When Ottawa's festival season officially launches later this month, organizers will be backed by a self-administered finan

New safety net gives festivals financial options to avoid 11th hour bailouts from city council

When Ottawa's festival season officially launches later this month, organizers will be backed by a self-administered financial safety net that some say introduces a new level of sustainability into the sector.

This will be the first full year Ottawa's fairs, special events and festivals can borrow money from a fund, formed jointly by the city and the industry, to help sustain them through cash flow difficulties and emergency situations.

"It really shows confidence in our industry, for us to be able to manage as any other business would even though we do have differing needs than your average business operation," says Barbara Stacey, the executive director of Ottawa Festivals, which represents 41 fairs, festivals and special events.

Separate emergency and sustainability funds were established following two city-led reports released in January 2007, that reviewed municipal funding for the arts sector as a whole and, in particular, festivals and fairs, many of which are hampered by having the majority of their revenue arrive in a short period of time.

The sustainability fund was set up to help festival organizers make it through short-term cash flow problems so they can pay their rent or employees while, for example, waiting for a government grant to be deposited in their account, says Ms. Stacey.

The city contributed $150,000 to launch the fund last year and has an additional $175,000 contribution pending this year. Individual Ottawa Festivals members make contributions based on their capacity to pay, and are eligible to borrow an amount up to double their investment, loaned at prime.

The separate emergency fund is intended to quickly provide additional money if, for example, a key staff member left a festival shortly before the event and organizers were forced to contract out the position, says Ms. Stacey.

Participants contribute 0.5 per cent of their cash budget to a maximum of $10,000 annually and are able to secure a loan of up to $100,000, but no more than 10 per cent of their annual cash budget.

The city contributed $100,000 for this fund in 2007 and has another $75,000 pending this year.

In both cases, a committee made up of directors from Ottawa Festivals' board reviews applications before funds are distributed. Applicants must be members of Ottawa Festivals and meet criteria set out by the festival organization as well as the bank holding the funds, says Ms. Stacey.

Although the funds are an important safety net for an industry hampered by a highly cyclical cash flow, some perceive its symbolic value to be equally important.

Canada Dance Festival general manager Ellen Busby says the funds are significant because it shows the festival community is looking after its own affairs in a self-sustaining manner.

"The most important thing was that it demonstrated to the politicians and to the world that we are trying to look after ourselves and we are willing to, in effect, invest some money into it," she says, recalling a conversation she had with the board treasurer.

Ms. Busby says the Canada Dance Festival was the first group to borrow from the sustainability fund in January. The money helped fill the cash flow gap early in the year until April, when the majority of government grants arrive.

Like Ms. Busby, Cisco Ottawa Bluesfest executive director Mark Monahan says the significance of the fund goes beyond alleviating cash flow problems.

"The intent of those funds is to give (organizers) a natural recourse to build up events and be more responsible for putting money aside for the future and encourage events to have a place to go," he says.

One of the goals of setting up the emergency fund is to stop festival organizers approaching city council at the 11th hour looking for crisis funding, a practice Mr. Monahan is happy to see come to an end.

"(It) was always problematic because it was done on an ad-hoc basis. I think we understood that it was difficult to put councillors and council suddenly in this position where their backs are against the wall. Do they help out a certain festival or does the festival go under?" he says.

Kanata Canada Day Inc. president Michele Green says the funding would make the difference between holding an event and being forced to cancel in a year when sponsorship is low.

Ms. Green says she hopes her organization will have developed a surplus by the end of this year that would make it eligible to begin participating in the fund.

Emergency fund