Adapting in a Time of Constraints

Extraordinary Times Call for Extraordinary Funders

Janet Sarbaugh and Kerry Spindler

At the GIA conference in fall, 2002, we hosted a round table discussion with the euphemistic title "Adapting in a Time of Constraints." Essentially its burden was to ask: what should we, as funders, be doing for the cultural institutions with whom we work in the context of these extraordinarily difficult times?

A constellation of factors, including severe economic and financial constraints, public lack of understanding of or substantial involvement in the arts, and cutbacks in traditional sources of support such as state arts agencies and foundations, have combined to put an unprecedented level of pressure on nonprofit cultural institutions. These pressures have led us at The Heinz Endowments to ask ourselves how and whether we should reexamine some of our long-held grantmaking strategies. At our GIA discussion, our concerns seemed to be mirrored among many of our colleagues across the country. How and when should foundations respond? In what ways are we being effective or ineffective? How can we assist the artists and cultural groups we work with to craft creative solutions that will advance their work amidst changing circumstances?

As we pondered these questions, we have often returned to the ideas expressed in John Kreidler's l996 article "Leverage Lost," which now seem to have more resonance than ever. At that time, Kreidler posited:

"...Like participants in most large organizational systems, the citizens of the nonprofit arts world find it difficult to perceive changes, even massive developments, which occur gradually....An issue today is whether and how the model of the nonprofit arts organization, which has flourished for only a brief moment in the history of the arts, will continue to be a viable, versatile, and publicly useful instrument for artistic production.”

This question hits home with particular force for those of us who have devoted significant time and effort into designing and implementing general operating support programs that place an emphasis on planning and what we at the Endowments call “dynamic adaptability” — “the quality of self awareness and self discipline that allows an organization to respond rapidly to changes in its environment.” Although many of our arts organizations have in fact made strides in becoming more skilled planners and nimble course correctors, a number are continuing to experience real trouble, suggesting to us that perhaps the problems they face are not episodic, but systemic and structural. Perhaps, for some of them, planning to sustain their current structure is actually detrimental to their art form.

At our round table session, we described four general patterns that are being exhibited by some of our cultural organizations:

Severe Financial Crisis: A number of institutions are now confronted with financial troubles of such magnitude that significant time and energy are being diverted from core programs to devising short-term survival responses. Many were in marginal financial condition prior to the economic downturn, and are now on the verge of ceasing operations. Accumulated debt and/or lack of liquidity are threatening the existence of a number of these organizations.

Revisioning: A culmination of ongoing financial difficulties and organizational stresses have compelled some organizations to reassess the entire institution and to conduct a radical revisioning process that could result in a new mission, vision, structure, and leadership. Groups pursuing this course of action have turned to experts in their discipline from outside our area to bring fresh perspectives to the discussion.

Revitalized Planning and Prioritization: Some organizations that are accustomed to planning and course correcting within some sort of strategic decision-making framework are analyzing and reprioritizing the objectives and strategies outlined in their strategic plans. Mission and artistic vision continue to serve as lynchpins, but the mix of activities and allocation of resources is changing in these institutions. Some major institutions have chosen to eliminate or significantly downsize entire program components, or decrease the size of artistic staff.

Holding Out for the Traditional “Silver Bullet:” Some organizations are continuing to bet on the status quo, and appear to be planning for large capital or endowment campaigns. Driving these strategies seems to be the belief that capital expansion will fuel audience and revenue growth, or that endowment funding will provide an increased level of financial security and continue to shield the organization from environmental changes.

We believe that it is likely that some of these strategies will work to good effect. But we are also concerned that organizations unable to think differently may not survive. How can we help them think differently? How can we help our cultural sector recognize systemic change and adapt more effectively? At the GIA session, we posed these questions as a group:

• What are our roles and responsibilities as funders in aiding organizations through difficult financial periods? When is it appropriate to let market forces prevail, with the understanding that some institutions may subsequently fold? When do we step in to “save” an institution?

• Is the 501(c)(3) organization the best model for everyone, all the time? Should we help the field to design and test new organizational models that might be more adaptable to environmental shifts? If so, what might these models look like?

• Are our current capacity-building and technical assistance efforts adequate given ongoing weaknesses and apparent lack of fiscal understanding on behalf of many non-profit arts boards?

• How do we encourage planning in service of more flexible organizations?

In the abbreviated time of our roundtable, we did no more than raise these questions and describe our environment. But there appeared to be a genuine appetite among the group to discuss these topics further, and to share case studies about promising approaches. In particular, the group expressed an interest in more sharing of information among GIA members about new organizational models and new forms of technical assistance. In tandem with GIA's board and staff, we will look at possible ways to continue exploring these ideas as a special thread of work, through ongoing data gathering, conference sessions, and other mechanisms.

Both at the Heinz Endowments, Janet Sarbaugh is director, Arts and Culture Programs, and Kerry Spindler is program associate.