Friday, October 1, 2010

How Arts Groups Are Faring in the Troubled Economy - Commentary

"How Arts Groups are Faring," regardless of the economy, is an age old question. In "the troubled economy," the question becomes more pressing as support for the fabric of life we call arts (and culture) falls to the wayside as audiences (and donors) limit their support either out of necessity or aesthetic. This commentary offers Fundraising Savvy TM along with a free resource to help you make the argument about the economic impact of arts.

This conversation, which took place as a live chat hosted by The Chronicle of Philanthropy on Tuesday, September 28, offered a limited, but useful perspective in "how arts groups are faring in the troubled economy." This moderated discussion featured the following panelists, whose full biographies may be found on the webpage for the discussion:

David G. Mallette is a consultant with Management Consultants for the Arts, in Stamford, Conn.

Dory Vanderhoof is a senior partner for Geneovese, Vanderhoof & Associates, in Toronto.

Of the questions and answers shared during the live discussion, the exchanges covered a variety of topics. In discussing revenue, the panelists suggested that diversifying contributed and earned revenue was important to a group's financial well-being and that expanding educational and summer programs could be very beneficial. The panelists concurred on the necessity of developing products and services that promote the brand.

In discussing primary factors for budget shortfalls and the lack of ability to adjust budgets, Mr. Vandrehoof placed unwarranted emphasis on union contracts as the primary problem with organizations having difficulty managing the economic downturn. In all fairness, contracts are negotiated with both parties/sides having the opportunity to provide input. Contracts that some perceive as overly beneficial to union employees were created through dialog. In response to the online poll question, "Did your arts organization implement any of these cost saving measures in the last 18 months?" taken during the live session, the responses confirmed that indeed labor costs represent the focus for adjusting the budget when revenue is down:

24% - layoffs
14% - salary reductions
43% - cuts to performances or programs
19% - furloughs

These panelists from the east coast at best overlooked and at worst ignored the discussion about the difference in regional funding for arts organizations in the United States. We heard about regional disparity in the form of contrasting Texas and California. Contrasting Oregon and North Carolina or some other combination might have provided better insight into the economic plight of arts groups.

Dory Vanderhoof's assertion that arts serve as a driver for the service economy i.e., jobs is an understatement of the economic impact. Is that really the best or strongest argument for supporting the arts? Thankfully, a resource provided during the conversation tells us a more comprehensive and thorough story of that economic impact. In May, 2007, Americans for the Arts published its study, "Arts and Economic Prosperity III," as a guide to the large scale economic impact happening through nonprofit arts organizations. The guide can be accessed at

In the course of the exchanges we learn the following from David Mallette, "I'm also a big believer in special event fund raising if you have the skills set to do it well." While there is a truth to the fact of having the right skills set for this type of fundraising facilitates success, Mr. Mallette could have offered the disclaimer that special event fund raising should generally only be pursued as apart of a comprehensive fundraising program. All too often organizations that produce special events focus only on the gross proceeds (revenue) without considering how they will cultivate newly acquired donors and integrate them into a comprehensive fundraising program or how much staff and volunteer time is needed to produce a first class event.

The conversation then turned to "significant new trends in fundraising strategies," where the panelists shared the following:

Dory Vanderhoof:
"The arts adoption of a focus beyond the annual campaign towards a comprehensive strategy that puts equal emphasis on Endowment, Legacy Gifts and Annual Fund. Same strategy the Universities used in the 70s. This is a major organization strategy. Right now there are billions of dollars of comprehensive campaigning in the planning and silent phase." (sic)

David Mallette:
"Ditto (above) on Dory's comment - a more comprehensive approach to donors vis-a-vis all the organization's contribution streams." (sic)

While Mr. Vanderhoof's comments seemed to reflect larger organizations, the advice here applies to smaller, emerging arts organizations as well. In the haste (or preoccupation) to raise general operating or current program dollars, organizations sometimes overlook key opportunities to build legacy gifts i.e., planned gifts that will benefits the organization in the future. While not every organization may be ready to launch and manage an endowment fund, the organization certainly has the capacity to remind its supporters to make a bequest or otherwise make a gift of assets that becomes a legacy for the donors and the organization.

In continuing to explore emerging trends, both panelists cited the expansion of summer and educational programming. Dory Vanderhoof says, ". . . we've seen arts groups focus much more on earned revenue sources: building audience, expanding school and summer programs, using existing assets such as families. Expanding the number of people who have transactional experience with you expands the number of potential donors. We did a survey late last year of about 60 organizations adopting new strategies and tactics. Very, very few reported new fund raising strategies."

The two important themes to take away from this conversation are 1) to diversify your contributed income to include a variety of vehicles for donors and 2) to fully utilize your assets including considering expanding your current programming to maximize your earned income.

This conversation was most welcome and needs to happen on a local level wherever you are. For my followers in Oregon, you may want to explore these issues and others at the Oregon Arts Summit 2010 happening on Thursday, October 7. Learn more at In the meantime, visit this blog frequently for your next dose of Fundraising Savvy TM.