1) Is the organization that you are planning to setup or grow really able to provide something of value to the local arts and wider community?
This is perhaps the most important question of all. Of course, as humans, whatever we choose to do, we do it because we see value in it for ourselves and tend to also think that other people should or ought to derive the same value from it.
But, in the same way that most people think that the jokes that they tell are funny (otherwise they won’t tell them) and most people think they have a good sense of style and fashion (otherwise they won’t dress the way they do), what you may think of as important and of value to the local arts and wider community may not necessarily be the case, or at least not enough people may agree with you for your organization to be sustainable in the long term.
In its Seed Grant briefings, the NAC has already stated that it is open to the possibility that some of the NAC Seed Grant recipients will not be successful in the long-term. For sure, such a change in attitude from the NAC towards funding arts organizations that are in the process of establishing themselves and do not yet have sufficient track record that is comparable to other NAC grant recipients is greatly refreshing, and may be indicative of an important shift in the way NAC engages with the arts community.
However, potential Seed Grant applicants should remember that the NAC will still assess the application based on the strength and viability of the applications, in relation to gaps in the local arts landscape and in comparison to the other applications submitted.
2) Are you really ready to take the financial risk of starting a new arts organization with a full range of activities and programmes?
The application guidelines for the Seed Grant state that the grant is meant for new or emerging non-profit arts group that have:
1. A clear vision of what they want to achieve, as seen in their programmes and projects;
2. The talent and drive to realise these programmes and projects, and engage their audiences or communities; and
3. The commitment to establish and register themselves as a professional not-for-profit arts
organisation and to learn and adopt good governance, financial and other organisational practices.
The above criteria means that any recipient of the Seed Grant will need to look at spending quite a bit money in establishing the organisation’s programmes as well as covering a range of overhead costs associated with setting up and maintaining an professional organization. The Seed Grant is of course meant to help to alleviate such costs.
But applicants will also need to keep in mind that the actual value of the grant will not be more than 70% of a reasonable estimate of the organisation’s operating costs. Also the period of Seed Grant funding is only for 3 years (renewable on a yearly basis), and the NAC estimates that the majority of recipients will receive between $30,000 to $80,000 per year, capped at a maximum of $150,000 per year.
There are a few important implications for the above figures:
1. The 70% cap means that your organization will still have to find a way to cover at least 30% of your operating costs through ticket sales, sponsorships, donations and other forms of revenue. In reality, you also need to keep in mind that a sizeable proportion of the grant will go towards covering overheads costs such as office rental, fixed assets, etc, and there is also no guarantee that you will actually receive 70% of your estimated costs because this is the maximum percentage, not a benchmark. Will your organization be in a position to bear the very real financial risks of your programmes?
2. The Seed Grant is a renewable on a yearly basis for up to 3 years. This means that if for whatever reasons your organization is not able to deliver the performance indicators agreed with NAC, there is every possibility that your organization may not receive the grant for the full 3 years. This will be a problem if, up to point at which the funding is withdrawn, your organization has accumulated debts and run into deficits, as only your organization will be responsible for these debts. Even if your organization receives the full 3 years of Seed Grant funding, there is no guarantee that you will be admitted into the Major Grant scheme run by NAC. Either way, although the Seed Grant provides funding for you to build up your organization, your organization is still the only one responsible for any debts that it incurs in the process.
Do you fully understand the difference between for-profit and non-profit organizations?
Simply explained, for-profit organizations (whether as a sole-proprietorship business, private limited company, etc) exist for the purpose of carrying out business activities in order to make profits, and these profits can be distributed among the organisation’s owners.
On the other hand, non-profit organizations are not allowed to distribute the profits generated from its activities, as non-profit organizations are allowed to form on the basis that their activities contribute towards the greater good of society, and not for the benefit of one or a specific group of people. Non-profit organizations are thus allowed to collect donations from the public and are usually tax-exempt, so that more funds are available that will go towards supporting its programmes and activities.
However, this does not mean that non-profit organizations are, or should be unprofitable. In fact, the programmes and activities of a non-profit organization need to be run very much in the same way as for-profit companies, generating sufficient revenue and profits such that these programmes and activities are sustainable in the long term.
To a large extent, potential applicants should think of the NAC Seed Grant as start-up capital to help the new organization establish an operational structure that will eventually be able to generate sufficient revenue to be profitable and sustain itself over the long-term, rather than as a source of funding to underwrite budget deficits of intrinsically unsustainable business models.
For more information on non-profit organizations, GuideMeSingapore has a very good article at http://www.guidemesingapore.com/incorporation/other/non-profit-entity-part1
Applications for the 2012 NAC Seed Grant close on 29 June 2012. More information on the Seed Grant and the relevant application forms can be downloaded from http://nac.gov.sg/grants-initiative...rants/seed-grant-(organisational-development)
[Disclaimer: The contents of this independent article are meant only to highlight some important considerations that potential NAC Seed Grant applicant should be aware of, and does not reflect the official position of the NAC. SG-MUSIC.NET is also not responsible for any decisions or actions taken by readers of this article based on its contents.]