Nonprofit Organizations Need a Black Box

Flight-Data-RecorderOnerous headlines in Phoenix and Tucson this week as Arizona Theatre Company, the only resident company in the US that serves as a two-city operation, is reportedly ending its current fiscal year with a $1 million deficit.

I have nothing but respect and compassion for the management & Board of my state’s preeminent professional theatre company.  I remain hopeful and confident that they will work hard to restore the organization’s financial health.  I wish them nothing but the best.

They may be the latest Arizona arts organization to make such headlines, but they surely won’t be the last.

For full disclosure and so you know that I speak from a position of personal experience,  I served as the Founder & long-time Executive Director of Alliance for Audience, the nonprofit service organization to Arizona’s arts & cultural sector.  AFA went out of business last October. 

Over the last 20 years of my career in the arts & cultural sector, I’ve watched organizations soar to great triumphs.  I’ve watched others crash.  I’ve witnessed capable leaders fight through tough economic headwinds.  I’ve been on hand to toast fiscal years ending in the black & surpassing budget.

But through all of this, I can’t remember once – neither in good times or bad – when any organization committed itself to anything like a thorough evaluation of what it experienced and what it should learn from the experience.

In the event of an airplane mishap, the black-box data is analyzed to determine what was known, when it was known, what was done about it and (importantly) what alternatives should/could have been considered.  Pilots and engineers study those findings as a way to learn to build stronger aircraft – and to better train pilots for the future.

So, for nonprofit arts & cultural organization leaders facing all kinds of challenges, where is OUR ORGANIZATION’S black box?

How do we expect our staff, management and Boards of Directors to get SMARTER without a dedicated program of on-going training by which to study and learn from our experiences – and from the experiences of others?

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  1. says

    Really great idea. My question to you is: Isn’t that what a board is for? Certainly one can argue that a board needs a black box too, but if the black box needs a black box, is the black box redundant?

    You’re larger point is spot-on: there’s too little critical and rigorous self-examination in the sector. I’d offer that it’s a reflection of our blame-shifting, blame-averse, blame-fearing society. When people take responsibility — that is, really take responsibility — the black box will surely function in the way one wants it to.

    • says

      Leonard – Absolutely, that’s what a Board of Directors if for! But what good is the responsibility if we don’t give them the necessary tools? And what good are the tools if they are not used? The idea of a Board as “institutional memory” is too amorphous. With all the technology, media and bandwidth at our disposal, it seems like the area of self-assessment & critical evaluation is RIPE for advancement.

      • says

        I completely agree that “institutional memory” is a means-nothing term.

        Smart boards, in my experience, establish clearly defined metrics and timeframes by which to measure achievement and improvement; smart boards hold trustees accountable when failing to reach the agreed-upon targets, and it’s really this latter effort that separates the proverbial wheat from the proverbial chaff. It’s relatively easy to develop metrics. Less easy is learning to kick someone’s philanthropic ass to the curb when someone isn’t delivering whatever it is that they promised they would.

        Two thoughts, then, about self-assessments. They’re a tool, but I feel it’s equally and maybe even more critical to empower executive committees or senior leadership to regularly review trustee performance — yearly, ideally. As for technology and media, it’s really critical insofar as it facilitates the meeting of those metrics. Board attendance is a good example. If a trustee has a big backlog at work or kids at home or the cat at their homework and they habitually can’t show up for a meeting, then for heaven’s sake be sure your bylaws allow for phoning in and spend the money to get a good phone system. The work will get done and the kids and the cat will get fed and the trustee will have no excuse not to participate.

        But back to self-assessment — it’s tricky. Many people self-assess honestly but many do not — this is why you need some counterbalancing force empowered to assess the self-assessments. This is why term limits and other good-governance tools are important considerations, too.

        • says

          I wholeheartedly agree with your hard-line attitude toward Board responsibilities. But I have to say that I am NOT at all a fan of phoned-in Board attendance. We are dealing with complex issues – and relationship-dependent issues – and attitudinal issues and NONE of that translates well by phone or skype. In my experience, the phone-participation of one person isolates that individual – and hinders/disrupts the flow of conversation among those present.

          Granted, for a statewide or national organizations, meeting by technology may be necessary. But I’d still choose to have in-person Board meetings whenever possible. “Your organization expects your PRESENCE” is not a bad first line for a Board member job description.

  2. Habeas says

    Who funds it? Professional development funds for administrators get treated as part of the dreaded “overhead.”

    Mid-size and small-size companies often can’t afford a) conference or professional training fees, b) travel costs to get to that training, c) staff time away from primary job responsibilities to do evaluation activities, d) access to other companies’ data to learn from their mistakes, e) time to care for and analyze our own data, which is often poorly collected and even more poorly managed.

    Agreed that we need it, but there’s a long list of things non-profits need, and other items (such as facility repairs and increased marketing budgets to drive audience) tend to attract dollars first because they have a more obvious ROI to boards and donors.

  3. says

    Matt: Thank you for this opportunity to get on my soapbox about ongoing organizational evaluation. Most organizations and the individuals who work in them view evaluation and assessment as an onerous after-the-fact accounting, but a carefully designed evaluation plan can be part of organizational programming from the beginniing and provide continuous feedback to the organization along the way. We saw this in a very small way in the project we (you and I) just completed, where specific objectives drove not only programming but also assessment questions. But I also agree with Leonard — the board should be serving this function all along; the board secretary and treasurer are (or shold be) the keepers of the data that would go in the proverbial black box.

  4. says

    Hello Matt,

    I am in full agreement that organizations need to be proactive in assessing performance. With the adoption of our new business model, we made sure that assessment and reflection were integral to the process. That is…until it came time to create the assessment process. We still haven’t gotten the process right…but we are working on it. Leonard’s observation about the blame game is spot on as well and is a huge trap we work hard not to fall into. But we’ve adopted a new organization goal for the coming year to become more reflective in our decision making helping us stay on track as a learning organization.

  5. Brenda Johnston says

    Great article Matt. I’m sick of nonprofit arts orgs (and I’m the ED of one) complaining about time and money. It’s our job to be responsible, take responsibility and learn from our mistakes. No more excuses. Yes we all have TONS on our plate but we owe it to our orgs, those we serve and selves to do more to not let history repeat itself. I know everyone feels we go above and beyond but are we really doing all we can to learn from the past? I don’t think so. And I’m sick of the whining and blaming. I believe these steps will help others take us more seriously and thus support us. Oh, and I think there are low cost and no cost ways to assess.