Category Archives: arts

The New Nonprofit World: Farewell to the Little Groups

Last Thursday the IRS finally published the list of non-compliant nonprofits. Those are the organizations that have – despite repeated requests from the IRS – not submitted their Form 990s. And presto, the nonprofit world in the US has shrunk by 275,000 organizations. You can go to the IRS site, tab to nonprofits, and download the list by state, either in PDF or Excel. Or you can go to Guidestar and for a small fee download the whole bit.

I took the time to download a cross sample of states, and the finding that has immediately leaped off the page at me is how our concept of nonprofit community groups will change, fundamentally, with this clean-up. Gone are thousands of small fraternal and veterans groups. Gone, too, are hundreds of local sports leagues, youth booster groups, on-again-off-again theater troupes, and others that have been a part of nearly every community in America. Veterans groups, gone. Women’s groups, gone. Religious-affiliated civic groups, gone. Reading the list is like reading our history, and a whole lot of America has vanished.

I know that the vast majority of these groups haven’t been functional, and I know that cleaning up the non-profit rolls has been long overdue. But I mourn at the ever-so-vivid loss of the small little groups that once really was the fabric of care, compassion, outreach, youth, and culture in towns, neighborhoods, and cities across our country. This really does show that groups can be too small to live, too small to be a nonprofit. We’ve tipped. Something fundamental has happened. Yes, it is possible for some of these groups to wake up and come back to life, but I doubt many will.

As I look ahead to what is an almost inevitable movement to lower the deductible amount allowed for charitable contributions, possibly to less than 30% of the contribution, I wonder how many more groups will be added to this list. The IRS is reportedly rolling out more and more groups onto this list every month, and when incentives for charitable giving drop for practically every American, you can bet that many more small groups that lack the fundraising expertise, the circle of donors, and the marketing clout to get their message out will find themselves on this list.

We may be heading into a next generation nonprofit world, in which small ventures – joining together with your neighbors to form a youth sports league, for example – no longer works. In which the dancer/choreographer with a unique vision and aesthetic is unlikely to form a new company from scratch. In which the after school arts program is less likely to form. In which the civic groups who raise a few hundred bucks by selling hotdogs at the high school football games to be able to give that money to local needy, will be less and less a part of our life.

I remember interviewing a state legislator a few years back in the process of doing a cultural development plan. He had one bottom line: close the gates to any new nonprofit start ups. Get rid of them, he said. They are a menace, a problem. They all come looking for money.

But here we are, with a government that needs to rid itself of services and needs a lot of services privatized – logically the ranks of what is now 275,000, and counting, fewer nonprofits. The good news for those that continue to exist is that there is a ton of work to do out there. And the good news is that there will be more room for smart entrepreneurs to license the hotdog stands and do the recycling and pick up the trash on the side of the highway and the countless other things that small nonprofits have done for decades. But I’ll miss them, that part of all of us that has made us believe in the American way of giving and helping and caring and doing in 275,000 small, unobtrusive ways. Won’t you?

A Crisis of Audience

We have an audience crisis on our hands. More grim news in the performing arts field this week comes from the New York City Opera, which is leaving Lincoln Center for someplace, somewhere, sometime. It wants a smaller hall which it hasn’t yet found, and it wants to eliminate fixed operating expenses. Why? On any given great performance evening, it can only count on what is reported to be an audience so small that it fills no more than 40% of the hall.

Sound familiar? My blog on the Philadelphia Orchestra noted that in their case, too, small audiences are at the root of the problem. In too many American cities and for too many great American live performing arts institutions, ticket sales are now making up the decided minority of overall revenue. And that’s the most serious problem in the field today. Without regular, repeat buyers – and I’ll take any kind of repeater, not just a subscriber, but anyone who cares enough to come back a couple of times a year – organizations can’t build loyalty. Without loyalty, there is no real personal identification, involvement, and investment. And without that personal identification, there is no annual gift. Without annual gifts, there are rarely major personal gifts, and even more rarely bequests and planned gifts that have long been the foundation for endowments and special programs.

So eventually, smaller and smaller audiences spell fewer and fewer donors. This is particularly critical as we move toward 2012’s Federal proposed cap on itemized deductions, including those for charitable contributions, at 28% of personal income. Not only will this have a highly negative impact on larger gifts from more affluent donors, it will place the burden on more smaller gifts from more people who will be essential to the survival of nonprofit arts organizations. That means we really have to hustle to get more repeat ticket buyers that will make a greater quantity of albeit smaller gifts.

A lot of what is keeping people away from ticket buying is cost; even a musician in the New York City Opera orchestra was noted as saying that he didn’t blame folks for not being able to afford tickets to the organization that has employed him. He’d probably just go out for a beer, he said, if he had any extra change. A beer out is about as much as many arts lovers can afford these days, and that’s flat-out tragic.

But others are fortunate enough to be able to pay the price of admission. And right now, we have to connect to them, woo them, and win them. We need an audience that can and will pay, will come back, and will stay. That means we have to find them, first; then win them.

Typically, development officers are the ones that put stock in donor research. Here at ArtsMarket, we believe in starting prospect research much earlier than in the development office: you’ve got to find likely markets that will be able to buy tickets, and begin with getting them in the door. That takes a lot of research and analysis, and prospecting that is pinpointed.

Yes, social media and mobile-marketing and advertising can do a good bit to get the last-minute buyers to your box office. Both are essential in connecting to younger buyers, and particularly to impulse buyers. But maybe institutions that budget too little for arts marketing – arts marketing has remained perennially underfunded – need to think again. We know of too many organizations that have just been kidding themselves into thinking that more and more (even all) of arts audiences can be won through low-cost social-media based marketing, alone.

This has to be the time when solid research-based prospecting and communications that can be accurately predicted and managed comes into play. We have to build a new pipeline of prospective audience loyalists. Those who take marketing seriously and do it comprehensively stand a chance of winning. And right now, we need a field-wide commitment to winning – to winning people back and into halls for great art. Before for others, like NYCO, it is too late.

Arts Marketing and a Bankrupt Orchestra

Now we know what makes the perfect storm that topples arts organizations. Yesterday in the Philadelphia Inquirer, Philadelphia Orchestra Board Chair Richard B. Worley laid it out. The story is classically cautionary.

”Today, our unrestricted endowment is nearly exhausted, our emergency fund has also been depleted, and our cash reserve has fallen to $3 million. Absent additional funding, we will run out of money soon.

“Our costs are too high, but the basic cause of our financial problem is declining revenue. The audience is the lifeblood of the orchestra, providing ticket revenue and a vital donor pool. But over the last two decades, attendance has declined from 250,000 to 150,000 annually, and half of that decline has been in the last five years. As a result, ticket revenue has declined to only a third of expenses, and donations have fallen to half the level of other major orchestras.

“For years, our costs increased as revenues declined, and our operating deficit is expected to reach $14.5 million this year. In the face of such deficits, we drew down our unrestricted endowment and, as that dwindled, raised $15 million in emergency funding from the board and a small group of donors.

“Second, the orchestra does not have $140 million in assets to meet obligations. The orchestra and the Academy of Music together have $140 million in restricted endowments. We are limited by law and donor restrictions to spending only the income from endowments, not the endowments themselves. And spending the endowments, even if allowed, would be a path to ruin, shrinking income and our ability to attract endowment gifts.”

The absolute centerpiece of this is the second paragraph. The orchestra has lost on average 10,000 ticket buyers a year for the past five years, meaning that earned income has fallen to only represent a third of all revenues. So, you ask, can’t this be the new normal? Can’t organizations survive just fine on a 33% earned-66% contributed revenue split? I’ve actually seen plenty who are attempting to say this is the new model of health.

But it isn’t, and Worley’s well chosen words say why. When audiences get too small, they don’t provide the lifeblood or pipeline to keep an organization healthy. In any given year, there is always huge audience attrition. People die, move, put their leisure money elsewhere. As a result, every organization needs enough of those casually interested ticket buyers to survive the attrition and stick around, ideally now as a more regular attender, eventually even as a subscriber. And there have to be enough of those regular attenders who stick to become new donors, to replace the donors who every year also leave through attrition. If the system has too small a base, you are mathematically out of luck. For example, draw your attender triangle on its base, then split it into four segments. Label each segment from the bottom up as follows: casual, repeat, sustained, supportive. How broad is your base? Broad enough to make sure that top section is large enough to do its job?

In the new normal, that top section of the triangle now has to churn out – inspire, win, give, cause to give –the staggering portion of the budget that now has to come from contributions. How realistic is that when the base is shrinking faster than ice cubes in July?

A lot of people will blame the marketers for not doing their job, and as the musicians’ leader John Koen correctly points out in his own letter to the Inquirer, crucial marketing and development positions at the Orchestra have long remained unfilled. No doubt, as so often happens, this was in an effort to save salary costs – but at the peril of generating essential revenue, and even more so, at generating that base of the triangle that has to be rebuilt.

Yet, there is a far, far bigger issue at stake here. Quite simply, marketing has to emerge on such a scale, with such ability to change consumer behavior as we have never seen before to save this orchestra and hundreds of other arts organizations and entertainment presenters around the country.

The issue is as much one for Hollywood and movie theatres everywhere as it is for symphony orchestras: Consumers have changed the way they spend their leisure money, and techno-apps gains have been live entertainment’s loss. Just last week, I took a look at some recent household spending trends with data available from the Bureau of Labor Statistics. I chose three variables: entertainment tickets and admissions; spending on audio-visual equipment, and a relative constant – spending on women’s apparel.

The game changer, of course, is audio visual. Our insatiable thirst for new apps, new eReaders, new tunes and tablets and a million new games has grown and grown and grown. That’s just fine as long as household resources keep growing and growing along with it. But say you only have so much money to spend – ah, the recession – and then say you spend more of it on new gadgets than ever before. Something suffers, right?

Notice how closely spending on clothing and entertainment parallel each other all along the way, until suddenly at the $200,000 + household earning level, entertainment springs loose. But really examine how vastly different spending is on apps and stuff: look at that huge chunk of household money.
This relatively fresh data (it was released in October, 2010) spells out the new normal for all live entertainment: you’ve got a far smaller slice of your consumer’s budget dedicated to you than ever before. Given this, how realistic is it to expect to build the bottom of that triangle to the level needed?

When we talk about a structural problem in the arts, it begins right here, not just on the balance sheet at the Symphony. Perhaps, if the recession vanishes, there will be more household money, more ability to blur the stark numbers above. But a blur is all it will be.

Only with herculean marketing efforts to pry dollars away from the newest cool stuff are we likely to survive. Only with equally herculean investments that insert the arts into technology to create new revenue streams will the badly needed new revenue sources really open up. The entire consumer system around entertainment has to change. And somehow, we’ve got to make that happen. Or what we see in Philadelphia will just keep playing and playing, coming sadly and soon to a city near you.

So take a good, hard look at doing marketing the right way. Just how aggressive does your institution need to be to chip away that household spending on apps and tablets and move those dollars into the fees and admissions column? Just what needs to happen to ensure that you have the audience lifeblood that Philadelphia so needs and lost?

The Grateful Dead and the Tapers: A Distribution Lesson for the Arts

I had the chance to tune into a great webinar yesterday led by Guy Kowasaki, the former chief evangelist at Apple and author of the new book Enchantment. The book is about how products and their marketers succeed in really enchanting audiences (buyers.) One of his examples was too good not to repeat. And it is a great follow-up to last week’s blog on how newly increased cable distribution will change the way we consume the arts.

Many of you may know how big the Grateful Dead community has been for all these decades. You know the ease of downloading recordings of their vintage concerts. What Kowasaki focused on was how the Dead fostered that community and all those recordings by creating and championing free seating for the tapers – the bootleggers and fans who got it all live. He noted that while everyone else works so hard to ban tapers and to control the distribution of concerts, the Dead’s free taper sections created – and continue to create – a lot of enchantment as the music and events live on and on.

I got a lot of feedback and emails on last week’s post about new distribution mechanisms in the arts, and a number of skeptics wrote me that we have to protect the live event and especially the artist’s ability to be heard and seen at the live event. (There seems to be some sentiment that too much distribution of classical arts via cable could somehow harm classical arts?) I love live events, witnessing art first hand. But maybe these guys had it right all along when they openly encouraged the free distribution of their work to make it live for everyone who couldn’t be there. What would happen to audiences if there was more of this, using today’s technology?

There’s a lesson there. Face to face interaction with content is what builds audiences far more than all the PR and marketing in the world. Face to face interaction – sure, including via digitized media – that is facilitated by people just like you and me, who think enough of the content to pass it along, is even more likely to build audiences. Too bad that 99.9% of the artists out there have contracts forbidding the very thing that, as Kowasaki puts it, is totally enchanting in the simplicity of methods to build and keep thousands of happy fans. Think of it – a taper section at the concert hall. A taper section at the theatre, the opera. YouTube content that never stops, that is fundamental to audience growth. Encourage distribution, facilitate it, champion it. And watch the line at the box office grow and grow, just as it did for the Dead.

A Way Forward? Rethinking the Distribution of the Arts.

Following so closely on the heels of the Philadelphia Orchestra’s bankruptcy, the sad news this week is that the wonderful Intiman Theatre Company in Seattle has gone dark for the rest of the season.(The hopeful news is that its board hopes to raise enough to re-open in the fall.)

I found the Intiman news that crossed my desk yesterday to form an interesting juxtaposition with a news release I received from Fathom Events. Fathom is the HD movie distribution company that brings us the Met at movie theaters around the country. And lately, its arts product has started to expand. This spring, for example, there are New York Philharmonic and L.A. Philharmonic HD concert/
productions. And they are also presenting – in movie theaters – two great Broadway productions, Memphis, and the Importance of Being Ernest. Locked as we are in this interminable spring of miserable weather, the prospect of Saturday or Sunday afternoons at the cinema over in the mall sounds pretty nice. And the ticket prices are painless, certainly compared to Broadway.

What Fathom is offering with its slowly expanding fine arts schedule is just the beginning little stumbles, I think, toward what could and should be something much larger – something that could eventually be a revenue generator for the struggling theater companies and symphony orchestras of this country. I have problems with Fathom because it is such an insiders-and-in-the-know thing. There is no marketing outside of Fathom or the Met or other institutions’ email lists, and it is so hit or miss. Just because my local cinema airs Fathom’s Met broadcasts is no guarantee I’ll get to see anything else. For example, I would love to catch the LA Phil’s all Brahms concert the first week of June, but no luck.

Let’s imagine, though, that the marketing was much better and that the product line up was there. One week the Met, the next week LA Phil, maybe the Chicago Symphony Orchestra the week after, maybe New York City Ballet the next, and so on. Pretty great, right? And imagine, too, that you didn’t have to even go to your local theater. As of this month, you don’t.

Roku, that little black box you can buy for $59.99, now lets you have access to free and unbelievably low-cost classical arts programming via its new ClassicalTV channel.(http://www.classicaltv.com) When I say low-cost, I mean it. You can catch the opening night gala from the 2009 Salzburg Festival with the Vienna Phil for the rental cost of $1.99 for 90 hours. (I know what I’m getting my mother for Mother’s Day.)

So we are on the cusp. Imagine making Saturday night popcorn and choosing what orchestra concert you want to see. Or spending Tuesday night’s pizza dinner in front of the opera broadcast of your choice. We are right there.

What will this mean to the repertory theater companies and the symphony orchestras and the ballet companies in your city and mine? The challenge and implications, and the prospective benefits and losses are all huge. For the finest – where the artistic product can stand up to the scrutiny of the screen – the benefits are incredible. For the others, it is clearer than ever that audience development will have to focus on the social and community aspects of attendance. (Why buy a ticket to an iffy production when you can gather your friends around, and enjoy a great evening at the Royal Shakespeare for about a dime a person? Clearly, the social aspects of actually “going” will have to be stupendous to balance that five-star event at its ten-cent-per-person cost.)

If this takes off – and I bet it really will – our entire arts world will be remade in front of us. We’re going to be rethinking everything about who our audience is and why people attend. And arts organization leaders everywhere are going to wonder anew what the opportunities and implications will be for product development.

The real excitement here is the chance to rebuild the market for the arts. As ever, the old question of “What is this, a pencil or a communications device?” is fresh. We may not be going to “live” performances and our performing arts centers may have to rethink their business models. But for those arts organizations that see opportunity through a new distribution mechanism and for the audiences that love arts, this is the dawn of a golden age, not the end of an era that one might think from all the recent bankruptcy news.

If this isn’t a blip, just what is it?

The news about the bankruptcy filing that will be made in Philadelphia court tomorrow by the venerable Philadelphia Symphony Orchestra has stirred angst around the globe. But the bigger news is hidden in the comment made by the American Symphony Orchestra League’s Jesse Rosen: “This is not a blip.” No, it isn’t, and that’s the real story. So far this year, both Honolulu and Syracuse have seen their orchestras go bankrupt. The eyes of the arts world have been on Detroit for months now, waiting to see if the inevitable will happen there as anticipated. Louisville’s fine orchestra filed for bankruptcy in December, not even making it to the New Year, bailing before those critical last few weeks of the calendar year when big donors in search of tax benefits often save nonprofits. Rumors swirl that the Indianapolis Symphony Orchestra, another wonderful ensemble, may not be far from taking the big step. And there are many other cities large and small throughout the United States where business and civic leaders, board members and donors are having plenty of sotto voce conversations about just what to do when the inevitable hits their back yard.

Bankruptcies aren’t new to the performing arts. Every recession in recent history has forced a few organizations that are under-endowed and over-contracted to face the music. Theater companies, ballet companies, opera companies, orchestras and performing arts venues themselves have all been victims.
But now that we all see the world in the post-Wisconsin-public-employee-union-pension world, different questions are being asked about the long term viability of performing arts institutions.

This is an industry that is firmly union based. When they are asked to save performing arts organizations from bankruptcy, many donors know that what they are really being asked is to maintain union agreements – often agreed upon in far rosier days – and in some cases to preserve or potentially bail out union pension funds. With the Philadelphia Orchestra – as with most of the organizations that have gone to Bankruptcy court before and those that are contemplating the move today – overly generous union contracts that can’t be met in today’s economy are the central issue. Sound familiar?

If you read last week’s post to this blog – and a lot of you did – you’ll remember that we’re thinking a lot about the sea changes impacting the arts. So rather than look at the Philadelphia Orchestra bankruptcy as just another blip, we’re pretty convinced that it is potentially, tragically, better described as a “new normal.” Simply put, too many contracts have promised too much that can’t be met. Too many pensions are underfunded, and depend on the continuation of current generous contract agreements to fund past agreements. Also, endowments are restricted in purpose and can’t be drawn down to meet crises. (Though, truth be told, plenty have been borrowed against steeply enough to cause their own set of problems.) At the same time, performing arts halls that have also granted their own unions lavish contracts – such as the Kimmel, the home of the Philadelphia Orchestra – need to charge every penny possible to stave off their prospective bankruptcies. Operating costs are through the roof. For large systems of performing arts organizations and their halls, the performing arts financial model is barely working, and only for those with the very largest endowments.

At ArtsMarket we’ve been increasingly asked to examine solutions to these developments in many different markets. Business leaders who are increasingly shaking their heads and refusing to bail out individual institutions are seeking larger, systemic adjustments. We’ve heard from many – corporate leaders in particular – that they’ve had it. Many understandably worry at the signals they send to their own employees when they step in to bail out arts union jobs providing six figure wages and generous pensions for jobs that often allow for or even further additional earning opportunities at universities and conservatories. Politicians feel the same way: How can tax payer dollars go to bailing out private sector union workers when public sector unions are up against it? Donors feel it, too. When institutions as venerable as the Philadelphia Orchestra declare bankruptcy – potentially making it possible to liquidate endowments that were never to be liquidated – why would any individual of means write that seven or eight figure check for an endowment meant to keep organizations safe forever? Why not give those dollars to something more pressing, more immediate, and possibly more honest in intent?

Are there solutions to this mess? Sure. But just as the citizens of Wisconsin have learned over their season of public employee union battles, the adjustments are nasty business, no matter what side you are on. First, you have to face reality, hard and uncompromising as it is. As the old saying goes, you have to raise the dragon to slay the dragon. One of our field’s many dragons is that we want a mid-20th Century performing arts system in a 21st Century world. We don’t want the pain of recognizing that our consumer tastes, interests, budgets, and technology have so dramatically and fundamentally changed our arts consumption and behavior that we aren’t ever going back.

We’re living in a time warp of about 1975. Are we ready to live in 2011? Because if we are, and we recognize that this Philadelphia story is not a blip, we better get busy in rethinking the entire financial and operational model of the performing arts while it is still possible to restructure outside of bankruptcy court.

Privatizing Community Quality of Life: Coming Soon to a Community Near You

Imagine this scenario: by 2020 your parks, your performing arts centers, your community art gallery, your neighborhood community centers, your soccer fields, your local walking trails, your zoo, maybe even your library will be operated on contract by businesses that find ways to make a profit. Those businesses will form the nucleus of a growing new economic sector of real profitability to America. Some of them will no-doubt even trade on the NY Stock Exchange. Too strange to believe? Not any more.

Cities across America have spent decades upping the ante on investment in livability as their mechanism to up the tax revenues they have received, and it has been a profitable strategy. Build the aquatic center, the new tennis courts, the lovely performing arts hall, the zoo, the botanical gardens, the gallery complex, the fabulous library and then reap the rewards with high property values and a desirable community that in turn attracts businesses and on-going economic investment.

Don’t accept any of it as a given any more. In fact, anticipate and get out ahead of the ways where quality of life investment has been and will continue to evolve.

In the past few months there have been all sorts of interesting RFPs for private management of civic assets, and the tempo seems to be increasing, not slowing. “Private management company sought for pool complex.” “ Private management sought for community neighborhood centers.” “Private management sought for arts centers.” “ Private management sought for operation of city parks.” “Private management sought for zoo.” Not “local nonprofit” sought. Not “local partner” sought. Private management sought.

It is a sea change, and it could be coming to a neighborhood near you before you blink twice. Cities are actively soliciting and searching for profit businesses to take on many of the quality of life assets that are not producing. Basically, they are dumping responsibility for under-performing or deficit-causing assets while still seeking ways to benefit from the property tax revenues all municipalities need to earn through having a comprehensive set of quality of life offerings. And in the process, they don’t want to become once again potentially saddled with bailing out non-profit operators that would stand to become permanent arms-length extensions of government. No more “hand over the arts center to a nonprofit that you’ll end up, in turn, having to fund to operate the arts center.” Cities have had it with that shell game. Instead contract a management company to run it and let them figure out how to craft a financially viable model. And they will.

What does it mean?

First, it means a real civic fatigue with the given assumptions of subsidy is a norm. Debt is just too big to be willing to enter into partnerships that are simply going to remove direct red ink from one column only to put the red ink – in the form of operating grants, for example – into another column. Frustration with subsidy-as-norm approaches is over the top.

Governments are looking for something better. They want flourishing, brightly lit and well maintained public amenities that work for the facility operators – who, ideally, make a profit – and that aren’t a drain on public resources. They want a win-win out of a dead-end.

What are the results of this trend?

Chances are, citizens will be paying more out of pocket to use those assets. Have you had to pay for your kids’ music or sports in school lately? Steep, right? Well, expect the same thing for swimming classes at the pool this summer or for art camp for your eight year old in August. Expect the same thing for the water color class you always wanted to take through parks and rec, and anticipate paying commercially competitive rates to rent the neighborhood center for your family reunion. Your library card? How’s $25 a year for one person or $40 for a family?

Really affordable “public” amenities are going to disappear. It will be pay-as-you-go. Your first graders’ soccer team will pay to rent the soccer fields. You’ll have to pay a competitive “for profit” rate to take your pottery class. Your community band will pay more to rent the performing hall.

The businesses that contract to operate these once-public assets aren’t stupid. They know they have to find the price points for their markets and still be able to turn a profit. There will be different prices at different locations. Looking for a way to save? You may drive to the other side of town to get a better deal than your own softball fields offer. Chances are, these new service-merchants will focus only on what can sell, and sell out. Rather than broadening the offerings, they may limit the camps, sports classes, arts classes and after school programs to those that have a large enough popularity to work.

Does it have to happen? Will it be terrible? Or, will it be at least be tolerable?

It probably does have to happen, because we as a society have let it happen. We’ve just assumed and assumed that more amenities can be added every year, no matter the cost, and that somehow it will all work out fine in the end. Too much red ink and too many required subsidies later, our elected officials are drawing lines in the sand.

As for how terrible it will be depends on your perspective. Chances are there will be some real messes out there. But maybe we are in for a complete redo in the way we think about delivery of amenities, and in the process there may be an entire new industry of service providing businesses that excel and thrive and grow to become a valued economic sector. Maybe we’ll find out that a lot of the amenities we thought needed subsidy don’t, and that we’ll all pay for those amenities we value.

If we look at it through the lens of the American entrepreneurial eye, the benefits can be huge. Why not? “Zoos, Inc.” as a Fortune 1000 company. “Arts –n-Kids” as a national provider of quality arts learning in summer camps at parks in 500 cities across the country, and growing. “Community Center, Inc.” as the leading provider of facilities and program management for neighborhood centers in the northeast. You get the idea. It has happened in higher education. Our community amenities could possibly move from subsidy rolls and taxpayer responsibilities to businesses with values that attract investments and shareholders. And, possibly, there is something attractive about seeing quality of life elements that had no determinable financial value potentially transformed into businesses that could provide share-holder benefits to thousands.

Stay tuned. I have a feeling we won’t have to wait too long to find out.

More than Creative Workers: Creative Exports

There’s much more to creating a creative economy than calling your city a friendly home for creative workers. There’s more to it than offering jobs that are (potentially) sustainable, more than a convivial lifestyle for the creatively inclined. There is even more than winning new visitors who spend money locally, though this is in itself significant. A centerpiece of economic development is exports – gaining new dollars into the economy from other markets that buy what you produce. As such, an export plan, strategies, and sales force are essential to the success of a creative economy. When I think about the arts councils of tomorrow, the roles of chambers of commerce and economic development agencies in fostering the creative economy, the first thing I think of is how all of these can work together to create a climate favorable for and even facilitating the export of local creativity-based products and services to create new revenue from outside the market.

Exporting drove the growth of the American arts sector in its early post WWII decades, though it was largely focused around the major institutions from the major population centers. In the heyday of recordings and tours, performing arts organizations and museums alike realized revenue from export sales far outside their own markets. (The recording contracts of old brought in real new dollars from around the country and around the globe. And the brand and image boosts from tours brought in more than audience and donor revenue: it rubbed off on other export products, opening up markets for other products from the same cities. Mayors and business delegations used to go along on international tours with their local orchestras or ballet companies for this very reason.)

Those days are largely gone. At the same time, hundreds of smaller cities and towns now seek to realize economic gain from creativity, and the creation and maintenance of such an economic gain needs more than cultural tourism to drive it. Today’s smaller markets need to export creativity, just as our big cities did a generation ago. We need a new generation of export strategies, developed and implemented at the local levels, to open up, expand, and sustain national and international markets for local creative work that includes everything from fine art to creative innovation – and is likely delivered via technology.

To get there, new training for the field is important. How does an artist move from a local market or a regional tour market to an international market? How does an artist entrepreneur connect to and supply an international buyer market? And how does this local export industry grow and thrive, so that the attention and money that comes into the market from the first sale leads to greater opportunities as your city becomes increasingly known for its creative products? What about protecting intellectual property rights for the creator?

There’s another interesting point to thinking about the exportability of creative work. Is it of the quality and uniqueness that claims interest and purchase from other markets? The ability to succeed as exports drove a huge number of America’s arts organizations to invest heavily in excellence in the decades post WWII. Local leaders rationalized making investments to attract top artists to take up residency in their communities and spend their careers on their stages so that they could compete and win market share outside their own communities, through the unique product to entice new visitors, recordings, touring and other outlets. (I have a hunch that a great deal of what was initially thought of as short term investment to build highly competitive creative (arts) product went on to become annual grant funding. Along the way, the original rational of funding excellence that had export value was lost, to be replaced with more locally-oriented definitions of excellence, outreach, or service, which I think led to a lot of the anti-funding sentiments out there from politicians and local business leaders who once supported arts funding.)

As it was a generation ago, it is time to raise the exportability issue. Other revenue options are constrained. Funding is diminished. Local markets aren’t big enough to sustain local creative economies. Yet creative product is highly prized and valued world wide, and America’s creatives take the back seat to no one. In this global economy, our collective creative economy goals should be to win ever greater international market share and benefits back into our local economies.

Creating an Economy of Creativity

There is a lot of talk, writing – and even the beginnings of policy development – around the role of creatives in our 21st Century knowledge-based economy. Readers of my blog know that I’ve been on the creative-cultural bandwagon, advocating creatives as a large and encompassing economic sector with a lot more clout that our current splintered arts and cultural community. Getting there, however, requires an understanding of creatives, and out of that understanding it requires a method of expanding the economy of creativity.

We’ve fallen down on describing creatives, I believe, and revert to an and arts-crafts construct of jobs. Creatives are too often thought of as artists who work in the for profit sector while artists are those who create in the nonprofit sector, a la the Richard Florida descriptions of the creative class from a decade ago. It was great break through thinking, but is still too narrow to build a value system that, in turn, fuels the economy.

So let’s dig into this for a few moments. What are creative jobs? What is the creative workforce everyone wants? If we can appropriately create understanding around the fullness of creative occupations, we are further on our way to creating a viable economic sector.

Yes, creatives are artists and designers and related professionals trained in creative methodology. But I’ll put forward that the largest portion of the creatives field are the knowledge makers who solve problems and identify new products through creative thinking. Creative thinking is a talent and a skill that can be taught and exercised, focused and directed. It is fueled by presence of other creatives, creativity, and exposure to the creative process. This is why communities rich in creatives get progressively more exciting in their knowledge-based outputs, and why everything from learning arts in school to wandering through a museum collection to soak in the aesthetic of hundreds of creative perspectives matter in fostering innovation.

I was interested that President Obama was in Silicon Valley last week to talk about innovation, calling for more innovators to fuel our economy. I think he (and we as a society) are all using the wrong language. Instead of calling for more innovation, he should have called for more creativity. Innovation is an outcome – not the root of – of creative thinking and creative problem solving. Always, creativity is the spark, the “I see this in a different way” that leads to and shapes the capacity of innovation. Our society seems to like the word innovation because it suggests a mathematical-scientific process or formula that can be captured and transfered to others. But without the creativity that is at the heart of innovation, there is nothing. Creativity is not a formula. It is a process, a way of thought.

We are societally unlikely to immediately accept and praise creativity as the engine of innovation – especially when economic and political rhetoric alike are prone to pit the cause of science -”wise investment” – against that of creativity – “we simply can’t afford it.” But imagine if we very, very broadly marketed and lobbied and changed thinking so that over time – five years, say – the American public becomes tuned to and “gets” the creativity-innovation partnership. That parents who want their children to grow into careers as scientific researchers or in management realize their kids must be well trained in creativity as a way of thinking and problem solving. That there is a broad spectrum of “creative jobs” – and that perhaps the majority of creative jobs are those that rely upon the talents and skills of creativity to do work that fits into entirely different job types or classifications. That there is a financial, economic value placed on the proven skill of creativity (not just on innovation) so that America wants to “race to the top” as a creative economy.

Budget Cuts: A Look Forward at Arts, Culture, and Public Funding

We have two choices (not necessarily exclusive) in facing the federal and states’ budget prognosis for arts, culture, museums, heritage, humanities, historic preservation, cultural resources and allied causes that range from public broadcasting to education to job corps. 1) We can write and call our legislators and do the best job of advocacy the field has ever demonstrated. 2) We can lay the groundwork for the future infrastructure of what I call the creative-cultural sector.

We must do both. We can no longer afford to just advocate. But when we do advocate, it has to be around a much larger cause. (More on that, below.)

There are two strategies required to lay the groundwork for a new future. We need to act on both. 1) We must become a unified sector. 2) We need to propose and advocate for an entirely new, unified funding approach that advances the entire sector as fundamentally valued by our economy and society.

To be a unified sector, we have to really and truly get past the distrust and the sometime-backstabbing that has kept this from happening over and over. The for-profit creative sector has to embrace the nonprofit sector and be in, one for all and all for one, and the non-profits have to sit by side with profitable and unruly creatives whose needs and priorities may be at odds with their own. On the nonprofit site, the historic preservation and heritage folks and the arts, museums, and humanities folks all have to look each other in the eye and pledge – and demonstrate – solidarity. No end runs. No peeling off to find safe havens elsewhere.

Then, we need to put forward radical, energizing ideas on how to reshape our creative-cultural funding infrastructure. The Department of Transportation has recently put forward a streamlining of 55 different programs into 5. We’re the creative thinkers: can’t we put forward a model that re-engineers our creative-cultural sectors’ funding in a similarly bold way? Why not go to Washington with a new approach in hand?

Now, on advocacy. It made me pause when I heard this week that the White House has proposed that arts and history be joined together in something called “Effective Teaching and Learning for Well Rounded Education.” Most people in our field have an immediate and angry response to this, feeling it prospectively marginalizes both arts and history in learning and in our society’s related view of their importance. It may be a semantics thing, even a small signal. But it may also point to the alliance we must form between arts, history, culture and heritage to preserve their importance in education and to preserve their value with the public at large.

Where will the leadership come for this to happen? The creative-cultural sector’s current splinters each have their own leadership and structures. It doesn’t seem like there is a lot of trust or common cause between them. Many leaders and agencies around the country are also (perhaps wisely) sitting as far below the radar as they can, hoping to go unnoticed in the current and projected budgetary mess. Perhaps this is a time for some of America’s leading foundations and private sector leaders to join together in a pledge to build a new creative-cultural infrastructure keyed to our 21st century, and then to bring their recommendations to the White House.

Where ever you are, we need you.