Kerry’s Question

Kerry Lengel, theatre critic for the Arizona Republic, recently posed the following question to me: “Is the business model for non-profit arts broken? If so, how can it be fixed – or replaced?”  Our phone conversation was focused primarily on nonprofit theatres, although much is generalizable across all arts disciplines.

My full response was no doubt longer than would be useful for his column, so I post it here:

The business model for theatre, like any organizational model, changes and evolves over time.  There was a time before the nonprofit theatre model as we currently know it existed and then, thanks in large part to a significant investment from the Ford Foundation, the regional theatre movement was born.  There was a time when commercial theatrical production developed through a system of “out of town try-outs” (the “town” being New York City), but that system is largely gone, replaced by commercial/nonprofit partnerships, corporate investment, and foreign imports.  That having been said, we’re in a period where the pace of change for nonprofit theatres appears to have been accelerated by economic and political exigencies.

The direct answer, then, is that it is a model that is evolving.  To be financially viable today – as opposed to the 25 years ago – theatres, like all arts organizations, will need to diversify their revenue models in ways that enable them to most effectively meet their mission.  In difficult times like these, we need more mission, not less, and it would be a mistake for an arts organization to allow its mission to drift on the tides of revenue (the “follow the money” syndrome), but by the same token, arts organizations can be more creative and entrepreneurial about the way they generate revenue from a diversity of sources. As with other types of financial portfolios, a funding portfolio that is diversified will likely be more stable, more able to withstand the vicissitudes of the economy, than one that is not.  For some companies, this could mean developing a “with profit” model, where there is a for-profit enterprise designed to fund or supplement the nonprofit one.  It also could mean program expansion to generate revenue from new sources.  When times are tough, the initial reaction is often to cut back, but there are examples both small and large (see Michael Kaiser’s “The Art of the Turnaround” for the latter) of companies expanding in tough times in order to stabilize their revenue streams.

Arts organizations, including theatres, can also ask themselves, “Who are we doing this for?”  Or, “What need are we meeting?”  By being more responsive to the communities around them, arts organizations will be more stable.   Further, by engaging communities through participation rather than just passive viewing, the community will be more likely to support the ongoing existence of an arts organization, because the community will have “skin in the game.”  The passive audience model does need changing. It is simply not engaging enough for the participatory culture of this century.

Personally, I think the current problems go beyond the nonprofit theater business model to an arts ecosystem that is designed to maintain the organizational status quo rather than foster innovation and develop new work.  The concentration of both financial and cultural capital in a few large arts organizations doesn’t necessarily trickle down to artists who are actually making work – especially locally.  I would love to see an ecosystem in which artists are funded directly and innovative arts organizations that are designed to get their work to new audiences are nurtured and incubated.

As a postscript, I recommended “20Under40: Reinventing the Arts and Arts Education for the 21st Century.”  My arts entrepreneurship class is reading the opening essay this week by Brain Newman, “Inventing the Future of the Arts,” in which Newman looks at seven trends affecting the nonprofit arts model. Some of Newman’s seven are reflected in my recommendations above. Paraphrased they are:

  1. Mergers/Downsizing/Partnerships
  2. For profit and with profit – (re)building a culture of enterpreneruship within the nonprofit arts sector rather than imitating corporate cultures
  3. Audience as curator
  4. Participatory culture – offering “experience” not just viewing
  5. Communal conversation
  6. Free stuff that supports artists; but demand for free stuff from artists
  7. “Electracy”

Newman concludes his essay with a directive for the arts with which I wholeheartedly agree: IMAGINATION NECESSARY.

About lindaessig

Linda Essig is director of Enterprise and Entrepreneurship Programs at the Herberger Institute for Design and the Arts at Arizona State University, including its award-winning arts entrepreneurship program, Pave: http://pave.asu.edu The opinions expressed on creativeinfrastructure are her own and not those of ASU. You can follow her on twitter @LindaInPhoenix and "like" the Pave Program in Arts Entrepreneurship at http://www.facebook.com/pages/pave-program-in-arts-entrepreneurship/386328970101 Find Pave's journal, Artivate, at http://artivate.org
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3 Responses to Kerry’s Question

  1. I couldn’t agree more with your assertions, and I plan on checking out Newman’s text. I just moved to Phoenix from STL, and back home the arts scene is in a state of flux – unfortunately many of the groups creating and performing the arts were not, and in the past several years we’ve seen a number of established groups disappear or restructure. I hope that with a little foresight and saviness we will see arts organizations reformulate and continue offering quality, varied, and new forms of entertainment in communities across the states.

  2. Jill Bishop says:

    I agree with many of your assertions….especially the evolving, financial, ‘with profi’ model. I almost think the “non-profit” identity keeps us in a poverty, scarcity mentality. I was on the Board of a dress for success organization when I lived in Ohio, and they opened a Boutique to sell all the great items they couldn’t use for professional dress attire for clients. Many non-profits have successful used this model.

    As for the second half of your piece, I am interested in seeing if our Tucson Arts Brigade fits the description you are looking for:
    TUCSON ARTS BRIGADE:
    BUILDING COMMUNITY THROUGH THE ARTS!
    TUCSON ARTS BRIGADE (TAB) is a nonprofit participatory service-based community arts and education organization that specializes in Green Arts, offering intergenerational and cross-cultural opportunities for civic engagement. TAB facilitates dialogue and employs arts-based solutions to complex community issues including graffiti, bullying, crime, drug use, health and wellness, empowering youth and elders, beautification, sustainable design, and revitalizing neighborhoods. Bringing together schools, neighborhoods, civic agencies, businesses, and other non-profits, TAB is a national model for sustainable community development through the arts.

    Thanks!

  3. Kevin says:

    Great story, all theaters must evolve or die. Coming up with sustainable revenue sources is critial for survival.

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