This document reports the key findings from the “Review of Capitalization Needs and Challenges of Philadelphia-area Arts and Culture Organizations,” a study commissioned by The Pew Charitable Trusts and the William Penn Foundation and conducted by TDC, a nonprofit research and consulting firm based in Boston. The objectives of the study were to review the capitalization status, needs, and challenges faced by nonprofit arts and culture organizations in the five-county Philadelphia region; clarify how well these organizations understand these needs; and develop recommendations for how organizations' financial health and capitalization could be improved.
This study was commissioned and conducted in late 2007 and early 2008, before the severe economic downturn in the fall of 2008. In this context, the first question we address is a simple one: Why talk about capitalization, especially now when so many organizations are struggling just to survive? This is a fair question, especially in the nonprofit context. In the for-profit world, capitalization – embodied in an organization's equity – is everything. For nonprofits, however, financial performance is not the sine qua non of exemplary overall performance, and balance sheet analysis cannot measure social impact or artistic excellence.