Can you grow a garden in a toxic habitat? A case study for arts nonprofit growth.

Let’s talk about growth for the performing arts because the very purpose of a nonprofit organization (which anecdotally I will say is maybe probably 90% of the performing arts sector’s business structure) is to not make a profit.?

Of course, there are plenty of benefits to having a 501c3 structure for arts and culture projects. The community can hold an organization accountable through its financial transparency and representation on a Board of Directors that passes budgets, strategic plans, and hires/fires the organization’s leadership. The single largest benefit, in my opinion, is that a nonprofit structure allows for a project to not be profitable. So, for a ballet company that cannot sell out the house for each performance but needs to perform for three weekends, the organization can rest easy knowing they can supplement the income lost from ticket sales via grants and individual contributions. Donors benefit from a nonprofit structure, as well, through their donation’s ability to be written off and for the philanthropy-minded wealthy class, individuals and families benefit from putting their wealth into a Foundation where they avoid capital gains taxes.?

Okay, so if there are tons of community, individual, and organizational benefits, why is growth such a tough thing to do for a nonprofit??

In an economy that favors rapid, consistent, and expensive growth, arts organizations are pressured to either grow or fold in sticky times. Simply maintaining annual programming year over year has become almost a death wish for arts projects because year over year services, products, and real estate are becoming increasingly more expensive. So growth, instead of being an intentional one-time endeavor, becomes an annual consideration. But how does an arts organization do so when it consistently operates on a “catch-up” structure rather than a generative one??

Let’s explore how annual growth, the tiny lil increases needed each year as well as intentional one-time growth, truly starts and ends with the community.

My grand thesis for this essay, should you venture to read the whole thing, is that arts nonprofit organizations are required (YES REQUIRED) to ensure artists can work and live in the greater community they serve. In doing so, organizations can more organically remain responsive to a volatile, profit-driven, and resource-deprived environment. Arts organizations are the garden bed while artists are the seeds. Community support becomes the source of water, sun, and care.

Click here for the full article, including Case Studies, Recommendations, a Checklist for growth, and References. https://www.artlike.org/blog/can-you-grow-a-flower-in-a-toxic-environment-a-case-for-arts-nonprofit-growth

Seeds can’t sprout if the garden bed is not tended to. The case for artist support in a cost prohibitive world.

Marcie Sillman wrote for Crosscut an article detailing the state of the contemporary dance scene in Seattle back in 2022. She wrote, “Emerging artists learned they could find affordable space in this historically blue-collar city, and Seattle was far enough from art world capitals like New York, Tokyo and Berlin that it gave artists the chance to try — and fail — outside of the glaring spotlight.” (Sillman, 2022). This attracted young, ambitious, and national talent to a city that, in just the nearly ten years I’ve been here, has seen dramatic shifts in affordability and access to reliable transportation.?

Similar data to consider is from an ArtsFund Cultural Impact Study from that same year (2022), which amplifies the financial hardship experienced by arts organizations throughout the COVID-19 pandemic and the perceived value the arts add to the city of Seattle as a whole. The study unpacked, “Across 121 reporting organizations, there was a $95.9 million (21 percent) decrease in overall revenue and $68.5 million (20 percent) reduction in operating budgets in 2020 alone.” As a result of these financial losses, the study found that even with doors to theaters and venues reopening in 2021 and 2022, the public still is hesitant to return to in-person events, making earned income particularly difficult for venues and spaces. (Artsfund Cultural Impact Study, 2022).

On top of these studies and articles released at the tail-end of the height of the COVID-19 pandemic, Margo Vansynghel , who you will see quoted in this article quite a bit, just published an MJ Murdock Charitable Trust funded article for the Seattle Times. Vansynghel interviewed artists for their salaries, expenses, and overall comfortability living and working in Seattle. One of the interviewed artists Scott Méxcal reflected, “There was an Amazon recruiting video that came out years ago now that touted Seattle as a vibrant creative city to lure top talent to move here. Big Business, the tech sector and developers all profit from the creative efforts of Seattle’s artists, but they aren’t reinvesting in the creative life of the city in a sustainable way.” (Vansynghel, 2024). It is tough to build a career tailor made to ones own creativity, a thing that at our lowest moments feels like a tool for corporate greed. So for artists, it’s critical that arts organizations offer the freedom, flexibility, and pay needed to sustain their practices where they practice. Arts organizations offer perhaps the only opportunity for play in a profit-driven, resource-deprived ecosystem.

Global consultant and founding director of AEA Consulting , Adrian Ellis , is known for saying, “the common challenge facing all cultural organizations, regardless of brand or size, can be boiled down to relevance to the changing world in which they operate,” (Ellis, 2017). Remaining relevant is a key lifeline for any arts organization. By prioritizing and thinking about artists as part of its community, the organization has a responsibility to them; paying artists a living wage directly supports the greater community who benefits from the art produced. It goes beyond the marketing or the branding or even the budget size. What connects people to the transformational powers of the arts other than the artists?

Keeping supporters supporting… remaining relevant is harder than we think.

Ellis points to a social framework that identifies key access points an arts organization and its programming opens to its communities. Through shared identities, standards of practice, a shared knowledge base, leadership and grassroots support, and secured funding in a policymaking environment, the work of an arts organization can be dynamic and accessible for the community(ies) it serves. The phrase, “authentically meaningful and of interest” sticks out as important. Ellis points to a North Star for the performing arts, or dance in particular, as leaning heavily into what the artists are needing regularly and through ongoing feedback to produce their imaginative work. An organization may be only as valuable as the art’s connection and impact within the community.?

Ellis writes, “A key implication arises — as society changes, arts organizations have to find new ways to engage with new audiences, and if they fail to do so, then they experience a crisis in their legitimacy, and one that might ultimately come to threaten their tax status. The arts engagement agenda is driven by both the need for a viable business model and a new need to demonstrate public benefit,” (Ellis, 2017). According to this observation, arts engagement is dynamic and must remain responsive to the world around it. Operating in a silo or in a world separate from reality can only cause the fateful loss of an organizational tax status, something that ultimately hurts artists and their communities more than any other type of business closure.

Let's talk about the financial implications of growth, whether percentage by percentage each year or one-time intentional growth, and what financial analysts have to say about those planning processes. The regulations in the nonprofit sector are very supportive of not growing. (Are we surprised?) However, grant opportunities and federal funding are typically granted to programs that will increase impact and reach a new community or a subsect of the community the organization’s mission vows to serve. Interesting from an article unpacking whether or not an arts organization should grow (linked here) written by William Foster and Gail Fine, is the fact that the ten (10) largest organizations in the US were founded in the year 1903. Here’s what I find most interesting about that (looking at the most viable ways an arts organization can grow):

?“We identified three important practices common among nonprofits that succeeded in building large-scale funding models: (1) They developed funding in one concentrated source rather than across diverse sources; (2) they found a funding source that was a natural match to their mission and beneficiaries; and (3) they built a professional organization and structure around this funding model.” (Fine & Foster, 2007).?

I have a comparison to make here that I will offer knowing it will receive judgment - There is no difference between a company that goes public and a nonprofit growing to maintain a large-scale funding model. Both are heavily focused on revenue. The third point offered above points to this fact. Building a professional organization and structure around the organization’s funding model implies that fundraising and revenue teams make up a large portion of the annual operations. When a company goes public, they similarly build budgets and annual plans prioritizing revenue streams first.?

The performing arts industry is famously sick. It’s ill. The cost, alone, to produce a performance will never be cheaper than what it can bring in through earned revenue channels, i.e. tickets. So, is it truly even growth if arts organizations accomplish all three of the practices identified in Fine and Foster’s research if doing so just results in finally balancing the checkbook??How does supporting artists factor into these business considerations?

READ CASE STUDIES HERE!