Capitalization
Grantmakers in the Arts defines capitalization as “the accumulation of the resources an organization needs to fulfill its mission over time,” specifically regarding financial health. Capital is money saved in order to respond to challenges and opportunities. Capital is different from revenue (which is immediately spent), and from assets like endowments or facilities (which are not available as liquid cash that can pay expenses). It has been the norm for the nonprofit arts sector to be poorly capitalized, an issue which disproportionately affects organizations of color. In response, GIA embarked on the National Capitalization Project (NCP) in 2010. Since its launch, GIA has provided resources, conferences sessions, publications, and workshops on nonprofit capitalization. GIA’s Capitalization and Nonprofit Financial Health Workshops are specialized workshops, held separately for funders and nonprofit grantees, focusing on what each group can do to support the financial health of nonprofit arts and culture organizations. GIA has also updated the workshop to reflect the financial impacts of the pandemic and to reflect a racial equity lens. These workshops are available either in-person or online by contacting workshops@giarts.org.
Capitalization is the accumulation and application of resources in support of the achievement of an organization's mission and goals over time. A well capitalized organization has the ability to access the cash necessary to cover its short- and long- term obligations, to weather downturns in the external operating environment, and to take advantage of opportunities to innovate. All capitalization is represented on the organization's balance sheet, primarily in the Net Assets section.
Read More...— Alfred North Whitehead, Process and Reality
There is nothing more difficult to take in hand, more perilous to conduct, than to take a lead in the introduction of a new order of things, because the innovation has for enemies all those who have done well under the old conditions and lukewarm defenders in those who may do well under the new.
New for 2015: Two Workshops for the Price of One! Grantmakers in the Arts offers Conversations on Capitalization and Community, a new design to the successful full-day funder workshop that was offered in 14 cities between 2012 and 2014. Responding to feedback from members, the day is now two workshops - one for funders and one for their grantees.
Read More...8 pages, 2010. Nonprofit Finance Fund, 70 West 36th Street, 11th Floor, New York, NY 10018. (212) 868-6710, http://nonprofitfinancefund.org/
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The Four Horsemen of the Nonprofit Financial Apocalypse (808 Kb)
2009, 29 pages, Working Knowledge, Harvard Business School, hbswk.hbs.edu.
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It Is Okay for Artists to Make Money…No, Really, It's Okay (178Kb)
As the Twentieth Century approaches a finale, the arts in America exist in a vast array of styles, disciplines and organizational structures. The purpose here is to examine one major organizational component of the American arts scene, the nonprofit sector, as an organic system that has progressed through three distinct stages over the past century.
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