Nonprofit innovation

Scott Walters despairs at the constant lack of innovation among arts leaders in a recent post that I'm highly sympathetic to:

Anyway, I'm not certain what I expected from the meeting. I think I usually set my expectations too high, and go in hoping that just this once a group of leaders might actually do some innovative problem-solving, that, given the assembled experience and intelligence in the room, a breakthrough might occur. I don't know why I always hope this will happen -- it has never happened before in my entire life, and I've attended a whole lot of meetings.

I still think of myself as an entrepreneur-at-heart. That spirit of cutting straight to the value that you provide your patrons still motivates me even as a fundraiser. I don't think that entrepreneurs are the only ones that can do this so efficiently by any stretch of the imagination.

We have some significant barriers to doing it efficiently, though, in the nonprofit sector. Answering to a board is the biggest one as an entrepreneur rarely has to answer to anyone but their patrons. This can drag out decisions, cause conflicts that don't happen for entrepreneurs, and depending on the board, even cause enough doubt to stop innovation cold for fear of being fired where the entrepreneur only has fear of failure to stop them.

The lack of profit motivation can get in the way as well, I believe, for better and for worse. The primary mandate of promoting artistic pursuit is absolutely a noble goal, but it is clear that some of those decisions come counter to the best business decision. When it comes to keeping prices low to encourage access and letting patrons self-discriminate on price by encouraging donations, that's a positive dynamic. Not so much when artistic choices start putting limits on growth that could lead to higher budgets that can, in turn, lead to a greater capacity for the organization to pursue its mission.

A lack of study into new techniques for success seems to be a persistent theme as well. Part of that is a culture that is extremely risk-adverse, at least in the offices if not on stage (though I know we've all encountered organizations engaging in "safe" art as well for fear of ever provoking a bad reaction from an audience member, a funder, or who knows what). Another part of that lack of study is perhaps that the arts are almost the definition of a mature industry, and I get the feeling sometimes that the assumption is that we know all there is to know as passed down from one generation to the next from the stone ages (of the grand and sage old 1960s when the modern nonprofit arts era began).

Largely, everything I'm describing is about attitude really. Boards could be better managed if we chose to approach it differently, some amount of profit could be factored into decisions more readily where appropriate instead of being treated as a dirty word, investigation into new techniques could be embraced and encouraged then shared amongst professionals.

But changing someone's attitude is tremendously difficult. Not impossible, but difficult. Take it from a fundraiser.

So as one of those subversive and horrible blogger-tweeters that apparently the people in that meeting that Scott went to at the NEA think I and others like me am, I continue to open the doors to those that want change. I'm with him when he says that it's time to start innovating, thinking outside the box, and making bold choices. Let's open the doors wide to anyone that is done with the closed door meetings and toeing the company line that just keeps the powers that be in their hallowed halls.

To take it personal for a moment, I suppose, in a way, I have nothing to lose. I'm funding my ability to be a fundraiser for the arts through alternate means right now. Means that will end soon, and either I'll find a paying job with an arts company that wants an innovative thinker, specializing in individual giving, that cares more about patron and donor experiences and the value that we create throughout our interactions with our patrons than just about The Way Things Have Always Been (tm), or I'll find a new career elsewhere, likely in social media, and the brain drain on the arts sector described so well in 20UNDER40 will continue. In the larger scheme of things, I certainly don't matter that much as an individual, but if all the innovative thinkers are pushed out of the industry this way, the industry will inevitably continue to stagnate and limp along as it has been.

But the current industry leaders have to own up to that choice, to stick to old attitudes and old methods and continue to moan about how no-one appreciates the nonprofit arts industry anymore and woe to the state of the arts in the future (as if the creative sector only exists in the context of the nonprofit arts world), or to start to innovate and take risks, exploring new directions and inviting new thoughts into the marketplace of ideas available to nonprofits.

Foundation Center Arts Blogroll

Great blogroll on leading arts thinkers from Foundation Center-Atlanta, and I'm not just saying that because I inspired the post! It's great to see Diane Ragsdale, Ian David Moss, Howard Sherman, Andrew Taylor, and many others get a big shoutout. It's just as great to be listed among such robust company.

Barriers to entry, gateways to prosperity

Many cities across the nation are rife with spaces left abandoned by businesses that were caught in the tidal wave of the financial crisis. Some, like Detroit and even Chicago (which has seen a 7% drop in population over the last decade), have even deeper problems on a city-wide or neighborhood-wide basis.

I was on an architectural boat tour on the Chicago River when my mom and aunt were in town (which while I was at first reluctant to go on, was one of the most intriguing treasure troves of information on my own city I've found so far - highly recommended) when I first learned that River North, that burgeoning neighborhood just north of the Loop full of restaurants and clubs and businesses of all shapes and sizes, truly got its modern day start as an artist collective. Naturally, these days most of the artists have been priced out of that trendy neighborhood, a problem all of its own, but it speaks to the power of the arts to revitalize a city, neighborhood-by-neighborhood, by bringing creativity, beauty, constructive outlets for passion, and the inevitable nightlife that comes with artists to an area.

This concept needs greater attention. Arts companies and service organizations need to start talking more with architects and development (in the building buildings sense) types to see where there might be mutually beneficial projects that could seed neighborhoods with relevant arts communities that will help the neighborhood grow.

As it is, there are some projects in Chicago, like the Cermak Creative District and the Bronzeville Urban Development that could use artists' input and collaboration. These projects might even find funding to help create art incubators and artist collectives and rehearsal spaces and performance spaces. Just so long as we make sure we're becoming a part of these discussions as a community and that the art that is being injected is organic to the neighborhood so that it can grow with the community.

[image credit: http://www.bronzevillebud.org]

Events to say thanks

There are any number of reasons that your organization can put on an event. Most boil down to another way to raise money. When was the last time you threw an event just to say thank you?

I'm a big advocate of stewardship, the art of making donors feel appreciated and well taken care of for their generosity. It takes a tremendous amount of energy and money to attract new donors. Keeping them is both cheaper, and in many ways, more fun too.

This coming Monday, BackStage Theatre Company will be holding a wine party just to say thank you to every donor that's given over the last couple of years no matter if they gave $10 or $2000. It's a simple event, held with one of our long time restaurant partners and advocates (another way to say thank you is to spend money and bring VIPs to your business partners!), and our ensemble will be there in force to help make our donors feel welcomed and a part of the action. Their instructions will be not to ask for anything. This is our opportunity to give to them. Give thanks, give stories, give time, and give them a chance to speak with and to us about what is important to them.

Objections sometimes come up around these kinds of events concerning whether it's a good way to use donors funds, but really this is one of those access events that makes donating worthwhile. It will lower retention and acquisition costs. Even those that can't make it are far more likely to give again knowing that this is the environment we're fostering.

We're building a movement here of our closest advocates. Pew Research is showing that people want to be part of groups online, and I have no doubt at all that that carries over to real life as well. I'll point to the brilliant work again of the Brains of Fire team to show how patrons, empowered and given direction as a group, will not only be loyal to you, but they'll recruit on your behalf as well, tell you when you go off-track, and support you with every ounce of their being when you hit the target.

There is no end of upside to going out of your way to do good stewardship. Give those donors the access they deserve for their strong support of your work. Never let them forget how much you need them and appreciate them. The payoff will be continuous growth.

Value in context

Let me also take a quick moment to respond to my anonymous commenter who says:

Your response ignores the fact that MANY arts organizations pull-in tonnes of funding for nice new buildings, staff lunches and a plethora of other activities completely unconnected with the activity of making art. These organizations still quibble over paying people Equity minimum.

Well, I wholeheartedly agree with our nameless friend that the purpose of every administrator should be to create a sustainable environment where artists and arts administrators should all get paid a living wage or better as commensurate as possible with the value that they provide. It's hard to measure any specific activity, however, out of context with the rest of the strategic planning of the organization.

New buildings are often the result of a capital campaign, for instance, that seeks one-time large donations towards the building of that space. The new building might realistically be a step on the path to forging new capabilities and partnerships that lead to artists being paid. Or it could be a giant, unnecessary expense that ends with the company needing to devote precious resources of time and money towards maintenance of the building rather than the art.

Staff lunches are generally a company benefit for overworked staff. Sometimes they're donated by corporate partners, but even when paid for, they need to be examined in the framework of how it effects the human resources of an organization. Also, within the scope of the alternatives seeing as an Equity actor is significantly more expensive than a dozen box lunches. Of course, one would hope that artists aren't excluded from the kind gestures of human resource efforts if you truly want to work with that talent again.

I find the resentment that comes up on occasion between artists and arts administrators to be self-defeating. There are no end of good and bad examples in the world of budgeting, human resources, capital projects, and so forth, in both the for-profit sector and the not-for-profit arts sector. What we all need to concentrate on is the value being created in each of our actions and to keep an eye on the prize of sustainable living wages or better for all artists and administrators for the incredible value they all provide in the work they do.

The persistent problem of boards

My good friend, Shoshana, who is a brilliant mind in many of the same themes that we discuss here at ArtsAppeal (she calls it audience development as opposed to experience management, but they're close enough as to be the same thing), commented in my last post about how boards need to be worked into the value equation as well. Oy. What a can of worms...

Let's be clear, we were discussing the decades of thought that have already gone into board development and management back when I was at Carnegie Mellon's Arts Management program over a decade ago, and while ideas were put on the table, I don't think anyone really felt fully satisfied by the discussion in the end. And with so few truly great boards out there, there's a reason to be dissatisfied.

I've seen the gamut, from hands-off status boards to micromanaging boards, and while I don't know that I can bring any more satisfaction to the discussion than my mentor, Dan Martin, I can offer what I hope to see in a board.

The Three Ws: Dan drove these into my head, and I still feel they make the foundation of my thinking on board value. They are:

• Work: chairing event committees, signing letters for the organization, holding fundraisers, representing the organization at networking opportunities, etc.
• Wealth: giving money and getting money (note the "and" there)
• Wisdom: oversight for the organization, using their expertise in their fields to offer advice when asked, knowledge of other philanthropists and how to best approach them, etc.

How each company defines these three Ws might vary by the need of the organization, but they stand as a good starting point at least to open the discussion.

The Fine Line of Oversight: This is one of those areas that really make the most difference in my experience. A bad board is normally bad because of this item right here. A board that doesn't offer any guidance to the organization is wasting everyone's time. A board that micromanages not only drives management batty but is also often counter-productive as roadblocks are put in the way of efficient action and capabilities are lost through the alienation of the organization's staff.

Generally, the perfect balance falls in the realm of hiring the Executive/Managing Director and Artistic Director that has the vision that they feel will most advance the company, collaborating with the Executive Staff to fully articulate that vision, providing advice and assistance when asked, bringing new capabilities to the organization as identified in the vision planning, and fundraising endlessly so that the vision can be achieved.

Note that among the things not listed are voting on every decision that the Executive Staff makes, picking individual shows to perform, hiring officers for the Executive Staff, choosing which consultants the organization will use, and a plethora of other activities that are far too long to list. Conversely, they aren't just there as a status symbol, to show themselves off without contributing more than a fat check.

There is a strange sensation that happens when a not-for-profit board is formed. In the for-profit world, a board that interferes as implied above is generally unheard of, especially if the company is doing well, and those that don't do anything are generally held to fire by shareholders once the excrement hits the fan. Of course, there are no shareholders in NFPs, and so how the board handles these situations comes down, largely, to internal pressure, custom, and management by the staff (a sometimes difficult prospect when NFP staff sometimes don't feel they can push against board members that are almost always higher status than themselves).

Fundraising: If you can't count on your board to give and get money, you need a new board. Period. End of story.

I have been part of too many organizations that didn't scale their board commitment to the size of their organization, either being scared to ask for too much or having not examined the issue in too long. Is there a magic number? No, but if your board aren't all what you would consider major donors (part of your top 20% donors or so for most organizations), if they aren't leading your other donors, if they aren't bringing new donors to you, then they shouldn't be on the board.

Form an advisory board or a business council or what-have-you to keep them involved as advocates or advisors if they do other great things for you, but the place for people that don't have the passion about your organization to find a way forward in your development goals isn't on a board of trustees.

The way forward?: New models for how to create appropriate experiences for all the important people in our organizations are needed. Not every important person to your organization should be shunted to the board as some sort of reward for their contributions, monetary or otherwise. Stewardship paths must exist for those not intersted or not proficient in oversight, vision, and harvesting contributions. As we continue to beat the dead horse of oversupply, there are highly significant returns any organization can achieve just in starting to retool their governance that will show which companies have the wherewithal to be ambitious, moving the ball forward in the industry, and which deserve to fall in the category of "zombie arts orgs". Like I said, I don't have all the answers to be sure, but the conversation must happen and must drive us towards excellence.

Artists aren't fundraisers

Rocco Landesman, NEA Chairman

I'm trying to believe that Rocco is continuing to provoke conversation by saying some of these things, but as he continues to stand by all of his statements, I despair just a little bit. In his response to all the hubbub about his speech at the New Play conference at Arena Stage, Rocco Landesman, head of the NEA, makes an otherwise good list take a bad turn when he includes this tidbit in his recommendations:

Examine our arts infrastructure. There are 5.7 million arts workers in this country and two million artists. Do we need three administrators for every artist? Resident theaters in this country began as collectives of artists. They have become collectives of arts administrators. Do we need to consider becoming more lightly institutionalized in order to get more creativity to more audiences more often? It might also allow us to pay artists more.

Let's set aside the misleading use of ratios for just a moment (one assumes art workers include far more than just administrators), and ask yourself this: How many arts institutions do you know that are really overburdened with staff? To be certain, I can name several organizations that may have large administrations. And I dare say that many, if not most, not-for-profits in the world (not just arts organizations) seem to have people that are more passionate for their cause than well-trained in best practices and using those practices to great effect. But as I look at the arts landscape here in Chicago and across the country, I would be willing to put money on a bet that the vast majority of arts organizations are severely understaffed, both in terms of actual hands-on-deck, and in terms of capabilities.

A wise man once made an exceptional analogy about staff to a room of financiers that I think bears repeating. If you have the option of investing $50,000 in a person or the stock market, the person is always the better bet. You get to pay that investment in installments over time instead of all in the beginning. Anyone you hire should be guaranteed to either bring in a significant return, save you significant money, or improve processes to create new returns that weren't possible before, all to the tune of much more than your average stock investment. And if the investment isn't performing as you wanted, you can divest yourself of the investment and invest in someone new without losing your premium.

People are the absolute most important investment in the arts industry (and some would argue in every industry). And recognizing that different people have different skill sets is the first important step in understanding why those "arts workers" are necessary.

While artists are important participants to a fundraising campaign in the role of stewardship, they are not fundraisers. Nor are they marketers, accountants, event coordinators, etc. Some of them might do these things when they have to and even have some amount of skill in it, natural or taught, but every moment they spend doing that, they aren't creating art, nor are they really maximizing what could be done compared to a true expert in those areas.

This analysis is not unique to the arts. For every scientist, there are dozens of administrators of all kinds supporting their work. For every engineer, there are teams behind them that bring their innovations to market. Steve Jobs doesn't just say "iPhone" and make billions (ignoring the stock market anyways which is just a bizarre fantasy wonderland really) as smooth as that process at Apple may seem. Artists may be able to achieve artistic success on their own, but very few will find their way to being paid a living wage alone. Those that do can inevitably do better with that team in place so they can concentrate more on their art.

Take a good look at your staff. The key question you should be asking for everyone, yourself included, is does this person in this position create value in some way (freeing up resources of others, enhancing customer experiences, finding new revenue streams, etc.) above and beyond what they consume themselves. If the answer is yes, then the ratio can be 12,000 to 1 and still be worthwhile. The reality will be far, far more modest, but the point is that it's the value that person creates, not the ratios of administrators to artists.

Phone experiences

I don't care if you are the Chicago Symphony Orchestra. Not putting your administrative phone number somewhere easy to find and then making me wait on hold forever with your box office to try to get transferred to where I need to go or to get information I need does not make me want to give you money as a patron or a potential donor.

You have the top-rated website in the orchestra world, CSO, and you are truly a world-class organization. But today, you have failed to provide me, an avid arts lover with a satisfactory experience. Imagine what the casual arts lovers calling today are thinking. You can and must do better.