In studying the 990's of non-profit arts organizations, I hoped to identify trends that help clarify why some arts organizations are financially successful and others struggle. And let's face it, financially struggling means no matter what great work you do, you will not be able to sustain operations and fulfill your mission over the long haul (or even if just until the end of the current fiscal year!). And just because your financially successful doesn't necessary means you are doing great work, but it does give you the opportunity to keep working.
Looking at Presenters 990's one thing is becoming clear, many organizations are in deep trouble. Over half of Presenters reviewed are experiencing negative net income, many in the -20% range.
One metric some of these organizations have in common are marketing efficiency ratio's of less than 10 (10 dollars of revenue for every dollar of advertising expense). Financially successful organizations have marketing efficiency ratio's of 20 and above. There are exceptions however. In addition, having a high marketing efficiency is no guarantee of financial success. Several organizations have marketing ratios above 20 and still realize negative net income.
Another trend that emerges is that having a high percentage of earned income is one of the components of positive net income. However, having a high percentage of earned income is no guarantee of success either. Revenue per employee is another metric that seems to correspond to positive net income, but you guessed it, there are significant exceptions.
The profitable not for profit presenter represents a system with many components, including the physical plant, marketing, programming, fundraising, and staff productivity, each driven by the community it serves. How these different components work together varies from organization to organization. Each is unique, but the bottom line is still year in, year out, a good indication of where your organization has been and where it might be going.
20120128
Benefits Based Programming
In the study Assessing the Intrinsic Impacts of a Live Performance, Wolf/Brown worked with 14 Major University Presenters and suggest a strategy called "Benefits Based Programming". Quoting from the study: "It suggests that presenters should first decide what impacts they wish to create for their constituents (e.g., spiritual value, social bonding), and then select artists, works of arts and engagement strategies that are most likely to deliver those impacts."
Although it's described as a radical departure for most performing arts presenters, it seems pretty intuitive. As described in the last post, "arts for everyone" is a pretty daunting strategy for most presenters to take on. Choices have to be made in order focus activities to meet the needs and expectations of its participants. It seems only natural to also focus on the impacts audiences are looking for. These too, will be specific from community to community and central to curating a season.
The ongoing research on arts participation and impacts is long overdue, and it puts the focus back on the artists and the audiences arts organizations work to bring together. So much of the marketing and pr in the arts marketplace focuses on the arts organization itself and not on the constituents it serves. It's a complex marketplace with many embedded interests, socially, economically and culturally. One benefit of a tough marketplace is organizations are compelled to assess their purpose and role in the community. For me its about bringing artists and audiences together. What's it about for you?
Although it's described as a radical departure for most performing arts presenters, it seems pretty intuitive. As described in the last post, "arts for everyone" is a pretty daunting strategy for most presenters to take on. Choices have to be made in order focus activities to meet the needs and expectations of its participants. It seems only natural to also focus on the impacts audiences are looking for. These too, will be specific from community to community and central to curating a season.
The ongoing research on arts participation and impacts is long overdue, and it puts the focus back on the artists and the audiences arts organizations work to bring together. So much of the marketing and pr in the arts marketplace focuses on the arts organization itself and not on the constituents it serves. It's a complex marketplace with many embedded interests, socially, economically and culturally. One benefit of a tough marketplace is organizations are compelled to assess their purpose and role in the community. For me its about bringing artists and audiences together. What's it about for you?
20120121
Arts are for everyone...
One of the challenges of being an arts presenter is having the discipline to make choices. As example, I came across a strategic plan for an organization that identifies five primary target audiences for its services and programs: Families with Children, Boomers (age 40-60), Young Professionals, Students K – 12, Seniors and the Disabled.The programming plan identifies theater, dance, music and comedy events, a speaker series as well as a film series. There's also an art gallery, a storytelling festival and classes for children as well as adults. It also serves as a rental facility. Many organizations share this ambitious strategy, that I refer to as "Arts for everyone".
There is value in creating programming that seeks to appeal to everyone. The experience of sharing a communal moment can be very enlightening and meaningful. As arts organizations we want to be relevant to everyone in the community, to share what we so passionately believe in, but as Bill Cosby is quoted - "I don't know the key to success, but the key to failure is trying to please everybody."
The Ticket Buyer Segmentation study by Wolf/Brown model gives an indication how challenging an arts for everyone strategy would be. Using Gardner's Multiple Intelligence's, the study creates a matrix of preferences that segments ticket buyers into 10 ticket buyer preferences. Some segments correlate to performance disciplines while others represent cultural dimensions.
Behind "the arts for everyone" strategy is the need to build community through the arts, but we often forget that the community will be constrained to those interested in the benefits intrinsic to the arts discipline/activity we program. Organizations with arts for everyone strategies often end up reflecting the preferences of the leadership, which of course can vary greatly. The result is often conflict and compromise that diminishes effectiveness.
It's not that you can't serve multiple constituents, but it does mean to do so effectively will require organizational capacity and leadership aligned with the multiple communities to be served. Organizational complexity doesn't eliminate making choices, it just makes choices more difficult to make.
There is value in creating programming that seeks to appeal to everyone. The experience of sharing a communal moment can be very enlightening and meaningful. As arts organizations we want to be relevant to everyone in the community, to share what we so passionately believe in, but as Bill Cosby is quoted - "I don't know the key to success, but the key to failure is trying to please everybody."
The Ticket Buyer Segmentation study by Wolf/Brown model gives an indication how challenging an arts for everyone strategy would be. Using Gardner's Multiple Intelligence's, the study creates a matrix of preferences that segments ticket buyers into 10 ticket buyer preferences. Some segments correlate to performance disciplines while others represent cultural dimensions.
Behind "the arts for everyone" strategy is the need to build community through the arts, but we often forget that the community will be constrained to those interested in the benefits intrinsic to the arts discipline/activity we program. Organizations with arts for everyone strategies often end up reflecting the preferences of the leadership, which of course can vary greatly. The result is often conflict and compromise that diminishes effectiveness.
It's not that you can't serve multiple constituents, but it does mean to do so effectively will require organizational capacity and leadership aligned with the multiple communities to be served. Organizational complexity doesn't eliminate making choices, it just makes choices more difficult to make.
20120103
Diversify, Broaden, Deepen...
The business of performing arts presenting is highly fragmented and competes with a wide range of other leisure activities. Representing just 18% of the leisure market, performing arts presenters must clearly differentiate themselves from other activities by focusing on the unique benefits they are able to deliver with costs in proximity to alternative activities.
As supported by the leisure literature, increased knowledge and familiarity with an activity leads to greater levels of satisfaction and participation. Participation becomes an end unto itself. Attracting and retaining frequent attendance is dependent on experiences that deepen the knowledge and understanding of the art form or the social context which frames the experience. Frequent participants are much more discerning, having gained considerable skill and knowledge in regard to both the experience and the context of the performance. Pre-show lectures, interaction with performers and artistic staff, as well as extended program notes are examples of activities that increase the intensity and complexity of the experience for participants. Within this context, McCarthy and Jinnet (2001) propose three strategies for developing audience participation in the arts; diversification, broadening and deepening.
Diversification seeks to attract participants that do not perceive the arts as beneficial or accessible as a leisure activity. Presenters that wish to diversity their audience need to create an ongoing communication and education program that presents an authentic representation of the experience of participating. The disinclined that share similar values and aspirations with the presenter will come to perceive the arts organization as a potential supplier of leisure activity. Outreach programs go to where the disinclined gather can be an effective way to create a positive gateway experience. An example would include a symphony quartet playing traditional Christmas music at a mall during the holiday season or performing at local churches. Many presenters have created education programs that support school curriculum, providing performing arts experiences that help teach history, social studies and science. These programs not only provide students with a curriculum based art experience, but create bonds between the community and the presenter. These school performances are attended by students and teachers as well as chaperones and teacher aides that may be participating in a performing arts experience for the first time.
In addition to education and outreach programs, presenters also encourage its current patrons to bring along disinclined friends and relatives by offering discounts or other premiums. Many disinclined will attend with a friend or relative out of obligation and find the participation experience more rewarding than anticipated. The value proposition for the disinclined includes products and services that are accessible to their level of arts education. Attendance at a symphony performance can lead to embarrassment if one applauds between movements; whereas a jazz musician is likely to be discouraged if applause does not follow each and every solo. Each arts discipline has its own conventions and levels of complexity that must be learned. Performers and audience alike have talents and skills that are developed with practice. Many presenters have staff dedicated to audience development activities. Having convinced the disinclined to attend, the experience of the performance must be captivating, enjoyable, and provide the intrinsic benefits that add value beyond the time and money costs of attending.
The perception of value is also central to broadening participation among the inclined. As cited earlier, attendees indicate that not having time and the cost of tickets as the significant barriers. Although the inclined value the arts, they are not likely to attend events unless convinced that the experience will be sufficiently compelling to overcome opportunity costs. Broadening participation requires the presenter to continuously improve the reputation and image of organization while simultaneously reducing the practical barriers to participation. Emphasizing the quality of the performance, the benefits of participating while making access more convenient, less expensive and time consuming, will increase the value proposition for the inclined.
A strategy of deepening experiences for frequent and loyal customers involves providing greater insight into the art, its context, the performers and the arts organization itself. Pre and post show lectures, artist meet and greets, season announcement events all draw the participant into the core of programming. Volunteer programs that encourage the customer to become involved in administration, fundraising and operating the organization deepen the relationship as well and provide significant social interactions. For customers that are more internally focused, challenging and innovative performances create a greater depth of experience. Given the market for the performing arts, the characteristics of participants and the strategies for participation, several customer value propositions are suggested for the performing arts presenter.
As supported by the leisure literature, increased knowledge and familiarity with an activity leads to greater levels of satisfaction and participation. Participation becomes an end unto itself. Attracting and retaining frequent attendance is dependent on experiences that deepen the knowledge and understanding of the art form or the social context which frames the experience. Frequent participants are much more discerning, having gained considerable skill and knowledge in regard to both the experience and the context of the performance. Pre-show lectures, interaction with performers and artistic staff, as well as extended program notes are examples of activities that increase the intensity and complexity of the experience for participants. Within this context, McCarthy and Jinnet (2001) propose three strategies for developing audience participation in the arts; diversification, broadening and deepening.
Diversification seeks to attract participants that do not perceive the arts as beneficial or accessible as a leisure activity. Presenters that wish to diversity their audience need to create an ongoing communication and education program that presents an authentic representation of the experience of participating. The disinclined that share similar values and aspirations with the presenter will come to perceive the arts organization as a potential supplier of leisure activity. Outreach programs go to where the disinclined gather can be an effective way to create a positive gateway experience. An example would include a symphony quartet playing traditional Christmas music at a mall during the holiday season or performing at local churches. Many presenters have created education programs that support school curriculum, providing performing arts experiences that help teach history, social studies and science. These programs not only provide students with a curriculum based art experience, but create bonds between the community and the presenter. These school performances are attended by students and teachers as well as chaperones and teacher aides that may be participating in a performing arts experience for the first time.
In addition to education and outreach programs, presenters also encourage its current patrons to bring along disinclined friends and relatives by offering discounts or other premiums. Many disinclined will attend with a friend or relative out of obligation and find the participation experience more rewarding than anticipated. The value proposition for the disinclined includes products and services that are accessible to their level of arts education. Attendance at a symphony performance can lead to embarrassment if one applauds between movements; whereas a jazz musician is likely to be discouraged if applause does not follow each and every solo. Each arts discipline has its own conventions and levels of complexity that must be learned. Performers and audience alike have talents and skills that are developed with practice. Many presenters have staff dedicated to audience development activities. Having convinced the disinclined to attend, the experience of the performance must be captivating, enjoyable, and provide the intrinsic benefits that add value beyond the time and money costs of attending.
The perception of value is also central to broadening participation among the inclined. As cited earlier, attendees indicate that not having time and the cost of tickets as the significant barriers. Although the inclined value the arts, they are not likely to attend events unless convinced that the experience will be sufficiently compelling to overcome opportunity costs. Broadening participation requires the presenter to continuously improve the reputation and image of organization while simultaneously reducing the practical barriers to participation. Emphasizing the quality of the performance, the benefits of participating while making access more convenient, less expensive and time consuming, will increase the value proposition for the inclined.
A strategy of deepening experiences for frequent and loyal customers involves providing greater insight into the art, its context, the performers and the arts organization itself. Pre and post show lectures, artist meet and greets, season announcement events all draw the participant into the core of programming. Volunteer programs that encourage the customer to become involved in administration, fundraising and operating the organization deepen the relationship as well and provide significant social interactions. For customers that are more internally focused, challenging and innovative performances create a greater depth of experience. Given the market for the performing arts, the characteristics of participants and the strategies for participation, several customer value propositions are suggested for the performing arts presenter.
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