The OAF Blog

The Role of an Endowment in COVID-19 Times

June 04, 2020

As arts organizations seek to manage the financial challenges they face during the current pandemic, the place an endowment holds in their financial picture is gaining attention.

Long-Term Asset
Foundations are being called upon to use endowments ‘more actively’, and provide much needed cash flow and income to their beneficiary organizations. It has long been a successful model that an endowment be considered as a long term asset.  The stability of a stable, recurring annual income is important to an organization’s day to day operations and financial planning. The perspective of long term investing, disbursing a portion of annual returns ( generally 3 to 5%), allows a fund to grow over time, protect that annual income against inflation and provide for increased cash flow over time. It is a model that serves the arts community through the Ontario Arts Foundation well.

Source of Additional Income
The Ontario Arts Foundation has tried to address this by recognizing the need for financial support (which is now), and deciding to pay out additional income to our arts organizations in addition to the annual payout. The Board felt comfortable that the positive growth in endowment portfolio’s over time, leaves the foundation with the ability to increase current support, be confident that we can continue our pattern of stable income over time, and continue to carefully grow for the long term. That translated in May to an additional $1.0 million dollars in operating support for Ontario arts organizations.

Different Endowment Use Perspectives
For a U.S. perspective, this New York Times article shows how U.S. cultural organizations are considering the use of endowment assets more broadly, more creatively in response to current needs.

In Canada, a group of Foundations, through, are encouraging funders in 2020 to increase the level of endowment giving to 5% of assets – traditionally the high end of range of annual payouts. The sector recognizes, that endowments have a strong role for the long-term, but can be adaptable and accessible when shorter-term needs become paramount.  

Arts and Culture Organizations – Adapting for a New Environment

May 21, 2020

I’ve observed recently that Ontario arts organizations are now moving to an environment where they are trying new ways to communicate their arts mission, how best to respond to the current COVID-19 world we live in.

Plans for the future
TRG Arts has produced a helpful report that may be useful as arts managers and Boards make plans for the balance of 2020, and into 2021 and beyond. It suggests that every organization consider four questions: 

• What might next year look like?
• What is the source of our strength? What do we do that is most meaningful and relevant to the community?
• How will we manage our people and revenue propositions to confront this new reality?
• When our doors reopen, where will we gather?

Helpful articles
The report offers a series of discussion points that every organization can consider and apply to its own specific mandate and place in its local community. Along with the report are links to a series of related articles that can add depth to each of the questions and issues arts organizations face.

It is refreshing to see that, despite the significant challenges, arts organizations are exploring new options for presenting art and supporting our communities during this time of social distancing. This is truly an example of resilience and creativity.

Canada Emergency Wage Subsidy

March 30, 2020

During this morning’s address to the country, Prime Minister Trudeau offered more important details on the Government of Canada’s Emergency Wage Subsidy that was first announced on Friday of last week.

The following eligibility parameters and details were announced:

  • Businesses that can show that their revenues have decreased at least 30% since the start of the pandemic will be eligible for the 75% wage subsidy.

  • The assessment of the 30% revenue drop will be done after the fact. If the drop was actually not this low, the company will have to repay.

  • The number of employees a company has will not determine eligibility.

  • The subsidy will apply to non-profit and charities, as well as companies that are both big and small (no cap).

  • The government will cover up to 75% of the first $58,700 that employees earn. That means up to approximately $847 a week. This will be backdated to March 15.

  • The subsidy will be a direct payment to the company so they can pay employees.

The Prime Minister indicated that there will be additional background documents and details coming tomorrow, including the estimated fiscal cost of the new program, from both the Minister of Finance and Minister of Small Business, Export Promotion and International Trade.

In his remarks after announcing the new details of the Emergency Wage Subsidy, the Prime Minister also made very clear that any businesses that seek to take advantage of the new program, or game it, will face strict consequences – expect those details tomorrow as well. He also noted that should employers be able to cover the additional 25% of salaries not covered by the subsidy, they should pay their employees that difference.

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