I’m currently working on a project that involves examination of what organizational and governance structure best provides incentives for success.  What I’m finding is painful, as the 2008 Great Recession has drained so much of the altruistic resource of our noble NFP workers.  They are being expected to do the work of many others, and receive pay cuts, or no raises in return.  They are made to feel thankful for having a job at all.  As I was once told decades ago, when I asked for a raise, “you don’t do this for the money, do you?”  That stung – and stuck!

So as I look at the various configurations of organizational design and governance I have to look beyond this current crisis.  What configuration provides the best environment for altruistic reward, as well as those financial?

Let’s look at elements of this puzzle.  Altruism is real — and a powerful motivator.  How can it be nurtured in an organizational and governance structure?  I believe that artistic altruism comes from a desire to be free, to be creative, to have your voice heard and respected, to have your ideas considered seriously.  

Financial incentives are real, too.  Arts workers are just like the rest of the world in wanting and needing financial rewards for good work and excellent results.  One difference may be that they buy artwork, not ordinary material objects (!).

So what organizational structure can effectively and consistently stoke these altruistic and financial elements? 

The first dichotomy to examine is that of public v. private ownership or operation.  Here the overwhelming favorite is the private option.  The public option does not allow artistic and/or creative freedom (except in very select cases), and rarely allows for merit pay, as most public entities have salaries set through formula.

The second dichotomy is not-for-profit v. commercial: the 501c3 v. the LLC.  In this comparison matters become much more complex.  

Depending on the governing board of the 501c3 (NFP), all criteria can be met: artistic and creative freedom and proper recognition through financial rewards for excellent work and results.  The challenge is good governance (I have blogged on this topic in the past).  And, in addition, as mentioned earlier here, today’s financial challenges are so great that governing boards are asking their employees to work multiple jobs while paying them the same, or less. Yes, in an ideal environment, both criteria can be addressed well in the NFP setting — the challenge and rarity is good and visionary governance.

The LLC can provide for financial rewards for successful outcomes: and, in the initial stage of development it can also provide a stimulating creative environment.  What’s more exciting that creating a new product or service, developing a marketing plan for it, and rolling it out to the public?  The challenge, however, is sustaining the creativity — and enduring the financial risk.  I can only speak for the young people I teach, and for myself, but what I find is tolerance for risk around making art, and more risk aversion around the selling of it.  

I can’t help but ask myself if there’s a totally new model (not the L3C) that starts as an LLC, then morphs into a 501c3, then morphs back into an LLC when needed, then back to a NFP when needed, etc, etc.??