My dad used to keep a goldfish pond in our back yard. Without some form of population control, goldfish ponds can become overstocked, a situtation in which the fish become sick, or even die, from lack of oxygen and competitive stress.
The Kresge Foundation and Grantmakers in the Arts have recently spearheaded a funder-led initiative,“The National Capitalization Project,” aimed at addressing chronic undercapitalization of the arts sector. The report suggests we have an overstocked arts pond: “At a time of flattening demand there is increasing supply … in terms of both the sheer number of organizations and the supply of product. Neither the audiences nor the public or philanthropic sector can support this level of oversupply. Taken together, this situation is pushing organizations into hyper-competition.”
But how, realistically, can we address this ‘fish too many’ problem when, according to the Urban Institute, from 2003-2008 (on average) a new non-profit arts organization was created at a rate of one every three hours? It’s reasonable to suggest, as Sarah Lutman has in her blog on this report, that foundations should ‘just say no’. Unfortunately, foundations throw so few pellets in the pond, relatively speaking, I’m not sure that this would have much effect? Besides, it’s the nature of the US system that when one funder closes a door, another often opens a window.
We appear to have neither the mechanism nor the will to effectively downsize the sector and thus we have created a rivalrous environment. And how have arts groups responded? Well, many have grown their institutions, making ever-increasing investments in marketing, development, high profile leaders, and buildings in order to be winners in the desperate fight for prestige, press, audiences, trustees, and donors.
Where did they find the money to grow, you ask? Well, when you look at the balance sheets of organizations it’s clear that many of them didn’t; but that did not stop them from growing their operations anyway. They now have what we call ‘structural deficits’ and many of them have incurred debt or raided their endowments to keep their organizations afloat. So we have not only a ‘fish too many’ problem, in our overstocked pond, we also have a ‘fish too big’ problem.
Why are organizations permitted to incur deficits year upon year? Who is held accountable when an arts group builds a space it cannot afford or launches a major initiative it cannot sustain? Who looks out for whether other nonprofits in town suffer when one organization becomes overgrown? And who takes repsponsibility for making sure debts related to year-upon-year deficits and unsuccessful capital campaigns are paid off?
The sad reality is that the lack of ‘ownership’ in the nonprofit system too often seems to result in a lack of ‘accountability’. It’s too easy for funders to ‘phase out’ support on programs or organizations they encouraged into existence; trustees who voted to build a new space to cycle off the board when the bonds, loans, and increased operating expenses must be paid; leaders that have driven an organization into the ground to exit stage left leaving a successor to clean up the mess; and everyone to turn their backs on small and midsized organizations that are often the ones left starving in this fish feeding frenzy.
I applaud the funders that have worked on this capitalization initiative for considering ways that they might change their own practices in order to strengthen the financial health of individual arts institutions.Unfortunately, I think their efforts may have minimal impact if these ‘fish too big’ and ‘fish too many’ problems cannot be systemically addressed. BTW, in response to my funder jargon post, more than a few people suggested ‘capitalization’ as the funder word for 2011–no doubt because of this initiative.
Photo of fish feeding frenzy by Tito Wong, licensed from Shutterstock.com.
Leonard Jacobs says
This is perhaps one of the reasons why the idea of the Epoch Model is so intriguing: http://www.clydefitchreport.com/?p=9510.
Diane Ragsdale says
Thanks for mentioning this! David J. McGraw has written a chapter in 20 Under 40 called “The Epoch Model: an Arts Organization with an Expiration Date.”
Nina Simon says
While it’s not about a planned end-date, I found it very refreshing when the founder/director of an experimental arts venue in LA told me he had a “deliberately unsustainable business model.” Sometimes, it takes radical focus to realize that the program matters more than the sustenance of the organization. http://museumtwo.blogspot.com/2009/03/deliberately-unsustainable-business.html
Debra Chandler says
Ms, Ragsdale has done well by the very institutions and foundations she is spearing. A. There can never be too much arts activities; although more collaboration is definitely in order. B. Non-profits do NOT have the monopoly on misdirected or just plain wrong decisions – check out the corporate fatality rate, and talk to a few investors or vd experts – non profits are actually in better shape!!
David Zoltan says
This is a constant refrain these days, it seems, Diane. I wonder, myself, if it’s just the funders that are encouraging this increased activity or if it’s something else in the environment. There’s another very interesting argument made in 20UNDER40 that the increase in arts organizations is due to the barriers of entry and lack of mobility surrounding the current model that I find even more convincing.
You would think that with a sector that has so much interest that the people willing to put it on the line and start a new company are growing should culturally also show an audience that grows at the same level of interest. Such energy would, to me, logically be distributed on both sides of the proscenium as it were. If this is the case, I would argue that we don’t have a problem of too many fish at all, but rather a lack of differentiation to accumulate the support that would otherwise naturally exist out there. Too many of these arts organizations look and sound the same to an outsider. This is a failure of mission and a failure of message on the part of the arts organizations. And yet, so little money seems to go to helping small arts organizations find their niche and really carve out their reputation and relationship with the audience that will be key in supporting them.
I think it would be very interesting if funders could provide small arts organizations strategic planning funding alongside the general operating support it needs.
Just some random musings 🙂
Sharon DeMark says
I would suggest looking into ArtsLab, a capacity building program here in the Twin Cities started by a group of funders who believed just this – that small to mid-sized arts organizations could benefit from professional development around leadership and adaptive capacity. http://www.artslabonline.org
Glenn Harder says
Our world pond is overstocked with economists like Ms. Ragsdale. These bloodsuckers destroy life wherever they breed. The confusing jargon used by these dismal “scientists” is are no more accurate or meaningful than witchcraft.
Glenn Harder says
Ms. Ragsdale has compared artists to fish in a pond! That is insulting and dehumanizing!. Look at all the dictatorhsips of the twentieth century and you will find a similar lack of respect for humanity.
Charlie Humphrey says
While all of what Ms. Rasgdale says may be true, there is far too little data or statistical support for her thesis in this article. It would require market by market benchmarking with careful per capita arts participation to draw the conclusion that we are somehow overstocked in the arts. In my experience, demand for the arts is far from static. In my experience demand actually increases with supply, which of course is contrary to conventional thinking. But then, good art is anything but conventional.
Diane Ragsdale says
Mr. Humphrey, you are correct; the conclusion that the National Capitalization Project and others have made (and that I’m agreeing with here) is not based on the sort of market-by-market analysis that you suggest, and which is absolutely needed.
Having said this, Americans for the Arts published a National Arts Index in 2009, which did show (aggregated to a national level) that, “from 1998 to 2008 … nonprofit arts organizations alone grew in number from 73,000 to 104,000” and that “one out of three failed to achieve a balanced budget even during the strongest economic years of this decade.” It concluded that these findings suggest that sustaining the current capacity is a growing challenge. It also finds that “arts and culture continue to lose their market share of philanthropy to other charitable areas, a decline that began well before the current econoimc downturn” and that “attendance at mainstream nonprofit arts organizations within many sectors is in decline.”
I would agree that we need data to be collected and analyzed in order to have a more accurate and nuanced understanding of whether or not we have an oversupply of organizations or “product”, and if so where, why, and in what particular arforms, etc. My sense is that some individual communities have already embarked on such “audits.” It would be great to know of some, and the results.
I’m also compelled by David Zoltan’s point that we may not have too many organizations, per se, but rather too many that are “alike” or “lacking mission distinction” (for perhaps complex reasons) and that this makes it difficult for them to carve out a niche in the marketplace.
Thanks very much for the thoughtful posts.
Heather Beasley says
As long as well-established regional behemoth arts organizations continue inbreeding in their artistic hiring practices, new organizations will continually spring up because arts practitioners can’t find a way in to existing organizations. Budget-wise, the major regional theatres can afford to take only certain risks, and those aren’t taken on making room in the field for post-collegiate artists. For companies in the million-plus budget range, there’s simply no way in as a new director or designer, and only very rarely for performers.
Increasingly, funders ask arts non-profits to serve K-12 especially “the underserved.” They provide very little funding for emerging arts organizations who want to create great art, and even less to support arts administrators with the time and skills for creating and marketing the kind of differentiation suggested by David Z. above. This may be because funders can tell how many “underserved” students are reached with a performance, but don’t have firm metrics for evaluating whether a company’s work is actually any good, or if an arts administrator is useful. I don’t think the “market saturation” argument can hold until we examine the divide between funders’ goals and arts organizations’ needs.
Tommer Peterson says
Just to clarify, GIA’s report on capitalization mentions the supply topic in the second bullet, as follows,
“If we agree:
• that arts and cultural organizations are undercapitalized which leads us to be concerned about their sustainability and the financial health of the sector as a whole, and that persistent undercapitalization has the strong potential to erode artistic vision and quality;
• that there is an oversupply of product in some marketplaces, and that current funding practices do not address this issue;
• that within the nonprofit system, both funders and grantees have not made significant progress in addressing either issue;
• that behaviors need to change on both sides of this relationship;
• that funders have influence beyond their actual dollars; and,
• that tools, education, and technical assistance are useful but not sufficient to address the issue.”
And, to clarify further, the author is speaking in marketing terms. The oversupply is not too much art or too many performances, or too many theaters, it is simply that there are more offerings than there is demand in some markets. This is evidenced by near empty houses and organizations falling short of their projected earned income goals.
tom poole says
I’m totally with you on the too big too many issue as you state it, but I also feel that the appropriateness of your criticism depends on a vision of the theater world as a collection of second-rate businesses requiring the kind of meddling and colonial micromanagement that first-rate business operations would never tolerate. Funders have required theaters to adopt business paradigms, pack their boards with business people, and chase after growth as if the only thing setting theaters apart from Walmart and Apple is the unfortunate whimsey of their “product” choice and the certain inferiority of their leadership in dealing with the “real world” without the help of an MBA and the management flavor of the month. I know that theater artists NEED more stability, better wages, and some kind of vision for growth, but the right answers for art are not necessarily going to be found in the same rulebook that sells hamburgers and hearing aids.
Leigh Fagin says
I remember walking away from the Americans for the Arts conference last year with one thing on my mind – that many arts organizations, especially those with founders syndrome, just might not know what it truly takes to turn off the lights and shut the door behind them. Where do you go to find out about archiving your materials when you are a small theater organization, or deaccessioning things they find valuable such as play adaptions and set pieces. What does any arts organization have to pass on, or leave behind, if they plan ahead? Is there an “organizational hospice” that the local Arts and Business Council can offer, or a hotline with a consultant that can walk you through “if I really chose to close the organization I started, what does that really mean?” And allow them to feel good about that decision?
Where is the roadmap that one can follow, that an Executive Director can look at, and truly say that these are steps they are willing to take? I’m not talking about how to merge companies, or how to copyright dance pieces for other companies to use. I just think that maybe many organizations might not understand how to pass on what they have learned, accomplished and produced in a systematic way that allows them to keep their work alive when they allow their organization to “die”.
Ruth Eliel says
I was the managing director of the Lewitzky Dance Company when we planned in 1995 to close the company and actually closed it in 1997. (Because, like most modern dance companies at that time, it was a touring company, we needed to give enough notice that the company would no longer be touring two years out.) We went through an orderly closure with a huge celebration of the company and its 30+-year history sponsored by all of the presenters in the Los Angeles area. Some dancers found opportunities elsewhere before the end, but as Bella had always made training the dancers to teach part of what the company was about, many stayed till the end and either went on to teaching positions or founded their own groups. The company archive went to USC, where it is available to (and has been used by) scholars, dancers, and other not-for-profit arts organizations for research, viewing of videos, information on funding for dance, and more. Some of this was documented in a piece in the GIA Reader in 1998 (?).
Greg Rowe says
Thanks for your clarification of our report, Tommer. To add some perspective to the situation, in Philadelphia, the growth in the number of large organizations over the last few years has been remarkable. With high fixed costs, these institutions, some of which appeal mainly to the region’s impressive tourist market, face considerable competition for both earned and contributed revenue. We also observe here that much of the artistic vigor is to be found in smaller institutions, so reducing the opportunity for new voices to emerge would be the wrong way, I think, to address this problem. So rather than talking about over-supply, we should think more about it as a mismatch between supply and demand. For instance, in Philadelphia, the fastest growing populations are coming from south of the border. This would suggest that more “product” aimed at that market (perhaps, a concert series featuring the work of Latin-American composers over the last 200 years), might make sense. Helping arts leaders understand both the limitations of their work in the marketplace…and the opportunities that could be explored by thinking differently about “the market”, could be very productive work.