{"id":428,"date":"2023-06-06T12:01:00","date_gmt":"2023-06-06T12:01:00","guid":{"rendered":"https:\/\/www.artsjournal.com\/scenechange\/?p=428"},"modified":"2023-06-06T20:02:01","modified_gmt":"2023-06-06T20:02:01","slug":"nonprofit-arts-funding-why-reward-bad-and-punish-good-still","status":"publish","type":"post","link":"https:\/\/www.artsjournal.com\/scenechange\/2023\/06\/06\/nonprofit-arts-funding-why-reward-bad-and-punish-good-still\/","title":{"rendered":"Nonprofit Arts Funding: Why Reward Bad and Punish Good \u2026 Still?"},"content":{"rendered":"\n

Why do funders support the same organizations because they\u2019ve always supported the same organizations, regardless of their results?<\/strong><\/p>\n\n\n\n

\"\"<\/a><\/figure>\n\n\n\n

I thought this would have stopped by now. Silly me.<\/p>\n\n\n\n

In 2017, the AT&T Performing Arts Center in Dallas, Texas<\/a> was $151 million in debt, partly due in part to escalating expenses from a capital project gone haywire. According to the Dallas Observer, project backers failed to raise the money needed to pay off $151 million in construction bonds. ATTPAC said it had $56 million in cash reserves and couldn’t fundraise itself out of the problem.<\/p>\n\n\n\n

They had an immediate need for $27 million, just to keep going.<\/p>\n\n\n\n

Bad management? Bad idea in the first place? Not enough discussion? Unpaid pledges? Really, really, really, really bad planning?<\/p>\n\n\n\n

Who knows?<\/p>\n\n\n\n

Instead of allowing the venue to close up shop, the Moody Foundation (a big financial player in Big D and the rest of Texas) donated $12 million. All they wanted was to change the name of a different performance venue (the Dallas City Performance Hall) to Moody Performance Hall.<\/p>\n\n\n\n

Previously, Bank of America and JP Morgan Chase had agreed to forgive $45 million of the debt contingent upon the city of Dallas contributing $15 million on top of that.<\/p>\n\n\n\n

So, to recap, a company that was $151 million in debt had $45 million forgiven, $15 million from the city (at the expense of\u2026?), and $12 million from another foundation entirely, who also pledged $10 million to smaller arts organizations across Dallas, as long as they were already funded in part by the city of Dallas. Is that rewarding bad management and, because that money had been hoovered by the arts center, punishing good management elsewhere?<\/p>\n\n\n\n

\"\"<\/a>
The AT&T Performing Arts Center, a monument to rewarding bad behavior<\/figcaption><\/figure>\n\n\n\n

In the early 1990s, the Los Angeles Theatre Center (LATC) closed, about $29 million in debt. During previous times of financial crunch, led by extraordinary bad management by the director (who later went on to teach arts management at a university, but had to flee the country to somewhere non-extraditable in the Caribbean because he was about to be indicted for allegedly keeping all the deducted payroll tax monies from LATC), the entire staff was ordered to appear at LA City Council meetings to get extensions on (or, [gasp] additions to) the debt to be serviced.<\/p>\n\n\n\n

And yet, the building is still there, still houses performances, just not under a single, poorly-run, badly-managed, ridiculously-led, debt-ridden nonprofit with an eponymous name. It\u2019s managed by the Los Angeles Department of Cultural Affairs.<\/p>\n\n\n\n

\"\"<\/a>
The Los Angeles Theatre Center (LATC), in the Hall of Infamy for Rewarding Bad Investments by a Community<\/figcaption><\/figure>\n\n\n\n

In San Diego, during this fiscal year (July 2022-June 2023), the city\u2019s arts and culture funding mechanism approved over 100 grants to area arts organizations. The top recipient, the San Diego Symphony Orchestra, received more than the bottom 39 recipients combined. The top 5 recipients received more than the bottom 79 recipients combined. The top 17 recipients received 50% of the funding.<\/p>\n\n\n\n

Included in the funding stream was $248,550 to San Diego Repertory Theatre. San Diego Repertory Theatre suspended operations on June 19, 2022. While not technically a closed, bankrupted company, they have not produced any services for the San Diego community at all this year.<\/p>\n\n\n\n

They have, however, racked up a lot of debt. So the city gave them $248,550 for past debt. I don\u2019t know the details of the arrangement here and I\u2019ll be the first one to support an arts organization going through tough times not of their own making, which I\u2019ll grant to San Diego Repertory Theatre to a point. The truth is that the company has always been near-closure, seeking bailouts from any source they can. The other truth is that they\u2019ve done more to include forgotten members of the San Diego community than just about any other large organization. But now they\u2019re closed. Is sending them $248,550 (2.5% of the total money distributed) rewarding bad management, just like the examples at the top of the page?<\/p>\n\n\n\n

\"\"
Is sending $248,550 to San Diego Rep rewarding bad management once again?<\/figcaption><\/figure>\n\n\n\n

There are too many examples to cite here, but a terrific article came out in the Stanford Social Innovation Review on this topic, appropriately entitled \u201cDon\u2019t Feed the Zombies: When Funders Aren\u2019t Accountable for Impact, It Ruins the Party for Everyone.\u201d<\/a><\/p>\n\n\n\n

In it, author Kevin Starr puts it succinctly:<\/p>\n\n\n\n

\n

\u201cThink about it. We\u2014social sector funders\u2014are the analog of investors in the commercial world. In that world, companies go broke if they don\u2019t provide value for customers, and investors suffer when companies go broke. When an investment firm makes too many bad bets, it goes out of business. They\u2019re accountable, and their bad decisions have consequences (mostly).<\/p>\n\n\n\n

\u201cThat kind of structural accountability doesn\u2019t exist in the nonprofit world. Our customers\u2014whom we often refer to as \u201cbeneficiaries\u201d\u2014have no way to express value or lack thereof. They have no say as to whether zombies live or die. If funders aren\u2019t accountable for value\u2014for impact\u2014then nobody is.\u201d<\/p>\n<\/blockquote>\n\n\n\n

Is Zombie Funding\u2014defined here as funding that continues to go to established organizations because there is a track record of giving to those organizations, regardless of impact (or lack thereof)\u2014 the sector\u2019s fault for allowing this to happen for fear of reduced funding all around? (In other words, better that some <\/em>arts organizations got some money instead of potentially none <\/em>of them?)<\/p>\n\n\n\n

There\u2019s plenty of blame to go around. And plenty of organizations that do not deserve the funding they receive regularly (which they receive regularly because they receive it regularly \u2013 a riff on \u201cWe do it this way because we\u2019ve always done it this way.\u201d)<\/p>\n\n\n\n

How do they do arts funding in your community? Is it similarly ridiculous?<\/p>\n\n\n\n

\"\"<\/a><\/figure>\n\n\n
\n
\"\"<\/a><\/figure>\n<\/div>\n\n\n

Based in Kirkland, Washington, <\/em>Alan Harrison<\/em><\/a> is a writer and speaker specializing in nonprofit organizations, strategy, the arts, and life politics. His columns appear regularly in major publications. Contact him directly at <\/em>alan@501c3.guru<\/em><\/a>.<\/em><\/p>\n\n\n\n

If you\u2019re feeling generous or inspired, just <\/em>click on the coffee cup<\/em><\/a> above. You don\u2019t have to, of course, but if you can afford it and find some value here, please provide the desperate need for caffeine.<\/em><\/p>\n\n\n\n

Alan is always looking for good opportunities to write and consult for nonprofits that need a hand. And, of course, that elusive <\/em>Perfect Opportunity\u2122.<\/em><\/strong><\/p>\n\n\n\n

\"\"<\/a><\/figure>\n\n\n
\n
\"\"<\/a><\/figure>\n<\/div>\n\n\n

Alan’s new book, Scene Change: Why Today’s Nonprofit Arts Organizations Have to Stop Producing Art and Start Producing Impact<\/strong> will be published in January. CLICK HERE TO PRE-ORDER IN THE UNITED STATES<\/a>. If you live in the UK, CLICK HERE<\/a>. It’s also available at the Barnes & Noble website, the South American river website (you know the one), and others. <\/p>\n\n\n\n

Bulk copies may be made available for those booking conferences, reading engagements, and speaking engagements. Recruit your local bookstore, conference panel, or boardroom to get a visit from Alan.<\/p>\n\n\n\n

And don’t forget to let Alan know if you want bulk copies for your board!<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Why do funders support the same organizations because they\u2019ve always supported the same organizations, regardless of their results?<\/p>\n","protected":false},"author":2,"featured_media":429,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_genesis_hide_title":false,"_genesis_hide_breadcrumbs":false,"_genesis_hide_singular_image":false,"_genesis_hide_footer_widgets":false,"_genesis_custom_body_class":"","_genesis_custom_post_class":"","_genesis_layout":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[21,20,32,25,19,18,17,27],"tags":[61,60],"class_list":{"0":"post-428","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-arts-and-culture","8":"category-board-of-directors","9":"category-charity","10":"category-development-and-fundraising","11":"category-leadership","12":"category-nonprofit","13":"category-nonprofit-arts-organizations","14":"category-philanthropy-and-donors","15":"tag-arts-councils","16":"tag-foundations","17":"entry"},"jetpack_featured_media_url":"https:\/\/i0.wp.com\/www.artsjournal.com\/scenechange\/wp-content\/uploads\/2023\/05\/asselbow-foundation-header-for-artsjournal.jpg?fit=1300%2C939&ssl=1","jetpack-related-posts":[{"id":514,"url":"https:\/\/www.artsjournal.com\/scenechange\/2023\/08\/22\/funders-how-do-you-hold-your-nonprofit-arts-organizations-accountable\/","url_meta":{"origin":428,"position":0},"title":"Funders: How Do You Hold Your Nonprofit Arts Organizations Accountable?","author":"Alan Harrison","date":"August 22, 2023","format":false,"excerpt":"Are you just robotically giving the most money to previous beneficiaries?","rel":"","context":"In "Arts and Culture"","block_context":{"text":"Arts and Culture","link":"https:\/\/www.artsjournal.com\/scenechange\/category\/arts-and-culture\/"},"img":{"alt_text":"","src":"https:\/\/i0.wp.com\/www.artsjournal.com\/scenechange\/wp-content\/uploads\/2023\/07\/here-is-your-money-robot.jpg?fit=1200%2C802&ssl=1&resize=350%2C200","width":350,"height":200,"srcset":"https:\/\/i0.wp.com\/www.artsjournal.com\/scenechange\/wp-content\/uploads\/2023\/07\/here-is-your-money-robot.jpg?fit=1200%2C802&ssl=1&resize=350%2C200 1x, https:\/\/i0.wp.com\/www.artsjournal.com\/scenechange\/wp-content\/uploads\/2023\/07\/here-is-your-money-robot.jpg?fit=1200%2C802&ssl=1&resize=525%2C300 1.5x, https:\/\/i0.wp.com\/www.artsjournal.com\/scenechange\/wp-content\/uploads\/2023\/07\/here-is-your-money-robot.jpg?fit=1200%2C802&ssl=1&resize=700%2C400 2x, https:\/\/i0.wp.com\/www.artsjournal.com\/scenechange\/wp-content\/uploads\/2023\/07\/here-is-your-money-robot.jpg?fit=1200%2C802&ssl=1&resize=1050%2C600 3x"},"classes":[]},{"id":757,"url":"https:\/\/www.artsjournal.com\/scenechange\/2024\/02\/13\/nonprofit-arts-organizations-you-missed-the-point-again\/","url_meta":{"origin":428,"position":1},"title":"Nonprofit Arts Organizations: You Missed the Point. 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