From time to time I am asked for advice about managing a non-profit organization and the answers vary in length based on the nature of the question. Usually it is about money, as in how to get more. And the second most popular attempt at playing stump the expert is about how to improve the board of directors, with a not so subtle indication that the goal is to eliminate one or more difficult persons from their lofty perch of intransigence, interference, or insouciance. Take your pick. The damage done is roughly the same. And, yes, there is an egotistical “I” in each of those well-established roles, which sap the emotional strength of everyone else on the board and on the payroll.
Occasionally there is a much more expansive concern about management at which time I make a simple recommendation as the quickest way to address a lengthy issue: get a copy of Michael Kaiser’s book The Art of the Turnaround and then, at minimum, read the introduction and the first chapter. They offer the most concise and easy to understand advice on what plagues us all in non-profit management. You will find that the word Art in the title has a double meaning. His specialty has been managing performing arts venues, which in turn have helped shape his perception of the artistry involved in reviving the near death, out of mind and body experiences of some large and well known organizations here and abroad. What you will find, however, is that his advice is generally applicable to most of us regardless of the size or purpose of the organizations we lead. There is too little money to adequately fund our missions.
I did have the opportunity to make this recommendation recently, but it also prompted me to review his work myself as it has been awhile since I first discovered his well-written book published in 2008 by the New England University Press. Maybe I like Kaiser’s authoritative comments so much because it has a balance between new perspectives I had never considered and old ones that served as affirmation of what I was already doing. It is encouraging to have someone you respect tell you, even from the impersonal distance of a printed manuscript, that you are doing somethings right. It seems rare to get that kind of positive boost from the people you know and who know you only too well. The bonus feature of this re-read of The Art of the Turnaround is that it gave me a prop for launching into a new web log series by writing about my own experiences following his ten rules governing non-profit management. Thank you, Michael. But first there is that pertinacious issue of too little money which we must address as it shapes our efforts at attempting the art of the recovery in returning our respective organizations to sound fiscal health.
Kaiser’s introductory comments are a must read. This is a cautionary tale from me for if you are like me you likely skip over book introductions and their acknowledgement of editors, researchers and typesetters before getting down to the content, which caused you to acquire the book in the first place. Not so here. In this case the introduction sets the stage (pun intended for a book focused on performing arts entities) for the rules and case studies which follow. It states the dilemma we all face and the strategy or strategies we employ in hopes of finding a resolution to our problem. Key point: Capacity and productivity are fixed aspects of our programs, making earned income a fixed and insufficient resource as well. His example is that you cannot add seats to a theater or cut the number of actors for a performance of a Shakespeare play. One thing that will increase on an annual basis is the cost of production. This creates a significant gap between revenue and expense, which must be filled if we are to survive.
Kaiser identifies four ways in which we try to fill that gap. He also gives the weakness of each of these as his own cautionary tale for how there is no one simple solution.
We can increase ticket prices, but this has a negative impact with a price sensitive audience. Attendance actually declines, giving the false impression that there is no interest in our mission or our programming.
We can court donations, but this is a highly competitive, time consuming operation especially when pursuing major gifts; and major gifts are the principle type worth pursuing.
We can look to diversify our revenue streams, such as adding food or merchandise services, but few of us produce the type of products that will generate sufficient market interest for generating an appreciable excess of revenue over expense. The result is therefore negligible.
We can ultimately, and too often do, cut expenses and this usually takes place in what we consider to be the least essential aspects of our work – marketing and program initiatives. He notes that people will pay to see new and interesting programming, but they cannot attend our glorious creations if they do not know about them due to our reduced advertising budget. In the long run we merely cut our means of generating any revenue, which is the death knell of our organization. Layoffs occur, there are fewer operating dates, the board panics and the call goes out for someone like Michael Kaiser to step in and do his artistic best to turn things around. Hence he views his line of work as being indispensable – if you afford him.
Fortunately he has promulgated ten rules to follow in order to forge a resurgence in an entity’s financial health. And over the next ten weeks I will do my best to write about each one based on my own attempts at breathing new life into the organizations I have managed these past many years. This gives me a month and a half of content to follow in keeping faith with my goal of posting a new message each week. And if successful, it will be the first time in my blogging career that I have managed to produce fifty-two messages in a single calendar year. So once again I say thank you, Michael.