To Bridge an Impossible Gap, be Responsive and Nimble

Reflecting on: What strategies exist to support, regrant to, and advocate for cultural organizations (without formal audits)?

If you asked me where I would be on April 13, 2020, I would have described a fun-filled adventure staycationing with my familia in D.C. over Spring Break. Instead, I am sitting in my “command center” — the spare room in my basement — helping the arts navigate through the worst crisis in a generation. This is not what I had planned, or what any of us had planned. Yet, this is where we are — where a lot of us are — and we must figure out how to make it all work.

I know several funders have been valiantly going forth and getting money to their community as fast as they can. Many relief funds have popped up in response to the sudden need, and we are just at the beginning of things. “Never let a good crisis go wasted,” as they say. We have no choice right now but to do what we can, to be responsive and nimble.

This is also an opportunity to tackle grantmaking challenges that we have long been noodling on or avoiding. I have long pushed for how we can ease requirements and create more access to much-needed funds. One barrier to this is the requirement of audits.

While some view the audit as a measure of financial stability and mastery, it leaves smaller organizations (or less-resourced ones) out in the cold if they cannot afford to secure a firm to produce it. I know some funders set a threshold — $250,000 annual budget? $500,000? $100,000? — which helps, but still requires organizations to take much-needed funds and spend them on an audit. Is this really the best way to ensure financial responsibility? Are we not simply enforcing another traditional means by which organizations and their stability are measured?

Some other things to consider doing differently:

• Start at the beginning. When a fledgling organization appears on the scene, meet with them and offer technical assistance for the accounting practice.
• If you require audits, provide additional support to offset the expense.
• Have a CPA on retainer that can work with small organizations to ensure they’re practicing proper accounting.
• Ask yourself, do you really need an audit to know an organization is stable?

On that last one — I was able to remove the “artistic review” portion of an operating support program because grant staff members aren’t experts in every artistic discipline, but we are experts in operation, structure, understanding financials, analysis, etc. So, we did away with the “artistic review” in favor of a more thoughtful and intentional review of an organization’s operation and marketing — how was the organization contributing towards the success of the goals that they had leading into 2020.

Now, let me pivot for a moment. In this current state, there is a lot of attention being paid to ensure that the individuals who are most at risk of financial ruin are taken into account in relief efforts at the local, state, and national levels. Through the CARES Act, individuals who did not previously qualify for Unemployment now do. We know that NPOs can access SBA loans and Payroll Protection. A lot is being done through the NEA, Regional Arts Service Organizations, State Arts Agencies, Local Arts Agencies, and relief funds of all sorts.

But we also know that in the end (whenever that is going to be), this won’t be enough — our losses are catastrophic, and we’re not done yet. I worry that the damage sustained by the arts funding infrastructure will be insurmountable. Occupancy tax revenues are being decimated as the country continues to stay home. According to the Economic Impact Survey being conducted by Americans for the Arts, as of this week, nonprofit arts and culture organizations estimate a $4.5 billion loss — up from $3.2 billion just three weeks ago — and a loss in event attendance of 197 million. Let that sink in! 197 million!

Nothing is going to bridge that gap. Yet, Americans for the Arts is already working on the next round of advocacy focused on measures like eliminating the 500-employee cap for nonprofits, ensuring arts eligibility for additional forms of disaster relief (such as Community Development Block Grants), education and lifelong learning programs, and health and wellness initiatives.

That is what is on my mind from my Command Center!

Ruby Lopez Harper is senior director of Local Arts Advancement for Americans for the Arts.