Archive for June 17th, 2011

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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