Earlier this summer, TRG convened a two-day meeting of chief arts executives here in Colorado Springs. In our session we discussed the importance of alignment between artistic leadership, executive leadership, and the board if an organization is to develop sustainable revenues from patrons.
Before the organization makes a strategic plan or begins implementing it, leadership must be on the same page about the current realities their organization faces. There are many factors that can affect the organization’s ease in sustaining itself, including:
- Art form: Realities in presenting chamber music are different than those in commercial Broadway.
- Market: Birmingham, AL is a different community than San Francisco or Vail, CO.
- Current operational practices: Are they the practices required in 2014?
- Current patron behavior: How loyal are patrons today? How do they respond to programming initiatives, and WHO responds?
- Programming and venues: The “what” and the “where” that may pique audience interest—or deter them.
One participant in our session looked at the list and asked a provocative question. “Where’s mission?”
Her question sparked my interest. What exactly is the role of mission when it comes to an organization’s sustainability?
Most non-profit organizations write their mission statements like the U.S. Constitution—meant to be around for a while and be so broad as to cover just about any situation the organization encounters. The mission’s utility lies in being that broad “who we are” statement for the whole organization.
Your business model: Where is the money coming from?
However, a mission statement is not a substitute for a business model. When I say “business model,” I don’t mean tax status, I mean income streams. The world outside of our industry defines business model in a simple question: Where is the money coming from?
Those of us in the non-profit arts industry can be squeamish about talking about revenue. The fact is, non-profit organizations can’t achieve their mission unless somebody somewhere is supporting them financially. Yet, the mission and business model often seem to be at odds, especially in programming decisions.
Luckily, the answer to the business model question often lies right in the mission statement. For most arts organizations, the majority of revenues come from the community we serve—our patrons.
Are patrons a sustainable source of revenue?
In industry dialogue, the debate around the non-profit arts business model—a hot topic in the recession—seems to be heating up again. Earlier this summer Devon Smith wrote a widely-circulated piece on the dying arts business model, which set off a new firestorm of discussion. It raises the question of whether our patrons want to or can sustain the arts.
On the other hand, we’re seeing arts organizations that have pioneered innovative ways to connect with their communities and generate income. We see industry thinkers like Richard Evans of EmcArts leading the way here. Our industry dialogue is rich with valid and interesting ideas for change and audience development—and that’s a good thing.
TRG is excited for these new and innovative models, and we want to pair them with what still works. In our data, we’re still seeing arts organizations buoyed and supported by the patrons that love the art form or organization—when the organization aligns itself around keeping those patrons and their financial support.
It’s mission AND business model, not either/or. Executive leaders must create focus and alignment around the priorities that support both. When executives are not aligned, the organization starts to see symptoms like different definitions of success in the organization, budgets that are rarely balanced, middling or poor morale, and more.
Distraction: a bigger liability than failing business models
The rich arts industry dialogue I mentioned above also has the power to distract. Every week there’s a new report with arts audience data, a new technology, or a new set of questions being asked by industry leaders, foundations, or those within organizations that suggests a new framework for our organizational opportunities and challenges. It’s hard to focus on any priorities or plan we may have made, let alone focus on something in partnership with our artistic directors or boards.
You may have heard us say this before on this blog: Stop doing everything.
If you’re a president, CEO, or executive director, you must align with your colleagues and focus your team on the sustainability of your business model and getting the revenue results that will support your mission. Insist on a “stop doing” list. Your non-profit status does not mean that you must exhaust staff time and resources with every initiative, regardless of return on investment.
Focus is the hardest thing to do, but it’s also the most important. We’ve built a consulting practice around it: focus brings results.
We’ve recently published a few cases about what happens when organizations align their focus on patrons and revenues from them:
Hubbard Street Dance Chicago: Data guided this already-thriving organization to focus on strengthening relationships with its most loyal patrons, while shepherding those who had potential to be stronger supporters through a sort of loyalty pipeline. They’re already seeing early results.
Guthrie Theatre: This presentation at the latest TCG conference described how data galvanized the whole team around keeping patrons and growing their ongoing support. Director of Marketing & Audience Development Trish Kirk described saying “no” to initiatives like flyering Mall of America to get new patrons in order to focus time and resources on getting first-time audience members to come back.
Seattle Repertory Theatre: In the midst of budget cuts and staff furloughs, Seattle Repertory Theatre decided to stop prospecting and focus almost exclusively on retention—with astonishing results. Their four-year patron development plan is a model for the industry.
What’s working now
Because of the fundamental shifts our industry has experienced, some organizations may require radical innovation and transformation to survive. When an organization has an under-performing season or a period of declining revenues, it’s natural for leaders to question whether the organization must change or die. However, many organizations may not require re-invention, just re-alignment. Sometimes it just requires focus on the practices that work.
We see organizations succeed when they align around common-sense strategies to bring audiences and artists together. These organizations recognize that their mission is not to seek new audiences at any cost and by any means necessary. They instead leverage the assets they have—the value of experience that their organization offers to their community and the loyal audiences they have who already love them. They tie those assets to measurable metrics and achievable revenue goals. Then, they pursue them with the same passion and perseverance as the artists who create the art hanging in their galleries or presented on their stages.
Does your organization align itself primarily around your mission, your business model, or a balance of both? Discuss in the comments.