For-profit Experience and Foundation Leadership

Kathleen Cerveny

Is a trend developing that favors drawing foundation leaders from the for-profit sector rather than from philanthropy or the nonprofit sector? If so, does it change senior grantmaking staff's challenges and opportunities? Would a more corporate view of private philanthropy affect how foundations view the arts?

The session drew a remarkably wide range of funders from community, public, private, and corporate foundations as well as from giving programs affiliated with foundations. The interests that led this diverse group to the session were varied as well. Rather than focusing the session narrowly on the suggested topic of corporate executives leading foundations, the discussion centered more on the trend of corporate executives moving into leadership positions in nonprofit arts organizations. Following is a bare-bones summary of comments and observations from session participants, gathered loosely into rough topic groupings.

Corporate leaders chosen to manage foundations

  • After successful careers in the for-profit sector, corporate leaders seem to be migrating into nonprofits, seeking more meaningful work.
  • Retirees are younger than ever, and many have a giving ethic that they want to implement by running a foundation or nonprofit.
  • Foundation leaders with business backgrounds blend their philosophy of doing good with a focus on economic development. The result is an investment model whose impact on the community seeks to be more visible and measurable.

Ramifications for the arts

  • Foundations led by former corporate executives seem to focus their funding more on major arts institutions. Is this focus a factor of scale that the majors bring vs. that of smaller organizations?
  • Is the "values disconnect" regarding the arts a myth or a reality?
  • If a foundation executive and board members are not already committed to the arts, it is hard to make a case for the arts for their own sake. Smaller arts groups that take more risks often are left out of the conversation.
  • Foundation leaders from the corporate sector may make the philosophical shift from funding arts that enrich society to arts that have social impact.
  • Corporate leadership, both executives and board members, say they want to take risks with their grants, but none want to make grants for projects that may fail. Talking the talk of risk is not followed by the walk, evidence being the increased requirement of this that grantees must demonstrate success and that they are often given with too little time for realistic progress.
  • Applying measurements of success to the arts is a concern. Some participants suggested that, as professionals, we should be able to define and measure such things as "joy." Others disagreed, saying that art's intrinsic value and its contributions cannot and should not be measured.
  • Some foundations show interest in funding new ideas in the arts, but put less interest in sustaining existing programs and organizations.

Corporate executives leading arts organizations

  • These leaders bring an expanded world view to arts organizations that can push the organization in new directions. On the negative side, this could lead arts groups to drift away from their mission. On the positive side, this could lead to greater community relevance and growing accountability. In all cases it means challenges for staff.
  • When looking outside the field for a new CEO, it's the board's responsibility to identify candidates who know something about the arts or at least are patrons. Horror stories exist about new leaders who are "strictly business" and never attend performances, for example, of the arts organization they are leading.

Capacity-building for current arts leaders in an increasingly business-oriented environment.

  • There is a language disconnect. We need to solidify the concept of arts as a vibrant "sector" of society—a contributing “industry.”
  • Arts leaders need to prepare for the shift from the historic “charitable” model to the investment model of grantmaking.
  • Some arts leaders and some disciplines are responding to technology shifts more readily than others. Theater seems to be the slowest to respond.
  • Capacity-building should focus on younger arts leaders. Older leaders—and many founders—have too large a knowledge gap to fill.
  • Should foundations have an intervention strategy for out-of-step arts groups?
  • Other trends: Younger arts leaders are leaving the field to go into the corporate sector; there is a shift away from the historic willingness of artist-managers to discount their labor; and younger university-educated arts managers desire a decent living.
  • Artists have historically cobbled together a life, moving fluidly between the for-profit and nonprofit sectors. Once seen as a negative syndrome, this now is emerging as an entrepreneurial model—the artist with a varied portfolio of skills.
  • We need more models for the arts than just the 501(c)(3). Irvine has a study of a for-profit hybrid.