In 2004, the state of Colorado cut funding to the Colorado Council on the Arts (CCA) by 90 percent. Seven of our eight staff members were laid off, and many programs were eliminated. The outlook was dismal, with some state legislators calling for the agency’s elimination. Today, not even three years later, our agency’s state funding has been almost fully restored. What happened? In a nutshell, we began to focus our efforts on providing evidence that our agency delivers what Mark H. Moore, Hauser Professor of Nonprofit Organizations at Harvard, calls “Public Value” in exchange for the public funds we receive.
You might be thinking that because your organization is not a government agency, this article doesn’t apply to you. But take a minute to reflect on your organization’s sources of funding.
If you receive grants from state or federal agencies, you are receiving public funds. By virtue of your nonprofit status, you do not pay taxes, which equates to a type of public funding. (In fact, the IRS definition of a public charity is an organization that “derives their funding or support primarily from the general public in carrying out their social, educational, religious, or other charitable activities serving the common welfare.”) Your individual and corporate donors deduct those contributions from their taxes, creating another source of public funds. Foundations, too, do not pay taxes on the interest they earn on their assets, as long as they distribute 5 percent of their assets annually in the form of grants. All nonprofits are therefore publicly funded to some extent.
Public value: What is it?
According to Moore, Public Value is produced when government or nonprofit managers deliver benefits to the public that are worth more than the taxes collected to pay for those benefits. This is similar to achieving a positive return-on-investment in a commercial enterprise.
Public value = benefits - cost
To prove that the CCA delivers Public Value, we first needed to determine what it is that our beneficiaries and our funders—which Moore calls our “Authorizing Environment”—value most. These are the people and groups that provide us legitimacy and support. (In other words, they write the checks!) And these people and groups have specific outcomes they are looking for in exchange for their support. We know our primary beneficiaries are artists and audiences, and our primary funders are state legislators and the governor. Audiences and artists place a high value on artistic excellence and access, but elected officials value educational achievement and economic development, which lead to healthy and vital communities.
The next step in proving our Public Value was to catalog the benefits that we know are provided through access to the arts. These are the things we think are important to achieve, the reasons we exist. At the CCA, we know that participation in and appreciation of the arts offers multiple benefits, including:
--Enrichment, escape, joy, fun;
--Healing, behavioral changes, therapeutic effects;
--Creative energies/cognitive skills/workforce skills;
--Social and family interaction/intercultural understanding;
--Educational growth; and
Moore believes an agency or organization delivers the most Public Value when the net benefits that the organization provides are in alignment with the values of its Authorizing Environment. By doing so, you earn the trust of those who invest in your work, and yet stay true to your own values and capacities.
For example, we know that Colorado legislators value economic development. So, we collected stories about the economic impact of our grants in communities across the state. In particular, we highlighted an $18,000 grant to a theatre company in a rural town that leverages $2 million in economic activity for the entire county. We also know that our legislators value educational growth, so we told them about our support for arts-based, after-school programs for at-risk youth that are showing evidence of academic improvement and reduced absenteeism. But, we didn’t stop there. We also invited them to experience the benefits in person by attending events. And, whenever possible, we publicly thanked them for their support.
Moore says there is a critical third variable that must be in alignment with benefits and cost: organizational capacity. He believes you can’t deliver full Public Value if you don’t have sufficient resources to accomplish your work: staff, space, tools or partners. In our case, we still haven’t fully regained our former staff strength, so we count on our technology tools and our partners to help us do more with less. We use our Web site to tell our stories, we hire consultants to provide the expertise we lack, and we collaborate with other groups to extend our reach.
Moore’s theory of strategic management (he calls it the “Strategic Triangle”) can be boiled down to answering three critical questions:
- Who are the authorizers to whom you must make the case for receipt of public funds and for legitimacy for your proposed work, and what do they value?
- Where do your organizational values align with the values of your authorizers, and what types of projects or activities deliver the hoped-for public value?
- Do you have the capacity, or what capacity do you need, to deliver the expected value?
At CCA, we’ve made a strong case that we deliver Public Value in exchange for the public tax investment and, as a result, that investment has been restored. But, we continually reflect on these three questions as we expand our programs and develop new ones. I think the best example of our progress is my answer when people ask, what does CCA do? I used to say, “We give grants.” Now, I say “We invest in communities.”
(Reference: “Creating Public Value: Strategic Management in Government” by Mark H. Moore, Harvard University Press, 1995.)
by Elaine Mariner, executive director of the Colorado Council on the Arts, a state agency that promotes the cultural, educational and economic growth of Colorado through development of its arts and cultural heritage.