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Incubation programs encourage clients to diversify their customer base, markets and investments to improve long-term sustainability. In much the same spirit, incubators themselves seek ingenious ways to increase program revenues and maximize available resources and skills.

Incubators innovate to diversify income streams and increase program sustainability

by Dennis E. Powell

February 2012

The Arts Incubator of Kansas City had some extra room, and like many incubation programs, the omnipresent need for additional income. So AIKC decided to rent out the third floor of its facility for events.

The event space became so popular that the incubator renovated it, adding a commercial kitchen to further broaden its appeal and possible uses as a venue. Ultimately, more than a third of AIKC's revenue resulted from rental income generated from the event space.

It became so successful that a competing reception hall lodged a complaint with the city's building department, which conducted an inspection and ended up shutting down the whole AIKC facility for code violations – not just the reception hall but the incubator, too.

In June 2011, AIKC closed permanently. The building problems were more than it could overcome, especially with the loss of the rental hall revenue. Its savior – the rental of extra space to bring in additional revenue – proved also to be its downfall. A cautionary tale to be sure, but also one that exemplifies the importance of imagination and innovation in diversifying incubator streams.

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Keywords: financial management – incubator, funding sources/fundraising – incubator, self-sufficiency, self-sustainability

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