Nonprofit Finance Fund (NFF) has released new analysis of its 2014 survey of nonprofit organizations, which includes responses from 919 arts organizations nationwide. The State of the Arts and Culture Sector report captures the challenges and triumphs of nonprofits grappling with financial pressures, changing demographics, new technologies and new opportunities to expand the reach of their programs and services.

"Cultural organizations change lives, as people are moved by the art these nonprofits create and protect," said Ben Cameron, Program Director for the Arts at the Doris Duke Charitable Foundation, which supported the State of the Arts and Culture Sector report. "These organizations also contribute to our communities in very concrete and measurable ways such as educational services and job creation.  All are good reasons to continue to invest in the arts and to help nonprofits adapt as needed to a changing environment." 

Financial stability remains elusive; 47% named achieving long-term financial sustainability as a top challenge. NFF's report outlines systemic barriers to success, including:

• Mismatched funding, with a focus on program development at the expense of preserving or building reserves. A staggering 41% have less than 3 months cash on hand.
• Missing dialog; 53% of respondents can have an open dialog with funders about program expansion; only 9% about flexible capital for growth or change.
• Misaligned reporting requirements; 42% faced reporting requirements outsized relative to the size of a grant.
• Funding that falls short of full costs. Just 14-23% percent (varying across funder type) reported that funders always or often cover full costs of the programs they intend to support.

"Arts and cultural organizations are among the first to experience funding cuts during tough economic times," said Kristin Giantris, Managing Director of Nonprofit Finance Fund. "Despite financial challenges, many of these organizations are exploring and investing in new ways of doing business and ensuring continued community access to critical programs.  In this sector, creativity is a great asset as it pertains to business as well as programming." 

The survey details a range of actions that arts nonprofits are taking to adapt, including:

• 59% are collecting data on audiences/ visitor preferences & behaviors
• 53% are engaging audiences/ visitors through technology
• 50% have added or expanded programs
• 44% have collaborated with another organization to improve/increase programs/services
• 21% have pursued an earned revenue venture
• 18% have changed how they raise and spend money

"Multi-year grants have provided more stability, so that we can focus on our mission and be more proactive than reactive," saidMadeleine Steczynski, Co-Founder & Executive Director of ZUMIX, an East Boston-based survey participant focused on building community through music and arts. "We have a range of funder-supported programming as well as earned-income services that give teens experience as performers and technicians -- all helping us meet our goal empowering adolescents through music."