Lessons Learned about Change Capital in the Arts: Reflections on a four-year evaluation of Nonprofit Finance Fund's Leading for the Future initiative

This report takes stock of a four-year evaluation of Leading for the Future: Innovative Support for Artistic Excellence (LFF), an experimental $15 million funding initiative administered by Nonprofit Finance Fund (NFF) with support from the Doris Duke Charitable Foundation (DDCF). The purpose of this analysis is to reflect critically on what was learned from the initiative for the benefit of funders, individual philanthropists and others with an interest in the theory and practice of capitalization as applied to nonprofit arts organizations.The LFF initiative was unique in its exclusive focus on change capital – substantial, flexible, multi-year capital intended to transform how an organization operates and delivers its programs, with the long-term goal of increasing reliable revenue, net of costs. By definition, change capital aims to strengthen an organization's financial position.Ten performing arts organizations received$1 million in change capital, drawn down according to individual plans for change, and an additional $75,000 in planning funds. Exit grants of up to$225,000 were awarded to organizations that made the most progress on their change efforts, for the purpose of advancing ongoing change efforts or seeding new plans.1 The 10 grantees invested LFF change capital in a wide variety of "business model transformations" ranging from building technologies with the potential to attract new donors and audiences, to experimenting with different models for touring, to investing in marketing and development capacities.NFF has previously published a series of working papers, case studies and video highlights from the LFF initiative, exploring the concepts of capital and financial reporting for capital, and documenting the 10 grantees' experiences.2 We will avoid citing the accomplishments and challenges of specific grantees in this report, and focus instead on program level issues and ideas that might be helpful to future investors of change capital. Indeed, the LFF initiative has played out against the backdrop of a national dialogue about capitalization in the nonprofit arts sector, both learning from, and contributing to, a good deal of productive thinking about capital.While the LFF initiative involved large grants, much was learned that might be of value to funders with more modest resources who are interested in exploring the role of capital in the artistic and financial health of the sector