California ArtsMarket Research Project

March 2000, 29 pages, executive summary; 126 pages, narrative report. ArtsMarket. Copies are available from Walter and Elise Haas Fund, One Lombard Street, Suite 305, San Francisco, California 94111, (415) 398-4474.

ArtsMarket was challenged by the Walter and Elise Haas Fund, the William and Flora Hewlett Foundation, and the James Irvine Foundation to discover whether grant awards for marketing to new arts audiences had resulted in systemic change. ArtsMarket studied San Francisco, Los Angeles, San Diego, and San Jose, where one foundation alone had awarded 139 grants for marketing over a ten-year period.

Unfortunately, baseline geodemographics for multiple years were not available for many of the grant recipients. Thus, ArtsMarket studied geodemographics of databases from thirty-six representative organizations for ticket and subscriber patterns from the 1996 through 1999 seasons. Interviews with 122 individuals, extensive case studies of forty-three organizations, and written surveys from 267 organizations supplied the remaining data.

The report clearly states that half of the organizations studied had developed long-term relationships with new audiences as a result of systemic changes, changes that included marketing initiatives among their core strategies.

The report defines organizations by how they anticipate and manage change and places organizations in four categories. The "Market-Responsive Organizations," which by the criteria used by ArtsMarket some of us might call the learning organizations, anticipated and managed systemic change the most effectively. Success was marked by a holistic approach championed by top leadership: internal systems changes, organizational capacity building, and targeted marketing initiatives. Learning organizations that used marketing in its broader context, and as only one major piece of retooling the organization, fared particularly well. Universally, the successful organizations also enhanced their artistic product, (rather than watered it down, as many had feared) and generally stabilized their financial picture. Many of these organizations also maximized their education and outreach programs, and moved these community service programs to a core position in their planning, staffing, and funding. The organizations that faced perhaps the greatest struggle had used major shifts in programming to target new ethnicities, and now are continually challenged by a limited repertoire or a lack of audience-specific touring groups to maintain their new relationships.

Some organizations launch significant change in a healthy and systemic way, and can be readily identified by funders through traditional grantmaking processes. However, what is once again confirmed is that much of the most profound change takes place in response to profound crises — changes in leadership, external environmental changes, loss of a major source of funding, new direct competition, or a slow downward-spiraling crisis that finally breached. To identify the organizations most likely to emerge from chaos as reinvented entities and to feed these potentially healthy systems in the height of crisis remains a challenge for grantmakers.

Undercapitalization in the nonprofit arts was a running theme throughout the report. Marketing is just one area where arts organizations' constantly lean finances reveal themselves. The report studies the most competitive markets in California, and yet marketing budgets average just 12.5 to 17 percent of budgets. Virtually all of the arts organizations also are severely undercapitalized in the technology they need to track and relate to new audiences. Antiquated hardware, out-of-date software, understaffed departments, and inadequate database systems are the norm rather than the exception. ArtsMarket cites another significant study, which specifically finds that nonprofit arts groups are more deficient in technology than all other nonprofit sectors. Considering how increasingly dependent arts organizations are on their capacity to communicate and target audiences as well as donors, database deficiency is a significant flaw that cries for financial investment.

Organizations that used marketing dollars for single-issue sales or “one-shot” advertising campaigns which were not set in a context for any other change, did not move forward. Other studies confirm similar findings (i.e. Marketing the Arts, documenting Knight Foundation work in North Carolina).

Lacking the solid baseline data that might have more conclusively “nailed” the indicators for “Market-Responsive Organizations,” “informed guesswork” provides a compelling narrative. Funders should be anxiously awaiting the “next” report, when cities launching multi-pronged strategies for change across multiple organizations can also provide both pre- and post- geodemographics of the funded partners, our own Grand Rapids “Consortium for Change” and North Carolina's theater initiatives among them.

Reviewed by Tami Ramaker, Arts Council of Greater Grand Rapids