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Diane Ragsdale on what the arts do and why

Archives for 2011

What is a mission-failing arts org? Like its opposite, perhaps you know it when you see it.

STREB: The Opposite of Mission Failure

In last week’s post I suggested that the sector might be strengthened if some ‘mission-failing’ organizations were to close. I defined mission-failing organizations as those that were not providing sufficient cultural or social value relative to the investments in them. It’s an awkward phrase and I find it difficult to describe a mission-failing organization with any confidence; however, I can give an example of its opposite–an organization that is providing great cultural and social value–and did so in a talk I gave in 2010 called The Excellence Barrier.

Here’s what I said (additional comments follow the excerpt):

Susan Sontag once wrote, “Existence is no more than the precarious attainment of relevance in an intensely mobile flux of past, present, and future.”  I take particular note of the phrase, “precarious attainment of relevance.”  No organization can be granted relevance in perpetuity based on the size of its endowment, the permanence of the building it occupies, the fact that it was the first or largest of its kind in its region or city, or its historic accomplishments.  The institution exists to matter to people, in a particular community, today.  That is the impact that must be assessed.

What does impact look like if not the metrics we’re currently assessing?  Alan Brown has done terrific work in assessing intrinsic impacts and community engagement, and I couldn’t begin to summarize his research here—but I suggest you take a look at it.   I would, however, describe what I consider to be one of the best examples in the US of an organization that is brokering relationships between people and art.

In 2003, choreographer Elizabeth Streb opened a performance space in the Williamsburg neighborhood of Brooklyn, N.Y. called S.L.A.M. Instead of creating a church-like space that patrons visited once a week for a sacred experience, Streb opened the doors and let people come in anytime to watch rehearsal or use the restroom. She added popcorn and cotton candy machines and let people walk around and eat food during the performances.

Streb noticed that her patrons wanted to join in on the action, so she installed a trapeze and began teaching people how to fly. Performances largely feature the professional company, but Streb also features her students in the shows. Not content to simply use the platform of S.L.A.M. to promote her own work, Streb began fostering the development of the next generation of artists, through an Emerging Artists Commissioning Program. 

Streb no longer needs to advertise her performances because she has created a robust social network that drives ticket sales. There is a palpable energy and familiarity in the room—people know each other and interact in the space as they would at a backyard barbecue. People come back to the performances time after time and the “initiated” (kids and adults alike) delight in showing newcomers the ropes, both literally and figuratively. The experience is participatory, not transactional.

Streb’s success is measured not when the ticket gets sold at the box office, but thirty minutes after the show when everyone is still lingering, buzzing, and talking with one another and the artists. Streb is cultivating “true fans”—a diverse group of people who are deeply engaged, enthusiastic, and loyal.  As Kevin Kelly, author of the article, “1,000 True Fans” might say, Streb’s fans “buy the t-shirt, and the mug, and the hat.” Streb does not behave as if achieving artistic virtuosity and being relevant to the community are competing or mutually exclusive goals. She is pursuing excellence and equity. 

By highlighting Elizabeth Streb I am, by no means, suggesting that the sector should institutionalize her particular approaches or practices. The key takeaway is this: You cannot miss Streb’s value when you go to S.L.A.M. And I would suggest that the opposite is also true. You know a walking dead organization when you see one.

An important point: in using the term ‘mission-failing’ I was intentionally avoiding the generic term ‘failing’ as I think it implies financial failure and one cannot assume that the groups that struggle the most financially are those that are providing the least value to society. (Though it is logical to ask how sustainable, and able to maximize mission, such financially failing organizations are and whether consolidation, strategic partnership, or merger with another organization might be necessary. Brian Newman has written a terrific post, Nonprofit Arts Zombies, on this topic.)

Pete Miller asked in his astute comment to last week’s post: “What is the path forward to winnow mission accomplishing organizations from time marking organizations?” Again, there is no easy answer. With very few barriers to entry (the IRS doles out 501c3 status like XTC at an 80s rave) growth of the sector will, no doubt, continue. It will, thus, become all the more imporant that we figure out how to ensure that resources are well utilized.

I do not believe it is the role of the NEA or any other funder in the US to hold ‘death panels’ and determine which organizations are mission-failing and should close. Ultimately, it seems that it is nonprofit boards and staffs that must wrestle with this question and charge themselves to take the decision that is in the best interest of the greater good.

In the meantime, funders need to determine what to do with their limited resources. As a philanthropoid friend wrote to me last week, “You spread the pain or you concentrate it. We all know we should target, but almost everyone just spreads the pain because it’s emotionally easier.” Candidly, we may not be able to (and I know many would argue we should not) reduce the actual number of nonprofit theaters (and other types of arts organizations) that exist; but funders certainly can reduce the number of organizations that receive grants and subsidies. Private and government funders should target their resources, and they should target them to those that are clicking on all cylinders, so to speak–and within that group, might I suggest prioritizing those organizations that cannot as easily cultivate support from individual donors or develop other revenue streams.

There were several posts last week at #supplydemand. I’ve put some of them in my featured texts section. If there are other relevant posts and texts you’d like to see included send them to me.

Two housekeeping matters: (1) Here’s a new essay, Rethinking Cultural Philanthropy, which I wrote for last week’s State of the Arts Conference in London; and (2) you can now follow me on Twitter at DERagsdale.

Image of Elizabeth Streb’s book STREB: How to Become an Extreme Action Hero.

Supply and Demand Redux: Rocco’s Comment and the Elephant in the Room

I’ve been following the responses to Rocco’s ‘decreasing supply‘ comment and his subsequent post on the NEA blog. Some believe that supply/demand is the wrong framework through which to look at the sector; some that there is no such thing as too much art and that we should increase patronage rather than ‘kill’ organizations; some agree with him but believe it was inappropriate for him to make the statement; and a few seem to agree with his points and believe that it was beneficial for him to make them. I’m in the last group.

Rocco has done the arts sector a service with his ‘decreasing supply’ comment as I think it has created an opening for a candid discussion about an elephant in the room: the US lacks a mechanism for identifying and dealing with mission-failing arts organizations and (because competition for resources exists) the nonprofit arts sector might be healthier overall if some mission-failing organizations were to close. Following on my overstocked arts pond post of a few weeks ago, here are some further thoughts on the supply/demand issue.

Competition among arts organizations for earned and contributed income exists. Some markets and organizations experience more competition than others, but it is not uncommon for arts groups located in the same city to be competing to secure patronage and trustees from among the same (narrow) demographic of upper middle class well educated arts-goers and funds from one or two government agencies and a small number of private foundations and corporations.

Many arts people take the stance that we should ‘let 1,000 flowers bloom’. While one might theoretically argue that there is no such thing as ‘too much art in the world’, the same cannot be said of arts organizations: to the degree that resources are not growing at the same rate as organizations (and they are not according to the most recent National Arts Index report), every new firm that enters the sector reduces the chances of every other to secure sufficient resources to operate.

If a commercial firm experiences losses year after year—unless it can successfully develop a new market for its product, or change its product to better serve existing markets, or restructure its business to reduce expenses, or find economies of scale through expansion or merger, or achieve revenues over expenses via other strategies—it will most likely shut down.  Or it might be taken over by others who believe they can do a better job of running it. If an entire industry is in decline and there is insufficient demand for the current suppliers to cover their costs then one would expect to see firms exit the industry until equilibrium is achieved.  There are exceptions– but generally speaking, this is what one would expect because commercial firms exist to make profits.

It’s more complicated for nonprofits because while they must have sufficient cash to operate, they exist (as Andrew Taylor has succinctly put it) to ‘maximize mission’ not profits.  Nonprofit organizations do not (in theory) exist to benefit themselves (i.e., to keep arts administrators gainfully employed); they have an educational and charitable mission and exist to benefit society (e.g., to support the development of artists and people’s relationship to the arts). One cannot assume that an organization that is balancing its budget is achieving its mission and providing cultural and social value to society; nor can one assume the opposite. 

If there are nonprofit arts organizations that are not providing ‘sufficient’ value to society relative to the current investments in them by the government, private foundations, and other donors, and if they do not appear to be able or willing to adapt to fix this situation, then it is logical to assert that other more deserving nonprofit organizations (arts or otherwise) that are currently competing with them for resources would be better off if those ‘mission-failing’ organizations would close (or be re-organized).

However, even if we were able to identify ‘mission-failing’ organizations (sometimes it’s obvious, often it’s not), we do not have a clear method for dealing with the ‘dead weight’ in the sector.  We don’t have a ministry of culture and large government subsidies. If we did, failing organizations could be de-funded and might adapt or close their doors as a result. The plurality of the US nonprofit model is both a strength and a weakness. Government agencies, private foundations, corporations, and major donors give more than just their money: they give endorsements that serve as signals to board members, leaders of organizations, and other donors. Renewed support from the state arts council or one well known family foundation to a failing organization can be all that’s needed to encourage other donors to re-up and for the board and staff to persist on the wrong course for another year (despite good sense telling all of them to do otherwise).

Many organizations were started with the belief that they should exist as permanent institutions and have fought for their survival at all costs. Some of our dead weight is in historically leading ‘tall trees’ that have been preserved for far too long. Those that are the largest or that have already existed the longest are often assumed to be the most valuable. This is why many arts organizations get nervous when the cutting supply conversation happens; they assume (and with good reason) that funders and government agencies will sooner turn off the sprinklers that are misting the grass, the small bushes, and the saplings than shift the hose from one tall tree. (I’d like to see some funders prove them wrong on this.)

We lack a sound mechanism for communities to identify and deal with mission-failing organizations—those that refuse to adapt or close despite a preponderance of evidence that it would be better for society if they were to do so. There is no easy solution to this but there are opportunity costs to ignoring the problem:  again, resources going to failing organizations are resources that cannot be utilized by those providing greater cultural and social value.

The reality is that organizations will close. Some already have, some are closing as I write this, and some will die in the coming months or years. And they will either be the right organizations to close or the wrong organizations to close.  Why is it better to shut our eyes, wring our hands, and hope for the best?

Of course, dealing with  failing organizations is only part of the strategy. We still have the issue of declining participation rates. Many took offense at Rocco’s comment that ‘demand is not going to increase’; but according to a report put out by his own agency, arts participation rates have been trending downward, more or less, for more than two decades.  I don’t perceive Rocco to be a pessimist as much as a realist.

Optimistically, I believe that there is ‘pent up demand’ (read: need) for the arts that is not being realized because of financial, geographic, cultural, educational, social, logistical, programmatic, and other barriers to participation. Pessimistically, I do not see many nonprofit arts organizations radically adapting their institutions to address these barriers. I hope I am proven wrong on this.

To be clear, I’m not suggesting that every organization needs to serve its entire community (it would be unwise for all but the largest flagship institutions to even try to do so); but if a given community has 100 arts organizations, neither should 80 of them be serving the same small segment of society. Perhpas arts organizations should spend less time stewing about the ‘decreasing supply’ comment made by Rocco Landesman and more time pondering why  participation rates have been declining and why the arts and culture sector is securing a declining portion of philanthropic dollars? This may be the other elephant in the room that merits some earnest discussion. And (please) this is not a call for greater investments in marketing and fundraising; it is a call for more relevant institutions.

Elephant image by Alexander A. Sobolev, licensed at Shutterstock.com

Waiting for a new business model for the arts.

"The air is full of our cries." (He listens.) "But habit is a great deadener."

What do nonprofit arts people mean when they say ‘the business model is broken’? I’ve heard this phrased decried ad nauseum in the US for at least the past three years. It was a working hypothesis before the economic downturn; now it seems to be a statement of fact. So what model are we talking about? The American ‘nonprofit’ model for the arts? A particular ‘business’ model used by individual organizations? A Stanford business school professor once gave me the following definition: a model is a representation of your beliefs about causality. Perhaps more interesting questions would be, what beliefs about causality underpin our ‘model’, and are they still valid?

Last year, in his post, One business model to rule them all, Andrew Taylor referenced a comment Clara Miller of Nonprofit Finance Fund made at an Americans for the Arts conference in 2010. She said, “There is one business model: reliable revenue that meets or exceeds expenses. Any questions?” I was at that session. A lot of people chuckled when she made the comment.

And then I remember thinking: So, which revenue sources are reliable at a nonprofit arts organization? Government arts programs across the country seem to go into duck and cover mode on a regular basis; corporations are often skittish—lavish one year and austere the next; foundations are overly cautious and generally dole out funds one year at a time, being careful to avoid enabling ‘dependency’; fewer and fewer people want to commit to buying a season’s worth of tickets up front; single ticket buyers are notoriously unpredictable; and individual donors are as varied as … well, individuals: some are dependable and loyal but many are fickle and elusive.

It seems like most arts organizations start each year with very little of their income committed and spend much of the year on pins and needles waiting to see if they will hit their revenue targets. Are we operating under a delusion that there is such thing as ‘reliable revenue that meets or exceeds expenses’ in the arts? And if so, is there a corresponding faulty belief that underpins our business model? For instance, that the arts are valued by our society?

Is this what we mean by ‘the model is broken’? Or is it something else? I would love to hear reflections on the ‘broken model’. What’s broken? How do we fix it?

Desolate Tree image from by lolloj licensed by Shutterstock.com. Quote from Waiting for Godot by Samuel Beckett.

overstocked arts pond: fish too big & fish too many

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.

Strategic partnerships between funders & arts orgs: same small grants, more hoop jumping

There were many thoughtful comments to last week’s post, including provocative reflections on the power imbalance between funders and grantees and speculation as to whether restructuring the relationship as a ‘partnership’ might be feasible or desirable. In recent years, a ‘strategic partnership’ approach (commonly used by venture philanthropists seeking to, for example, fund nonprofits to make and distribute mosquito nets in the Third World), has been embraced by some arts funders. But is this a positive development for arts groups?

Most arts funders (even those that are endeavoring to be ‘partners’) are making miniscule grants relative to arts organizations’ operating budgets, or even the budgets of their individual programs in many cases. If an arts organization is cobbling together a bunch of $5-$25,000 grants to fund some portion of its operations (as many of them are), how many authentic ‘partnerships’ (read: masters) can it reasonably fulfill (read: serve)?

For that matter, how many ‘partnerships’ can one funder reasonably sustain? I was interested to learn from a presentation by a major venture philanthropist that his foundation had determined that it could manage no more than about 30 projects at a time, because each ‘partnership’ required sustained financial support and significant time (read: involvement) of foundation staff.

Which raises another question: Do arts organizations want ‘partnership’ if it implies intense involvement? Furthermore, is such involvement appropriate when one is creating operas or art exhibitions? Witness the way some foundations and individual donors have, essentially, sought to coerce the National Portrait Gallery into reinstating A Fire in My Belly by artist David Wojnarowicz on the grounds that they have contributed to the exhibit Hide/Seek: Difference and Desire in American Portraiture.

It would appear that the National Portrait Gallery made the decision to remove the exhibit in response to political pressure from representatives of the US government, which might reasonably be considered a ‘partner’ given that the NPG receives several million dollars in federal appropriations each year. That other smaller ‘partners’ of the exhibit disagree with the decision is completely understandable (there seems to be near unanimity in the ‘art world’ that this was a scandalous turn of events); but that they expect to change the outcome, may not be. Unless these other funders and individual donors can pony up millions of dollars per year in operating support for the National Portrait Gallery, they are unlikely to have significant political leverage with it now, or in the future. And, reasonably, should they?  

I sense that grant seekers are keen to use the term ‘partnership’ as they perceive that recasting the relationship as two entities jointly trying to achieve a great goal may help level the playing field and encourage meaningful underwriting in support of core programs for sustained periods of time (think: The Humana Festival at Actors Theatre of Louisville). Realistically, I don’t see many arts funders being able or willing to do this. Cynically, I think calling them partners (particularly those that are flying the ‘strategic philanthropy’ flag) may simply give them more power and lead them to expect more involvement and hoop jumping and achievement of outcomes, in exchange for what still amounts to relatively small amounts of restricted support.

Elephant and Mouse image by Gnurf, licensed at Shutterstock.com

Arts & Culture Sector 2011: Striving for Systegic Survibrustainadaptinnovaccountabeffectipreneurism

In 2005, when I was working at Mellon, a fellow funder suggested that the funding community needed to stop using words like ‘strategy’. She lamented, “Funders got arts organizations to start using [such] business words years ago, but nothing has changed. They are not in better shape.” (Evidently, it takes more than using business jargon in funding guidelines and proposals for arts organizations to improve their finances.) Around that same time I correctly predicted that ‘innovation’ would emerge as the next funder mot-du-jour.

Funnily enough, I was at a meeting of funders a year later at which some had recently jumped on the ‘innovation’ bandwagon while others, who had been using ‘innovation’ for a year or two already, were planning to take the word out of their guidelines because they had determined it wasn’t working. (Evidently it takes more than using business jargon in funding guidelines and proposals for arts organizations to overcome risk aversion and ‘innovate’.)

‘Systemic’, ‘effective’, ‘sustainable‘, ‘adaptable’, ‘entrepreneurial’, ‘accountable’, and ‘artistically vibrant’ now appear to be vying for top spots. ‘Emerging’, ‘mid-career’, and ‘established’ are continually embraced and abandoned like partners in a square dance (and many artists and organizations cleverly reposition themselves accordingly in order to qualify for grants). Of course, these buzzwords never fully displace the ubiquitous pursuits of ‘excellence’, ‘accessibility’, and ‘diversity’.

This juggling of magic words and continual tweaking or overhauling of definitions and priorities by many (but certainly not all) funders is understandably maddening to grantees. Funders intend no harm, and most probably believe their ideas and guidelines are well-received because … well, who would dare to say otherwise?  The generally accepted wisdom is that it’s safer to flatter funders than to challenge their intelligence. Even when funders convene arts leaders to ask for ‘honest input’ that might help shape their priorities and guidelines, all too often participants leave the meeting shaking their heads at the amount of BS flung around the table.

Fantasizing for a moment … I wonder what would happen if funders started getting letters from organizations saying: “After reviewing your guidelines we have determined not to seek a grant in support of ‘Systegic Survibrustainadaptinnovaccountabeffectipreneurism‘. We must admit that we understand neither what is meant by this term as you are using it in your guidelines, nor why you believe it to be an appropriate, beneficial, or achievable goal for our organization or others like us. We considered writing a fictional proposal that would please you, because we could certainly use the funds in pursuit of the goals we’re actually pursuing, but decided this would be both disingenuous and a waste of time (yours and ours).” 

I suspect most funders would shrug off such a letter and that it would have little impact.

David Dower at Arena Stage has noted at more than one gathering of theater types that being “an ‘artist-focused‘ organization that develops ‘new works‘ by ‘emerging’ artists‘ of ‘culturally diverse‘ backgrounds,” is the current phrase that pays with theater funders.  As you might suspect, it has become an articulated goal (if not a goal in practice) of theaters across the US. I’ve witnessed funders and theater leaders alike chuckling at David’s observation, no doubt in sheepish recognition of its truth.

The promotion of such jargon by funders, and the dutiful adoption of it (on paper anyway) by arts organizations has been going on for decades. What’s bewildering and disappointing is that this mechanical and dysfunctional pas-de-deux persists despite the fact that both grant-makers and -seekers seem to recognize it as such. I wonder whether we have simply given up on the possibility of enlightened dialogue, or whether we are we actively trying to avoid it?

So … any predictions on what the winning word for 2011 will be?

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