At the Rainin Foundation, we don’t have a one-size-fits-all approach to serving our community. And we don’t believe in boxing people in. Like the artists and arts organizations we serve, we like to draw outside the lines.
For example, we believe that the long-held belief among American donors that nonprofits should have low overhead costs is damaging and ineffective. A 2001 survey revealed that American donors expected nonprofits to have an overhead no higher than 20%. We reject the idea that a low overhead to direct program cost ratio is a reliable indicator of a strong performance. Rather, we understand that what constitutes “overhead” versus “program” costs isn’t always black and white. And we believe that the practice of pressuring grantees to keep overhead low creates a “Nonprofit Starvation Cycle” where nonprofits are unable to attain what they need to serve people and communities.
[Read more about this ineffective practice in “The Overhead Myth,” a 2013 open letter from directors of the country’s three leading sources of information on nonprofits.]
One way we avoid playing a part in this cycle is by maintaining flexibility when it comes to budgeting approaches in our New & Experimental Works (NEW) Program. Every project is unique, and we know that a little flexibility can go a long way.
So as an arts organization, how can you take advantage of our flexible approach to get the support you need?
One challenge to our flexible approach to budgets is that it can leave organizations unsure about what we are willing to support. Don’t avoid the uncomfortable questions. For example, “Is the Foundation willing to fund rehearsal fees?” (Yes!) “Are there certain line items the Foundation prefers to support over others?” (Not really.) The key to a great partnership is open communication. And it begins with leaving no question unasked.
We know applicants can feel hesitant about building in the “true cost” of projects when it comes to artists’ time and planning, space and rent, and administration. Yet, especially for groups operating on a project-by-project basis, incorporating the full cost of projects into budgets is imperative to sustainability. When items aren’t included in expenses in an attempt to be viewed more positively, it can lead to budget troubles down the line. Sadly, artist fees are often the first to get cut. We understand that producing creative work can necessitate creative budgeting practices. At the Rainin Foundation, transparency is to your benefit, not your detriment.
If you’re wondering what non-traditional expenses we do consider appropriate, here are some examples:
- Percentages of administrative staff salaries (e.g., Executive Directors, Company Managers, Managing Directors, etc.)
- All artist fees (e.g., planning, rehearsals, performances)
- Percentages of rent or mortgage payments (e.g., if space is being used for project development)
- Fringe benefits
- Hospitality costs
Still have questions? Today is a great day to start asking. Email our Arts program staff.