Pooling Resources to Fund the Arts

Literature Review

Nonprofit organizations are funded through three main sources – private giving, government grants and contracts, and earned income. Referred to by some as a “mixed economy” (Anheier, 2005), this variety of funding sources is one characteristic of nonprofit organizations that makes the sector different from both government agencies, which mainly rely on taxes and fees, and from for-profit organizations, which depend mostly on consumer payments and sometimes government contracts such as defense contracts (Grønbjerg, 1991). While having a variety of funding sources can prevent a nonprofit organization from depending too much on one source, it also can give nonprofit organizations less ability to control their revenue streams than government or for-profit organizations can (Grønbjerg, 1991). Arts organizations as a whole depend heavily on private giving (41 percent of revenue) and earned income (31 percent of revenue) (Wing, Pollak, and Blackwood, 2008).