Nine Ways To Sustainable Funding: The Arts Sector And Special Vehicles

Forbes

09-04-2025

Larry Bomback is the founder of Strategic Nonprofit Finance.
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Arts organizations are constantly seeking innovative ways to build long-term financial sustainability. While traditional philanthropy and grant funding remain vital, they can leave organizations vulnerable to shifting economic conditions and donor priorities.
Enter special purpose vehicles (SPVs)—or, more specifically, roll-up vehicles (RUVs)—which can help nonprofits to tap into new revenue streams by enabling stakeholders to invest directly in their work.
Until recently, investing in private ventures was limited to accredited investors—people with high incomes or significant assets. That changed with the passage of the Jumpstart Our Business Startups (JOBS) Act of 2012, which introduced crowdfunding regulations. This allowed anyone to invest in private companies, opening the door for nonprofits to use RUVs to attract funding from everyday supporters.
On top of this, with the proliferation of investment crowdfunding platforms like WeFunder, Republic and StartEngine, organizations can now more easily pool small contributions from a large number of investors.
But while SPVs have been widely used in the startup world, I find that the nonprofit arts sector has been slow to explore this potential. With this in mind, here are nine ways arts organizations can leverage SPVs for growth and impact.
Traditional arts funding relies heavily on wealthy donors, foundations and government grants. RUVs open the door to individuals who may not be high-net-worth philanthropists but are willing to invest in a project they believe in.
In addition to using crowdfunding platforms, you can identify potential investors within your existing network, using surveys or direct outreach to gauge interest and educate them on how investment through an RUV works.
When someone invests in an art project, they're no longer just a donor or a ticket buyer. They're an owner, and ownership breeds advocacy. They are more likely to promote it to their networks, increasing word-of-mouth marketing and strengthening the overall community. To help encourage this toward direct financial investment, you can design a communication plan to keep investors engaged and further encourage this type of advocacy.
Many arts organizations operate like startups; they take creative risks, experiment with new ideas and work tirelessly to scale their impact. However, I believe they lack one major startup advantage: the ability to offer equity to employees and stakeholders. By structuring investments through SPVs, nonprofits can mimic the startup model, rewarding those who help drive success without violating their nonprofit status.
Subscription-based platforms like Patreon or Kickstarter are fantastic for raising money, but they are not the same as ownership. Those models rely on ongoing goodwill, with no financial upside for supporters.
Arts organizations tend to have passionate fan bases that rival those of professional sports teams and music artists. RUVs provide a way to monetize that enthusiasm, turning loyal supporters into real investors who feel even more connected to the work.
If audiences are willing to spend hundreds of dollars on VIP experiences or exclusive content, why wouldn't they be interested in owning a piece of something they love? You can use your existing social media and marketing to create buzz around investment opportunities. Consider partnerships with influencers or industry figures to help legitimize and promote your project.
The traditional model of arts philanthropy skews toward an older demographic. I find that SPVs appeal to younger generations who are accustomed to investing through crowdfunding, crypto and fractional ownership models. This approach allows organizations to cultivate lifelong relationships with new supporters for whom standard fundraising strategies may have previously overlooked.
The nonprofit sector can sometimes be resistant to financial innovation. By adopting SPVs, arts organizations can signal to funders and audiences that they are forward-thinking and adaptable. This reputation for innovation can lead to greater institutional investment and a stronger position.
Grants and donations are often one-time infusions of cash, while investment-based funding models create recurring opportunities. If a show, exhibition or production succeeds, investors might reinvest in future projects, providing a longer-term financial runway for the organization. You can identify projects within your organization that have long-term revenue potential, such as licensing, intellectual property or real estate.
I believe SPVs and RUVs can provide a bridge to the future, offering a model that blends impact investing with artistic excellence. Those who embrace this shift early, engaging legal and financial experts along the way, can better position themselves to thrive in an increasingly competitive funding environment.
One of the biggest questions nonprofits might have is how to structure an SPV or RUV while maintaining their nonprofit status. I believe the key is to create a separate for-profit entity (typically an LLC) under the nonprofit's umbrella. This LLC can manage a specific project or program that aligns with your organization's mission but also has revenue-generating potential.
For example, a museum undertaking a major building expansion could use an RUV to invite donors to become investors in the real estate project rather than just contributors. If the museum later rents out space, licenses its brand or monetizes the new facility in other ways, investors could see a return on their participation.
Similarly, a theater company launching a new show could establish an LLC specifically for that production, allowing patrons to invest in its future commercial success if it were to be licensed to Broadway or for film.
I believe RUVs present a bold new way to build sustainable funding streams, engage supporters in a more meaningful way and help to ensure that creative institutions thrive in an increasingly competitive environment.
I am certain that the organizations embracing this kind of financial innovation today will be the ones shaping the cultural landscape for generations to come.
The information provided here is not investment, tax, or financial advice. You should consult with a licensed professional for advice concerning your specific situation.
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