As if the auto industry bailouts and now the bankruptcy of major newspapers such as The Tribune Company aren’t enough…
Today’s news of the Baltimore Opera bankruptcy is the latest in a series of worrisome similar stories. Our good friends at Buffalo’s Studio Arena faced the same sad situation not long ago, closing the doors on a major regional theatre. Last week, the Virginia Symphony went on the record that it may be close to bankruptcy. And there are rumors of more institutions facing similar fate.
For an industry that long considered itself unique, bankruptcy and bailouts show striking similarities between the auto industry, newspaper industry, and the arts.
1) A lot of product out there, some of it of variable quality that left enough people unhappy with past purchases that they stopped new major purchases. (See GM’s apology yesterday about expensive cars and trucks that were variable quality. Think of people dropping their Trib subscription because of spotty quality.) Applicable to the arts, yes, often enough to create ripples in subscriptions and donations. Applicable in people pulling back, purchasing less often, not donating.
2) High labor costs leading to inflated purchase prices. From Detroit, to Chicago’s newsroom, to backstage at a professional theatre – the issues are one and the same. Sky high fixed labor costs and contracts. The arts aren’t unique.
3) Growing debt, lack of funder confidence, and inability to leverage more financing. When funders voice lack of confidence, the ability of nonprofit arts to get new lines of credit just about vanish in the best of times. In the worst of times, forget it.
Is there a silver lining? Let’s pray that an outcome of this will be radical rethinking about the industry, our needs, and above all the accountability to which we hold our industry. The past few recessions haven’t been deep enough or hurt enough to force real change.
I remember working with a group of civic leaders after the last recession to create a firewalled endowment that couldn’t be touched, that required high accountability on balanced budgets, and would have been salvation to that community’s arts in today’s economy. Those civic leaders ditched the concept when the arts groups backed away because easy money started flowing. Too bad. They wouldn’t be facing a local arts crisis today.
This month’s Harvard Business Review includes a superb article on nonprofit accountability. It claims that nonprofits do well when they “are much more explicit about the results they intend to deliver and the strategies and organizations they’ll create to achieve those outcomes.”
Explicit accountability. That’s our new arts era. Let’s use it wisely, and emerge stronger for the long term. We need this silver lining.