What is working capital?
Working capital is defined as the difference between current assets (cash
and other assets which could be readily converted into cash) and current
liabilities (payables, debts, and other obligations which must be met in
the short-term).
Adequate working capital is an indicator of financial
health. Without working capital, arts organizations suffer from persistent
cash crunches and have trouble meeting financial obligations.
Why not raise endowments, instead of working capital?
Working capital is the basis of sound financial health for any arts
organization. For larger, more established arts organizations investment
in endowed capital is often an appropriate addition to their capital base;
for many smaller companies, it is not realistic without first addressing
the fundamentals.
No organization should dedicate funds, management, or
board time to endowment development until its annual revenue objectives
are consistently being met. Thus, working capital, and some knowledge of
its importance and uses, is the first order of business in any effort to
sustain a community of arts organizations.
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Shouldn’t well-run companies be able to eliminate
deficits and build working capital on their own?
With limited personnel and a mandate to sustain and improve their artistic
work, it is not realistic to expect mid-size organizations to divert
energy to raising funds for working capital. This is where Creative Trust
comes in.
The Trust provides the opportunity to build capital
reserves without siphoning off the personnel and resources the companies
need to direct at their two central objectives: raising annual operating
funds and building their creative mandates.
Does the performing arts community support the program?
Creative Trust is in the unique position of being a stabilization program
that has begun from the inside with those who are most fully involved in
the sector crafting a program uniquely suited to the needs of mid-size
companies in Toronto.
Companies involved in Creative Trust’s planning phase
found the concept of Working Capital for the Arts to be energizing and
empowering. They wanted to participate, were eager to develop new skills,
and were open to change—if that change ultimately allowed them to devote
more of their energies to training new talent, producing fine art, and
bringing their productions to the community.
How does a gift to Creative Trust differ from a gift
to one or more of the companies participating in the program?
Gifts to participating companies’ on-going operations are an essential
component of their funding picture, providing vital support to the art
that appears on their stages. However, a one-time gift to Creative Trust
provides a critical base for that work to continue, and is an investment
in the future.
It provides capacity-building assistance to a group of
companies in the community, giving them the tools they need to continue to
make creative contributions to the artistic environment. |
Elmer Iseler Singers
Conductor: Lydia Adams
Photo: Stormi Greener
Buddies in Bad Times Theatre
Homage
Photo: Guntar Kravis
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