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August 2, 2004

Of costs and control

Two large performing arts projects dealt publicly with costs last week, but with dramatically different public buzz. The Miami-Dade Performing Arts Center, 20 months late in its construction and $67.7 million over budget, got grudging approval to move forward (username:, password: access) from the county commissioners. While Madison, Wisconsin's, Overture Center for the Arts announced its project costs had more than doubled ($205 million vs. the original estimates of $100 million), but Madison was all leaps and smiles about the news.

Despite sharing the same architect (Cesar Pelli), the projects have obvious differences that would lead to these radically different community reactions (one Miami-Dade commissioner compared the situation to chronic spousal abuse, while a Madison local called their news 'outstanding and wonderful'). The most obvious difference is that the Madison project is privately funded (by a single donor, mind you), while Miami-Dade is a collaborative public/private project, drawing significant investment from the county.

cost control chartBoth projects show a useful lesson about project costs and the control thereof...they are inversely proportional. A consulting friend loves to draw a quick thought-chart to make this point about cultural construction projects. Our ability to control costs starts high on the left side of the chart, and drops like a rock as the first dollar is spent on the project, and thereafter. Our actual costs incurred start at zero on the left side, and rise like a rocket as the chart moves forward in time (see my lame attempt at the graphic to the right).

In short, as money flows on a project, our ability to control future costs drops dramatically. The small choices we make lock the project into specific trajectories that quickly become forces rather than options. Problem is, the public usually notices the project most when we have the least amount of control over the final cost. One clear implication is that planning and honest perspectives are essential before the money starts to flow.

Miami-Dade has just approved a plan to hire some serious project management consultants to complete the job ($150 an hour for five executives and more than $100 an hour for five more, totalling $2.3 million by the end of the year). They will enter a world on the far right side of the chart, which might explain their salary demands.

Posted by ataylor at 9:51 AM

August 3, 2004

Another take on the org. chart

I've written before about the problems of traditional organizational charts. They are collective fictions, really, of how an organization should behave rather than how it does. Earlier, I offered network mapping as one odd alternative. But there's another that's less complex and perhaps more fun: the genogram.

Genograms are used by family therapists, social workers, and medical professionals when exploring family health and relationship patterns. With a set of standard symbols, genograms allow you to map not just family trees, but relationships between members (closeness or distance, even co-dependence or complete estrangement), and other health/profession/informational factoids. By sketching out an extended family tree, practitioners can find patterns of health, relationship, or behavior that often shed light on why the family is the way it is.

Not all the symbols are relevant to an organization (divorce or adoption are probably only useful if nepotism is a driving hiring strategy), but some can be quite interesting when overlayed on the traditional organizational chart. Imagine if the box office manager, for example, had more direct connection to the facilities manager than to the marketing or development director. Or what if the development director was enmeshed (overly close) with the board of directors, leading to an end-run around the traditional chain of command? Or what if a retired or deceased founder is still connected somehow, through meddling or myth?

Organizations are just aggregations of individuals, relationships, contracts, and assumptions. When mixed with mission-driven or personally rooted incentives and goals, they look more and more like families, with the same dysfunctions and hidden role-playing games. In that way of thinking, genograms can be like 'Family Counselor: The Home Game,' and well worth a doodle or two during your next staff gathering.

Posted by ataylor at 3:28 PM

August 5, 2004

More than half the pie

By 2010, according to the U.S. Census folks, about 50.8% of the U.S. population will be female. The majority of those women will be between 20 and 44 (33%) and 45 to 64 (26%). Yet most smart marketers are realizing that 50 percent can be much more than half.

There are indications everywhere that women constitute the primary force in consumer and even business decision-making. According to trend consultant Faith Popcorn (honest, I didn't make it up):

  • women influence the purchase of over 80% of consumer goods;
  • they influence 80% of health-care decisions;
  • they buy 50% of all automobiles sold, and play a role in influencing the purchase of 30% more;
  • 40% of households with assets of more that $600,000 are headed by women;
  • they start new businesses at twice the rate of men....
In her book from 2000, EVEolution : The Eight Truths of Marketing to Women, Popcorn suggests that women make purchase decisions in specific ways, and in different ways than men. While she tends to paint with a broad brush to make her point, the 'eight truths' are worth at least a moment of thought for arts marketers:

  1. Connecting your female consumers to one another connects them to your brand.
  2. If you're marketing to one of her lives you're missing all the others (says Popcorn: '...women lead multi-lives, and a marketer, concentrating on only one of them, will miss out on all the others. The answer is to help women integrate their lives more seamlessly').
  3. If she has to ask, its too late (Popcorn believes that to win the loyalty of women, a company must anticipate needs rather than just respond to them).
  4. Market to her peripheral vision and she will see you in a whole new light (Popcorn says -- in her broad brush way -- that women are much more likely to notice the subtle surrounding features that comprise a message and may place less emphasis on the main message).
  5. Walk, run, go to her, secure her loyalty forever (it's your job to make buying or accessing the product as easy as possible).
  6. This generation of women consumers will lead you to the next (Popcorn uses the term 'brand-me-down' to describe how brand loyalties can pass from mothers to daughters. As a sidebar: Arts marketers can obviously emphasize the power of creative experience to bond mothers and daughters).
  7. Co-parenting is the best way to raise a brand (the strongest brands are co-constructed by consumer and company in an active dialogue).
  8. Everything matters -- you can't hide behind your logo (This feels like a corollary to number 4, suggesting that you have to walk the walk instead of just talk the talk -- in hiring practices, customer service, governance, environmental impact, etc. Popcorn connects the idea of consistent and mutally reinforcing elements of statement and action, which she suggests is the 'fifth P' of marketing: Policy).
A bit broad, a bit fluffy, a bit hazy around the details and nuance that actually define the marketplace. But still a bit useful as you construct your next season or promotional campaign.

Posted by ataylor at 2:18 PM

August 9, 2004

GETTY: Extending a conversation

This June, I was one of twenty-three participants in a leadership roundtable on a particularly compelling and complex topic. Co-sponsored by the Getty Leadership Institute and National Arts Strategies, and held at the Getty Center in Los Angeles, the convening brought together fascinating folks from the nonprofit and for-profit side of cultural enterprise to search for key differences and common ground. According to the briefing report:

The purpose of the meeting is to explore the extent to which non-profit and for-profit cultural organizations -- museums, orchestras, opera companies, theaters, dance companies on the one hand and the gamut of film, publishing, media, fashion, music, commercial theater, video and related enterprises on the other -- have things to learn from one another with respect to both the effective management of creative processes and finding an audience or market for the fruits of their labors.

National Arts Strategies recently posted the pre-event briefing paper by Adrian Ellis and Sonali Mishra (available in pdf format), as well as a summary report (also available in pdf) on what was discussed and discovered.

Over the next few weeks, I'll be hashing through the briefing paper and the conversation as I heard it. Our perceived boundary between nonprofit and for-profit in arts and entertainment -- especially when it comes to management -- is fertile ground for honest exploration; full of myth and hidden assumptions. The convening in Los Angeles was a great beginning to that conversation, but it's worthy of a wider world. So stay tuned...

Posted by ataylor at 9:44 AM

August 11, 2004

GETTY: Nonprofit and for-profit

Much of the discussion at the June Getty Leadership Institute/National Arts Strategies convening (introduced in my last post) was focused on the 'gulf' between nonprofit and commercial/for-profit creative endeavor. Thankfully, we (mostly) moved beyond the usual assumptions that sandbag most such conversations:

  • Nonprofits make art / For-profits make entertainment
  • Nonprofits serve vision and mission / For-profits serve the mass taste
  • Nonprofits are noble / For-profits are venal
  • Nonprofits are poorly managed / For-profits are wonderfully managed
  • Nonprofits are poor / For-profits are rich
While all of these are occassionally true as stated, the reverse is also true (some for-profits make art, while some nonprofits make entertainment...however you choose to define the difference; many for-profits are poor, and poorly managed, and noble, and vision-driven).

As I've said before, the idea that the corporate structure is the cause of such differences -- even when they exist -- is flawed and backwards anyway.

More interesting than judgment is analysis, which came in spades at the Getty event. According to one participant, all managers of creative endeavor -- nonprofit or commercial -- have the same three concerns:

  1. Artistic vision (what to create, how to create it, and why)
  2. Access to resources (how to pay for it and sustain it)
  3. Legal/regulatory environment (what rules and barriers will define the two elements above)
The stresses on for-profit and nonprofit creative endeavor are certainly different in type and scale (for-profits are more prone to merger and acquisition, for example, and to shifts in Intellectual Property protection and associated revenue streams / nonprofits are challenged by a much more limited set of financial tools and options than their for-profit counterparts). But the outcome of these different stresses, the group suggested, has begun to look quite similar:
  • Organizations that focus on financial outcomes first (nonprofit or for-profit)
  • Organizations that promote defensive decision-making (aversion to risk)
  • Cultural systems that breed imitation and repetition, rather than innovation
More broad strokes, to be sure, but with some interesting caves and crannies to explore. One of particular interest, and the focus of my next post, is the concept of fungibility (I'll define it, don't worry), and how it drives behavior and dysfunction on the nonprofit side.

Posted by ataylor at 8:54 AM

August 13, 2004

GETTY: Fun with Fungibility

One of the clear differences between nonprofit and for-profit creative enterprise is how each can use cash and financial resources to advance its work. This distinction seemed to stick during the GLI/NAS roundtable in June (see my original post for background, also note that the Getty Leadership Institute has now posted a summary of the event and downloadable versions of the briefing and summary reports).

The flexible and malleable use of cash and monetary assets is a hallmark of for-profit enterprise. If a dollar isn't serving its best purpose in one place, a smart for-profit manager is expected to redirect that dollar somewhere else. The magic word that kept arising at the Getty gathering was 'fungibility' (defined here, if you need a word of the day), or the ability to use an asset in a flexible way, rather than have it restricted to a specific purpose.

For all sorts of reasons, nonprofit enterprises often find themselves with funds that aren't fungible, i.e., can't be redirected from their original purpose. Some reasons are obvious -- as public entities, nonprofits receive many fiscal priveledges, adding an extra layer of responsibility and accountability to their actions. Some reasons are systemic -- contributed funds often carry specific restrictions on how and when they are to be spent, either directly stated or merely implied.

As the event briefing paper describes it:

The business model that comes with red-ink businesses is a cumbersome one, reliant as it is on contributed income. Richard Caves again: 'The growth of bureaucracy in arts organizations stems not just from its enlarged size but also from the need for donations, which require the organization of fundraising and the bureaucratic display of orderly procedure and accountability.' More generally, the increasing preoccupation of foundation and government funders with evaluation of outcomes and outputs -- all in itself entirely legitimate -- similarly shifts the balance between accountability and the fostering of innovation.

That balance between accountability and innovation is the crux of the matter for cultural nonprofits who, often as a result of their funding structures and limits, end up focusing more on the means than the mission. Often, even if an organization found a more effective and powerful way to fulfill a stated goal, it could not redirect its contributed income from what it already said it would do.

As an example, suppose a nonprofit received a grant to involve public school teachers in the performing arts through a series of lecture/discussions. Then suppose they eventually realized that for their community, a series of individual ticket vouchers would better match the teachers' time and interest, or a hotline for specific curriculum questions, or a series of in-services sent into the schools. Without specific consent from the granting organization or donor, they could not redirect the funds, even if the goal was better served. The money isn't fungible, isn't flexible, as it is tied to the means of the project rather than the ends.

It's not that for-profit creative organizations are swimming in fungible cash. Contracts with investors can look just as complex and means-focused as grant guidelines. And if they are publicly traded organizations, for-profits have an increasingly burdensome responsibility to justify their actions and expenditures. The grass isn't greener on either side of the fence.

But when such sources become too restrictive in the for-profit world, there are a wider variety of financial tools and resources to draw from...not to mention a deeper pool of business expertise and financial innovation.

Posted by ataylor at 8:52 AM

August 16, 2004

Will dance for cash

The Sunday New York Times went on a bit about the on-going trend of 'selling' major ballet stars to donors in an effort to squeeze contributed income. Through individual dancer sponsorships, endowments, auctions, and other means, at least seven of America's 14 largest ballet companies have put their dancers on the block, with four more considering it.

It's not a particularly new trend (the hazy boundary between star dancer and major patron is part of ballet lore), but it now carries a slightly more corporate sheen. At the more aggressive ballet companies, dancers host a reception for their sponsor, provide an autographed photo, and make themselves available for special backstage meetings or one-on-one events (check out Atlanta Ballet's sales page, where plenty of dancers are still available). At other companies, sponsorship of individual dancers is more like a smaller-scale version of event sponsorship, where the donor's name is presented next to the artist's photo and bio in the program.

Fortunately, the Times doesn't give way to the obvious 'shock and awe' response, but attempts a balanced perspective of the challenges. ABT über-star Ethan Steifel sees the effort as one more necessary cost of high-stakes ballet (he says: 'You have to have a practical sense of what the business of ballet is. It's kind of a fact of life of arts in America'). Atlanta Ballet's John Welker finds a vague inspiration in his auctioned sponsorship, saying 'In a way, she's investing in a product...And you're that product.'

A few ballet companies are wary of the market forces they unleash by offering individual sponsorships for what is supposed to be an ensemble organization. The market value of some dancers over others could strain the internal artistic rankings that drive professional companies, or even pressure artistic leaders to feature high-value dancers more often.

But at the end of the day, individual dancer sponsorships are just another channel for access and connection between audience and art -- another gate that can carry a ticket price. Unlike a traditional gate, however, this point of access involves an artist's and organization's privacy, dignity, energy, and longterm value, making it a particularly important and dangerous gate to manage.

Posted by ataylor at 8:43 AM

August 17, 2004

GETTY: In search of elbow room

NOTE: This is the fourth in a series of entries on a roundtable discussion I attended in June...more details in the first post.

When discussing the challenges of for-profit and nonprofit enterprise in the creative industries back in June, there was much talk of 'elbow room,' that small amount of extra space (financial space, physical space, time, and other dimensions) that allows for innovation, creativity, risk-taking, and stretching ideas. Whatever it was that 'elbow room' represented, leaders on both the for-profit and nonprofit side of the conversation were frustrated that they didn't have it.

For-profits had lost elbow room due to increased commercial competition, threats of mergers and aquisitions, increasingly tight profit margins, and massive efforts toward efficiencies and vertical integration. Nonprofits had lost elbow room due to competition for both earned and contributed income, to broad expectations and efforts to serve not just a creative but a social agenda, and to increasingly restricted funds (see Fun with Fungibility).

The odd thing is that the nonprofit corporate tax structure was originally designed (in part, at least) to provide this elbow room. The exemption of nonprofits from many operating taxes, their access to volunteer and discounted labor, and their ability to provide tax-exemptions to major benefactors, were all an effort to buffer them from the commercial market, and to create a space for forms of expression and heritage that couldn't stand otherwise (at least not in the same number, and not outside of major metropolitan areas).

As the nonprofit creative industries have matured, grown in number and in sophistication, a different bundle of market pressures have overtaken that original conceptual space.

As I've quoted before, Samuel Beckett once said that all art is 'an attempt to fill an empty space.' With less and less empty space in our corporate structures, our financial structures, our physical structures, and our social structures, true art and innovation is potentially crowded out.

Posted by ataylor at 10:31 AM

August 18, 2004

Finding Forrester

In the search for better management metaphors in arts and culture, and in my work directing an MBA degree program for arts managers, I keep finding myself drawn into the discipline and worldview of system dynamics, or systems thinking, or ecological thinking, or whatever you care to call it.

Systems thinking (short definition here) is a method and toolset designed to approach a complex world with rigor, with clarity, and with a continual sense of interconnections. It has been used by biologists, sociologists, educational psychologists, major corporations, and a full range of other disciplines to inform a more useful worldview, and to find the essential points of intervention toward positive change. Over the past three years, I've incorporated it more and more into my teaching, my thinking, and my weblog efforts.

I bring it up again because I recently stumbled on a great 1994 keynote address by the founder of system dynamics, Jay Forrester, that talks about why the discipline is so essential to education in the 21st century. A few quotes struck me as dead on to the world of arts and cultural management, as well, so I'm excerpting big chunks of the keynote below. For the full text, you can look to this web page (it's the second speech in the list), or just download the pdf file directly.

A system dynamics education should sharpen clarity of thought and provide a basis for improved communication. It should build courage for holding unconventional opinions. It should instill a personal philosophy that is consistent with the complex world in which we live....

Basis for Clear Thought and Communication
The ordinary spoken and written language allows a person to hide behind ambiguous, incomplete, and even illogical statements. Language, within itself, does not impose a discipline for clarity and consistency. By contrast, computer modeling requires clear, rigorous statements....

Building Courage
A strong background in modeling should show students that conventionally accepted opinions about social and economic policies are often actually the causes of our most serious problems. If they realize that popular opinions are not necessarily correct, they should develop courage to think more deeply, look beyond the immediate situation, and stand against majority opinion that is ill founded and short sighted....

Personal Philosophy
From simulation models, students should appreciate the complexity of social and economic systems, whether those systems be at the level of families, communities, corporations, nations, or international relationships. They should have seen many times the counterintuitive nature of such systems. They should understand that 'obvious' solutions to problems are not always correct, and that apparently correct actions are often the causes of the very problems that are being addressed....

Seeing Interrelatedness
Interrelationships in systems are far more interesting and important than separate details. The interrelationships reveal how the feedback loops are organized that produce behavior. Students with a strong background in systems modeling should be sensitized to the importance of how the world is organized. They should want to search for interconnecting structure that gives meaning to the parts....

The four elements above would also seem essential to any arts and cultural manager, funder, supporter, or board member.

Posted by ataylor at 9:55 AM

August 19, 2004

Value solved: This weblog is worth $4,992.64

BlogShares is a fascinating experiment in valuing something vague and amorphous, in this case the individual 'value' of any given weblog (on-line column, like this one). Constructed as a fantasy stock exchange, the BlogShares system analyzes any weblog it can find -- over 1.3 million of them so far -- with a full range of seemingly serious valuation measures. According to their web site:

BlogShares is a simulated, fantasy stock market for weblogs where players invest fictional money to buy stocks and bonds in an artificial economy where attention is the commodity and weblogs are the companies. Weblogs, or blogs for short, are valued by their incoming links from other known blogs. In effect, links become the business deals in the simulation and players speculate on the fortunes of thousands of blogs by buying and selling shares.

Each weblog has an analysis page much like a stock or company analysis you'd find on an on-line investment site (here's the page for this weblog). Players can buy and sell using virtual money to build their virtual fortunes (or go virtually broke).

Cute, you say. Vaguely interesting, but seemingly pointless. The point is here: assigning value to something vague and abstract is a challenge arts managers face every day -- when speaking to their boards, their audience, their donors, their communities, and their public representatives (I've touched on this before). The more we explore the dynamics of value, the better we'll be in that challenge.

I'm not suggesting we build a virtual marketplace to attach cash values to cultural organizations or cultural activity (although that would be really interesting). I'm just admiring the sophistication and effort expended to attempt such a thing for the parallel world of weblogs. Learning through simulation, exploring through fun -- it beats an econometrics class any day.

Posted by ataylor at 8:25 AM

August 23, 2004

The art of the everyday

Found Magazine is a glorious aggregation of discovered things from the everyday world: to-do lists, photos, cards, ticket stubs, doodled napkins, and on and on. Public radio's 'To the Best of Our Knowledge' featured an interview with Found's editor Davy Rothbart, with some dark, funny, and sad examples read aloud in the audio stream.

Among the highlights now on-line:

A post-it reminding someone to 'Make Dummy for grand prize.'

A slowly devolving list of repeated written lines, obviously intended as punishment at school, saying 'I will not throw during quiet time'.

A strange list of instructions found in Boulder, Colorado:
'Beat up a pillow
Hide from yourself
brush hair wrong way
run into a wall
pretend you're on a talk show
tape mouth
Clean up!'

The Found articles raise two thoughts in my head about arts and cultural management:

  • First, how wonderful it is to have a thoughtful, creative, and observant curator to uncover what is strange and beautiful in the world...the editors of Found Magazine are clearly such people. Arts managers, when in the zone, can be this to their audiences, too.
  • Second, there is so much art, elegance, oddity, discovery, expressive force, and personal meaning in the notes and photos we take everyday. When, along the line, did the experience of the more formal arts become so separated from daily life? We must have been working awfully hard to make it that way.

Posted by ataylor at 8:35 AM

August 24, 2004

Orientation and orienteering

We're knee deep in new graduate student orientation this week in my program, so my entries will be patchy, at best. In the meantime, I'm pleased to point you in a completely self-serving and self-involved way to a feature in September's Madison Magazine about the business of art, and the transition of the degree program I direct into an MBA.

It's all in the context of Madison's new $200-million arts complex, set to open phase one of its facilities on September 18. I give the magazine full credit for populating the entire business section of that issue with arts-related stories. Usual efforts tend to label arts and cultural business as 'business lite' unworthy of extended coverage. (Also worth a look is the interview with the Center's primary donor, Jerry Frautschi, who has already committed $205 million of his own money to the project.)

Note that there are a few errors of fact in the arts and business article. One error is the assertion that ours is the only MBA in Arts Administration, which isn't near true (Southern Methodist University and the University of Cincinnati both offer an MBA option, and York University in Toronto has the degree, as well). And as most will recognize, the Kennedy Center for the Performing Arts is in Washington, DC, rather than New York, unless somebody moved it as some evil joke.

And no, that's not bird droppings on my jacket in the photo...that's paint. They were going for a visual metaphor of art and business that almost worked.

Posted by ataylor at 11:43 AM

August 25, 2004

GETTY: Some capital ideas

Any extended conversation of nonprofit cultural enterprise will eventually wind its way to a certain business term: undercapitalization. The term and the challenge certainly came up often at the Getty Leadership Institute/National Arts Strategies roundtable I attended back in June. The general gist of the conversation is that the nonprofit arts lack sufficient capital to really do what they need to do, leading them down all sorts of dysfunctional paths as businesses that only get worse over time.

Capital is most simply described as 'wealth used or available for use in the production of more wealth.' It's the stuff (money, equipment, land, buildings) that an organization uses to do what it does. According to the definition:

Capital is something owned which provides ongoing services. In the national accounts, or to firms, capital is made up of durable investment goods, normally summed in the units of money. Broadly: land plus physical structures plus equipment.

According to the GLI/NAS briefing for the conversation, the method of securing and building capital is a key difference between nonprofit and for-profit creative enterprise:

The inescapable difference, it could be argued, is that where you generate surpluses rather than deficits, you have the possibility of a level of capitalization that allows you to invest in your future. Where you do not, then securing the funds required for investment in people (including, not trivially, health benefits), in infrastructure, in marketing, in product development is significantly compromised. This simple difference informs not only the chosen legal structure but the culture of the organization.

Labeling any business as 'over,' 'under,' or 'adequately' capitalized is, of course, fairly subjective. Arts organizations, especially, could always use better facilities, more cash reserves, larger endowments, better office equipment, and the like. Yet so many continue to produce despite this lack of capital that it's easy to wonder why it's such a big deal.

For those managing, staffing, governing, or supporting a nonprofit cultural organization, it is a big deal, whether they recognize it or not.

Lack of adequate capital usually shows up as a series of symptoms, rather than an obvious disease: facilities become ragged and unrepaired, staff look increasingly burned out, training and professional development opportunities are ignored or discouraged, marketing budgets are cut, office equipment is crashing or straining with older software and not enough disk space. It can be like running a marathon without enough body fat to burn in the attempt -- eventually your body starts eating at the muscle itself for fuel.

For commercial firms, the profit margin on their sales will often feed capital savings or investment (so they can become more efficient at selling what they sell). For nonprofits, costs of production are almost always higher than earned income (which is why they're nonprofits), so there is no profit margin to siphon over to capital. One response is to build endowments -- a specialized form of capital available to nonprofits -- or to construct 'working capital reserves' (ie, restricted cash accounts that can be borrowed against and repaid). But more often than not, nonprofit arts groups just let their staff eat the difference, in more work, less training, less health insurance, and lower pay. Worse, they apply for more project grants to fill the hole, which often only support project costs rather than overhead, leading them to stretch themselves even thinner and dig the hole deeper.

There are good reasons that nonprofits don't or can't capitalize like for-profits do, and these will come in a future post. But in the meantime, just understanding and recognizing the structural problem can be an essential first step.

For some great resources to learn more about capital structure in nonprofits, take a look at Hidden in Plain Sight: Understanding Nonprofit Capital Structure from the Nonprofit Finance Fund, or Nonprofit Capital: A Review of Problems and Strategies from the Rockefeller Foundation and Fannie Mae Foundation.

Posted by ataylor at 11:04 AM

August 30, 2004

New museum model or Trojan horse?

The museum world is casting a wary eye on Clear Channel Communications, according to this LA Times report (username:, password: access). The multi-mega-media company, with efforts in radio, outdoor advertising, concert production and promotion, and other industries is touring its third museum show.

It's a bit of irony that the company's third touring show focuses on Greece and Troy, where the Trojan Horse had its first incarnation (remember Odysseus and his fellow Greek warriors hiding inside the sculpture, waiting for Troy to go to sleep?). The argument over the company is much like the conversation must have been in this a gift or a tool of war?

Clear Channel's first show -- works of the Vatican -- had all the trappings of a gift to the museums that hosted it, offering a full-blown exhibit without the usual 'participation fee' required of nonprofit touring blockbusters. According to the article:

Clear Channel's Vatican show, by contrast, required no upfront fees, and Heath Fox, acting director of the San Diego Museum of Art, says his institution expects to reap $600,000 to $700,000 from its share of the receipts, with ticket prices going as high as $18. Clear Channel will pay an additional $800,000 or so to cover the museum's extra staffing costs and other special expenses related to a big show with projected attendance of 150,000 to 175,000 people -- many of them newcomers the museum can try to convert into regular attendees.

But some curators and critics are wondering if the money and attendance are worth the price. Gary Vikan, director of the Walters Art Museum in Baltimore, is one voice of concern:

'In Cincinnati, they blew the place away in raw attendance. That makes people nervous, because we're all competing for market,' Vikan says. 'Museums like to believe they deal in authenticity. Clear Channel deals in illusion. If they don't do a good job, it makes the genre to which I belong, the display of art, something less sterling in the public's eyes.'

Faithful readers may recall that Clear Channel was also behind the Radio City Christmas Spectacular that was giving local productions of 'The Nutcracker' a run for their holiday revenue across the country.

Whether Clear Channel finds any form of profit or gain in the touring artifacts market remains to be seen. They may well discover that it's a black hole of cash and energy. But in the meantime, it will be fascinating to watch the local cultural reaction and response to the incursion by a major for-profit player. The touring Rockettes changed how many local ballet companies promote and produce their work (one group added a kick line to their production, and stopped using the word 'ballet' in their promotions). The for-profit tours may have a similar effect on the museum market.

Posted by ataylor at 9:06 AM

August 31, 2004

GETTY: More capital ideas

NOTE: This entry is part of a continuing series sprouting from a leadership roundtable hosted by the Getty Leadership Institute and National Arts Strategies in June 2004. For links to all posts in the series, see below.

In the exploration of the differences between nonprofit and commercial cultural enterprise, we've already touched on the challenge of fungibility, on the myths that dog the comparison, and on the specific differences in how capital is built and used. In almost every case, the challenge and complexity of the nonprofit form seem strangely high. Why don't nonprofits have ready and flexible access to cash? Why is it that finding and holding enough capital to do a job effectively proves such a challenge to nonprofits? And why, if it's so hard, have so many entities chosen that convoluted and complex organizational form?

Here's one shot at it: Any advanced society has a bundle of things -- actions and artifacts -- it believes to be important. Some of these things are brilliantly provided and sustained by commercial incentive, others are not. Those actions or artifacts not consistently served by commercial incentive are particularly vulnerable to decay or destruction, or at least collective neglect. To preserve and promote these things, a separate system of incentive and support is necessary. The nonprofit corporate model is the best response we've figured out so far.

Without this separate model, the thinking goes, our individual and collective choices would lead us to a world lacking the balance we would like. Historic downtown theaters would become car parks or office supply stores. Downtowns, themselves, might give way to the centrifugal forces of suburban migration. Essential artifacts of our history, our society, and our expressive efforts would be discarded or lost under traditional cost/benefit analysis (it's expensive to preserve and present this photo, this recording, this performance, this handicraft; not many people want to experience it right now; therefore, our energy is best spent somewhere else).

Given this need for a separate space, we require different rules of engagement, different rules of capital, and different rules of cash. As the nonprofit industry drifts closer to the financial flexibility and fungibility of its commercial cousin, it can threaten the different choices it was designed to make.

So, what might happen if we allowed capital to work among nonprofits as it does in the commercial realm? Might major museums use their collections as collateral against major debt (rumors swarmed about the Milwaukee Art Museum considering this, whether true or not)? Might we lose access to and collective ownership of essential elements of our heritage? Consider a warning from Bill Ivey, former chairman of the NEA and now director of an arts and entertainment policy center (from a speech he gave back in March):

The pending merger of Sony Music and BMG will, among other things, bring together the two most consequential archives of recorded American music and spoken word assembled during the 20th century under the ownership of a single, non-U.S. corporation. The exact size of the two collections of master discs and tapes has never been made public (and is most likely unknown), but it is fair to assume that the combined archive will include at least four million recorded performances. Of course, mergers and acquisitions in the media industries have been commonplace for decades. But, given the historical depth and sheer size of these collections, it is significant that the placement of large blocks of heritage in a giant, non-U.S. company has to date generated virtually no public outcry.

In short (okay, it's too late for that), there are reasons for at least part of the strange and bureaucratic mess of nonprofit tax and finance rules. The trick is in sifting away the messes that aren't necessary from those that actually make us who we are.

Posted by ataylor at 8:53 AM

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