in using change capital to invest in an organization’s ability to raise more money in addition to its ticket sales, thus making it a little healthier on the revenue side?
I don't think it’s ever a bad thing to help an organization be healthier on the revenue side for any length of time, but the bottom line is, you don’t want to throw them way out on a limb that you’re going to then saw off, and leave them plunging to the ground with no support mechanism. I’m all for helping anybody at any point. The question is, can you be clear about the exit strategy, and when that’s going to be, and how you do that? And how do you prepare for that? If you can help them raise more money, God bless. I’m just at a moment right now of thinking that the whole way that we raise money is changing so much in the arts. You may tell me that it’s every bit the same in other sectors, but when Kickstarter gives away more money than the [National Endowment for the Arts] budget to the arts last year, ok, the whole thing is shifting.
Can you discuss the tension between operations and program with regards to funding?
I think that the hardest thing in the arts field around this terrain is the natural inclination in the arts funding world to focus on funding artists and art—and God knows artists and the art are woefully underfunded and under supported. But I think the terrain we’re talking about is a non-artistic terrain. I’m oversimplifying but, when all things are equal and you can invest in marketing or you can invest in another five actors and a better set, in almost every arts organization the pressure, the heart, the temperament is to invest in the set and the artists. And certainly funding panels, when asked to choose between an artistic objective and a management objective, 99 times out of 100 will go for the artistic.
“[T]he symphonic repertoire is played at a higher level today than at any time in human history. The kind of funding you and I have been talking about is not money to help you play it better. You are playing it fine.”
And yet, many of the challenges we face as a field won’t be solved simply by better art. This isn’t about a commissioning program. It’s like the orchestras for years saying, “if we just play it better, they will come.” But the symphonic repertoire is played at a higher level today than at any time in human history. The kind of funding you and I have been talking about is not money to help you play it better. You are playing it fine. This is money about the other organizational dimensions. And that’s just a hard thing for a lot of arts organizations and the arts philanthropic field to hear. I think. Maybe I’m being harsh and misjudging them. But in general, I think when you offer people money, they will inherently want to throw it toward artistic objectives, and it’s harder for them to think in terms of these kinds of more infrastructural needs that may not have an immediate artistic payoff.
And I think there’s a lot of reinforcing negative press around that right now, and people say, development directors, you’re making too much, or managing directors, you’re making too much, or the management staff makes more than the artistic staff, or whatever. But if you don’t have a healthy infrastructure, the arts are never going to get on the stage. So it’s just a relative call of how you put those things in correct proportion. There’s real division in the field about that right now. I mean, there are a lot of people who just think, if you’re not funding the artists, you’re really not doing your work.
The other thing I will say is, the biggest win for us around this kind of conversation with artists and arts organizations is when we just literally say, “We want to help you focus on the balance sheet, because a healthier balance sheet means more artistic freedom, and that ultimately, you cannot do artistically what you want to do if you’re hemorrhaging red ink.” And whereas you may not see this money as going into the art, if this sheet looks better, you as an artist have more freedom. And then they sit up and pay attention. But if it’s only framed in terms of the balance sheet or, let’s just make marketing stronger, then there’s a lot of resistance.
But the big takeaway of our work on capitalization has been this: while we have tended to focus on statements of activities and ignore balance sheets, we have created organizations that have done wonderful projects but are now miscapitalized and imperiled. While you may not see funds designed to support organizations as going into the art, it may ultimately be a fantastic artistic investment by giving the artist a stable enough platform to realize her or his aspirations. The challenge for funders is how to be effective in this quest, and how to place so many competing priorities in the correct proportion.
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