Andrew Taylor on the Business of Arts & Culture
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Balancing the triangle at Steppenwolf
Posted: October 24, 2005
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An exceptionally interesting case study of Steppenwolf's past 25 years (available for download from the Nonprofit Finance Fund) paints a complex picture of how the organization moved in and out of balance as it grew from tiny to iconic.
Like other analyses from the NFF, this story explores the dynamic balance in arts organizations among three sides of a pyramid: ''the artistic mission; the organizational capacity in the form of staff, skills, and investment in business operations; and the capital base, principally real estate, cash, investments, and equipment.'' The authors argue, quite convincingly, that changes to any one side will necessarily bring changes and stresses to the other sides. If you expand your artistic mission, for example, either capacity or capital will need to adjust, as well. If you buy or build a building and dramatically expand your capital base, artistic and capacity issues will eventually smack you in the face.
The issues of edifice are particularly vexing to creative organizations, since building ownership seems like a great way to control your creative destiny -- all the time and space you've been dreaming of but could never attain. But buildings inevitably turn arts organizations into landlords, with a weight and responsibility that can crush the creative soul. Says the study:
Real estate and its operation are, above all else, a mass of fixed costs. Moreover, the production expenses required for mounting a show and filling the house in a bigger venue are fixed as well. But the unpredictability of ticket revenue -- and to a lesser but still important extent, the variability of production expenses -- makes high fixed costs dangerous and confining. That’s especially true for a company like Steppenwolf, whose reputation is based on the presentation of challenging work that will sometimes flop.
It's great to read a 'happy' case study, not driven by disaster or collapse, but by decisions that actually turned out well in the end. It's even better to read a nonprofit business story with depth and dynamics worthy of the theater world.