Posts tagged ‘Vancouver Symphony Orchestra’

August 12, 2011

3 Ways for Nonprofits to Crash & Burn in Current Economy

This week, I was all set to write my blog post. But then, an article at The Chronicle of Philanthropy website caught my attention: “How a Double-Dip Recession Could Affect Giving” by Lisa Chiu. It was a fine article, but it was nevertheless the last straw. I’ve seen way too many articles, blog posts, and Tweets exploring the “What’s going to happen?” question. I have to respond. And, I have to share some meaningful suggestions.

There’s really no mystery. It’s quite simple. I’ll tell you what will happen if there’s a double-dip recession or, for that matter, if the economy improves. Overall philanthropy will follow the growth trend of the Gross Domestic Product. Philanthropy has long correlated to GDP. It averages about two percent of GDP. So, if GDP goes down, giving will go down. If GDP grows modestly, philanthropy will grow modestly. If a miracle happens sometime soon and GDP growth leaps upward, so will giving. We don’t need more studies. We don’t need to guess. We already know what will happen.

Photo by inajeep via Flickr

While philanthropic performance is easily predicted, what is more difficult to determine is how individual nonprofit organizations will do in a bad economy. Since we are nearly powerless to alter the course of the economy, we need to focus our efforts on controlling the thing we can, well, control rather than behaving like a deer caught in the headlights. While I cannot provide a plan that will guarantee success, allow me to share three things that can guarantee that your nonprofit organization will crash and burn during a poor economy:

Stop Asking. It may seem obvious that you should never stop asking, but some nonprofit organizations really do think that the current economic conditions are not good for going out and soliciting money. So, they have scaled back their fundraising efforts. The Vancouver Symphony Orchestra (in Washington state), left their Director of Development position open for a year. They ended up on the verge of bankruptcy. If you ask for contributions, you may not get them. But, if you don’t ask, you certainly won’t get them. Ok, maybe you’ll get a few, but you won’t raise nearly as much money as if you get out and ask.

Do Not Have a Compelling Case for Support. If you’re going to ask people for money, particularly folks who might be struggling themselves, you better have a superb case for support. Just showing up and saying, “Hi, I’m here. Give me money,” might work in good times, though it’s still not a particularly effective idea. But, in these tough economic times, you’ll need to do better. So, get back to basics. Examine your case for support and make it stronger. If you don’t have one, create one. Tell prospective donors how you have wisely used previous contributions and what you intend to do with new dollars. Identify a problem and show prospective donors how they are part of the solution.

Ignore Current Supporters. To save money, some organizations are cutting their stewardship budgets. This is a great way to alienate and lose supporters at a time when you can least afford to do so. During the recession of the 1980s, I had a museum client with a senior executive who wanted to eliminate the member magazine to cut costs. Before doing that, the wise membership director and I put together a member survey to determine whether the membership valued the magazine or not and what, if anything, they valued in particular. We found that the magazine was an important member benefit, even among those who couldn’t remember any of the articles from the most recent issue. The most valued feature of the magazine was the listing of upcoming events. As a result of the survey, the membership department redesigned the magazine with a special pull-out calendar rather than a simple event listing. A follow-up survey found that members valued the publication even more. The membership retention rate even went up! And, yes, the great powers allowed the magazine to continue. In a bad economy, it is time to take especially good care of supporters. It is not the time to alienate them.

June 17, 2011

If Your House is on Fire, Don’t Throw on More Wood!

I’ve worked in the nonprofit sector for a long time. I landed my first professional fundraising job 31 years ago at Temple University. Given how long I’ve been around the nonprofit sector, you might think that I’ve seen and heard it all before. But, I recently received a reminder that that’s simply not true. One of my Twitter friends Tweeted a news item about the Vancouver Symphony Orchestra, the one in southwest Washington near Portland, Oregon. The link took me to a sad news article: “Vancouver Symphony’s Future in Doubt” in The Columbian.

While I certainly have not made a thorough study of the Orchestra’s dire situation, I’ve learned enough to be somewhat surprised and very concerned about some horrible mistakes that the organization’s board of directors appears to be making. Here are some of the mistakes that the Orchestra seems to be making that others should avoid:

Mistake 1–Misidentifying the Problem: You can’t solve problems if you can’t identify the problems. This might explain some of the difficultly at the Vancouver Symphony Orchestra. The Columbian quotes Scott Milam, the Orchestra’s board chairman, as saying, “Like most small nonprofits, the economy has caught up to us. We’re struggling very hard.” While I’m reasonably confident that the recession has indeed contributed to the Orchestra’s troubles, an examination of the Orchestra’s 990s at Guidestar reveals that the organization’s problems are more complex. In 2006-07, public support totaled $385,600. In 2007, with the recession officially beginning in December (in mid-fiscal year), public support dropped to $352,236. So, the Orchestra did see a philanthropic decline. However, the $352,236 is still well above the $249,969 that was raised in 2005-06. And, the $299,050 that was raised in 2009-10 was also above the 2005-06 level. So, while public support is down, this by itself does not explain the Orchestra’s trip to the edge of the abyss. Furthermore, the decline in contributions cannot be blamed solely on the economy. Consider that in 2008, 39 percent of arts and cultural organizations reported actually raising more money than they had in 2007 with another 20 percent saying they had raised the same amount, according to a Guidestar survey reported in Giving USA 2009. Looking at ticket sales reveals more. While The Columbian reports that the number of tickets sold has gone up over the past five years, the 990s reveal that ticket revenue has actually declined since 2006-07. In 2006-07, ticket revenue totaled $146,345. By 2009-10, ticket revenue had fallen to $115,574. What’s even more telling is that ticket revenue only covers about 20 percent of the Orchestra’s operating budget. Virtually no performing arts group can sustain itself at that level. As a general rule of thumb, earned revenue must total at least 50 percent of the operating budget. The Orchestra has seen a decline in both philanthropic support and earned revenue. And, its expenses have remained at an unsustainable level relative to earned income over this period. Until the board gets a handle on all of the complex issues, the future of the Orchestra will remain in doubt. Simply attributing the troubles to the economy is insufficient.

Photo by Helena Price via Flickr

Mistake 2–Wrong Actions: About one year ago, the Orchestra’s director of development left. Perhaps in response to its fiscal woes, the Orchestra chose not to fill that position. Surprise, surprise. Without a solid director of development, contributions continued their downward slide. Now, looking ahead to 2011-12, the Orchestra is planning to eliminate the executive director and the director of marketing positions! It’s unclear how the Orchestra expects to effectively manage itself during this crisis without a strong executive director. It’s equally unclear how the Orchestra expects to increase desperately needed ticket revenue without an effective marketing director.

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