Last week, Ben Cameron, Program Director for the Doris Duke Charitable Foundation, presented an impassioned State of the Union for the Arts. It wasn’t a pretty picture:
Two Chronic Issues Surrounding Arts Organizations:
- Under-capitalization. Organizations should maintain enough liquidity, operating reserves and artistic initiative reserves to keep their audiences engaged while growing organically. Instead, many organizations purchase fixed assets (real estate and other permanent equipment) during times when it is financially irrational.
- Under-compensation. The current non-profit model is predicated on discounted labor. Superstars build empires and non-profits cannot easily attract that talent.
Among the current issues were: audience erosion, impending generational transition of leadership (75% of CEOs would leave non-profit jobs by 2012), the impact of technology with a society craving “culture on demand,” pricing out key audiences, artist unemployment rising twice as fast as regular figures (200,000+ jobs and hundreds of organizations lost by end of 2009), and a decline of individual donations (which are about 83% of contributed revenue!).
Yes Mr. President, we want change, too.
And what do we know about change? Here’s a little exercise from Target’s New Employee Training:
- Find a partner and look at your partner deeply for 60 seconds.
- Turn your back to your partner and change 5 things about your appearance.
- Identify your partner’s 5 changes.
- Turn away and change 10 more, then 20 more.
What did we notice?
- Change provokes anxiety.
- Change increases at an exponential rate. We must maintain clarity in vision or we could lose control.
- Change translates as loss. Most people view change as something they have to give up.
- People revert to competition, not cooperation.
- People focus on resources they can control.
- When the pressure to change has been removed, people revert to old behavior even though they’re less comfortable.
To change the perception of the arts and create viable enterprises, we must innovate. We must find new pathways to mission fulfillment, discontinuous from previous practice, springing from changes in underlying organizational assumptions. We must create value in anticipation of future demand. We must learn to skate like Wayne Gretzky (“to where puck is going to be, not where it has been”).
Arts organizations must understand that ‘non-profit’ is a tax structure, not a business strategy. Each organization should be able to answer fundamental value-based questions: why must we exist today? What is the value of my arts organization to my community? What is the value of my organization alone brings or brings better than anyone else? And more specifically…how will my community be damaged if it were deprived of music tomorrow? How does my organization be optimally structured/behaved to become my community’s conduit of symphony music? Second-rate value will not stand.
We are in the midst of a shift in cultural tastes. Value is no longer consumed; it is co-created (think of the experience of going to Starbucks).
It is time to rethink how we view arts and culture. We must shift our focus from short-term survival to long-term transformation. If we can maintain clarity in our vision, this recession might just turn into a renaissance.
Hey there, I am loving the things you have to say! Keep it coming!
The capitalization point is interesting. How much of this do you think is a function of donor desires – e.g., they would rather have a physical asset to bear their name rather than $100,000 that can be used to help make cash flow management a little easier.
Is this something where donor education can be helpful, or is that only a marginal solution to a bigger problem?
Labour is a market, one which responds to normal forces of supply and demand. Issues of under-compensation relate in part to the over-supply of individuals willing to accept lower wages to work in the sector – the same problem is manifestly visible on the artistic side, in which actors and musicians make far less than regional averages. The other issue is that of the economics of the performing arts. The cost disease effect identified by Baumol leaves most organizations in a perpetually under-capitalized state and thus unable to compensate on par with for-profit industry. Add to the fact that facility expenses are usually the third highest for arts organizations after personnel and marketing, there’s a reason they tend to focus on acquiring or improving venues.