State of the Arts

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The doldrums of the economy have a number of local nonprofit arts groups re-examining how and why they go after private dollars. We speak with some notable practitioners and benefactors about the new era of philanthropy, marketing and alliances.    

Dan Brunner

, president of the Sacramento Theatre Company‘s board of trustees, is explaining the dilemma of creating a business model for a nonprofit arts organization.

We introduce seven new products a year&emdash;our plays&emdash;without having done any test marketing, he says over lunch at Lucca restaurant, a few blocks from STC. In the arts, and particularly in the theater, you only know how well you’re doing or have done in retrospect. You don’t know what the next batch of shows will be like and how the audience will respond. Then you have to factor in what the media judgments will be; a bad or even mixed review can hurt.

It also can affect contributions, which still comprise the major portion of most nonprofit arts groups’ budgets. STC’s annual budget, for example, is approximately $2 million. Forty percent of that comes from what is referred to as earned income (the box office), while 60 percent comes from contributed income (donations, grants and bequests).

Yes, art may be in the eye of the beholder. But the arts have always been in the hands of their benefactors.

Today, many of the Sacramento region’s nonprofit arts groups&emdash;frustrated by the one-two punch of government funding cutbacks and a now-you-see-it/now-you-don’t economy, which has reduced consumer spending and corporate giving&emdash;are rethinking their traditional approach to fundraising and funders.

Gone are the days, if they ever truly existed, when an organization’s eager development director could walk into a meeting with a company’s president and waltz out with a fat check, a contribution that reflected the tacit understanding that giving to the arts was simply a good thing to do.  

Back then, when they supported the arts or other nonprofit organizations, companies used to simply give. Now they’re saying, with depressing redundancy, that they give back, implying they’re essentially returning a favor&emdash;to the community or organization that either supported (or didn’t stand in the way of) their success. That’s not the same as being sincerely philanthropic, though the net result is still the only thing that matters. But it does mean that those who solicit contributions from those people and companies are coming to understand that for the donors, generosity is more often a marketing decision than an intrinsically motivated activity.

If there’s been a sea change in corporate giving, I think it’s that major contributors are demanding that their dollars be spent well, says Brunner, who became a full-time philanthropist when he retired, a little more than three years ago. He had co-founded and served as chief executive officer of a company called Affordable Heath Care Concepts, which had begun laying the groundwork for preferred provider organizations, or PPOs. The company eventually became the publicly traded First Health Corp.

There’s a feeling among some businesses&emdash;a kind of conventional wisdom&emdash;that not-for-profit organizations aren’t well run, he says. A CEO will say, ‘If I’m going to give money, I want to know that the organization is being run as an efficient business.’ And frankly, I think that’s a good thing.

I think the question for nonprofit arts organizations, Brunner says, should be the same question a good businessperson asks: ‘How do I maximize revenue, minimize expense and generate profits while preserving the integrity of the product?’

These days, Brunner&emdash;along with STC’s artistic director, Peggy Shannon, and eventually, it’s hoped, all of the major performing arts groups in town&emdash;is devoting a great deal of his time to the birthing of the California Academy of the Arts. The plan is to build a conservatory and theater complex at the landmark Railyards project in downtown Sacramento&emdash;and to do so, he says, will take a lot of fundraising.    

Wanted: Language Skills

Carol Van Bruggen

says that one of her goals is to help the arts community learn to speak the language of business, because that’s what companies need to hear when they’re considering the commitment of hundreds, thousands or even hundreds of thousands of dollars.

Van Bruggen, the chair of California Musical Theatre‘s volunteer board of directors, is a partner in the financial services firm of Foord, Van Bruggen, Ebersole & Pajak. She also is the CEO of ERC Systems, which creates regional database directories to allow performing and visual artists to market themselves. (The Sacramento Metropolitan Arts Commission is a client.)

Sitting on a second-story deck outside her Garden Highway riverfront home, Van Bruggen says the historic disconnect between the business and nonprofit worlds, while understandable, is foolish because each needs the other. The dilemma is that a lot of arts (volunteer) boards are made up of businesspeople and the arts people sometimes feel that businesspeople don’t understand how really tough it is out there. 

Personally, I think that matching up the arts and business communities, through loaned-executive and other types of programs, is beneficial to both sides. The arts groups learn what the private sector needs to hear&emdash;and businesspeople, particularly younger ones, learn about skills and disciplines they’d never learn otherwise.

Art can bring cultures together. When you ‘speak art,’ it becomes a common language.

Jockeying for Position

My feeling is that there’s a lot of bubbling&emdash;a lot of conversation&emdash;going on right now among arts groups and businesses, says Ann Lucas, executive director of the Nonprofit Resource Center, which offers consultants, training and almost innumerable materials to support area nonprofit organizations. Until she accepted her current job a little more than a year ago, Lucas had spent most of her career in Cleveland, where she trained executives in the management of nonprofit organizations&emdash;and, she says, learned a valuable lesson about giving. Cleveland’s a very established corporate market and its businesses have had a deeper commitment to giving than Sacramento has, principally because people made their money there in the last century, she says. We’re simply not as mature a market, which means we have a very unique opportunity here to shape the way we grow.

People are asking the important questions, like, ‘How do we want our
cultural philanthropy to look and feel as the region continues to grow over the next 20 years?’ The challenge is to continue on the path and not have everyone jockeying for position.

Interviewed just outside her office on the second floor of the downtown branch (and headquarters) of the Sacramento Public Library, Lucas says that arts groups and patrons in the Sacramento area need to recognize and celebrate how much activity is really going on here and not to beat ourselves up for not being San Francisco. In fact, I truly believe that Bay Area transplants&emdash;businesses and individuals that relocate here&emdash;comprise our future. They already understand the importance of a vital arts scene and they know it takes money to keep it vital.

Extracurricular Work

When you work for a nonprofit, your time isn’t your own, and I think that can sometimes cloud your judgment or make you feel a little self-righteous, says Charlie Weiss, director of development and marketing for the Sacramento Philharmonic Orchestra (and a former board member of same).

Weiss, a veteran of the nonprofit arena, knows whereof he speaks. A former disk jockey for rock radio, he did marketing for the Sacramento Theatre Company for more than two years, then signed on with Capital Public Radio from 1998 to 2005 as an underwriting specialist, the public broadcasting euphemism for advertising sales rep.

Weiss left public radio for commercial radio, spending two action-packed&emdash;and, he says, discouraging&emdash;years as the station manager of AM 1320, the local affiliate for Air America Radio, which defiantly billed itself as Sacramento’s Left Channel. Now that he’s back in the nonprofit realm, he’s grateful but chastened.

There’s a great deal of extracurricular work that goes into the job, he says during a lunch interview a few blocks from his Oak Park office. Everything from board meetings to events to concerts to other arts-group functions&emdash;just being in places where you can get in front of people. One reason visibility is so important for nonprofit arts people, Weiss says, is that in addition to a general mistrust or lack of understanding of the field, there’s often a stigma attached to a particular organization.

The Philharmonic’s a great example of this, he says. While it’s been in the black for a number of years, it has a rough road to trowel because it’s still associated in people’s minds with the Sacramento Symphony, which declared bankruptcy more than a decade ago. Weiss explains that the Philharmonic’s most successful promotional effort continues to be viral marketing: essentially, word-of-mouth advertising. Our subscribers are loyal and they talk about us, he says.

 

Valuing the Arts

One of Weiss’ former colleagues is Jane Hill, who, as executive director of the Philharmonic for nearly six years, helped guide it to solvency. She currently works as a consultant to the Humboldt Area Foundation’s North Coast Cultural Trust, for which she’s been allocating a substantial James Irvine Foundation grant&emdash;she won’t reveal the exact amount&emdash;to 32 artists.

Like Weiss, Hill’s paid her dues in the nonprofit arts field. Before accepting her post in Sacramento, she had devoted nine years to saving Nebraska’s Opera Omaha, Inc., which had a $1.5 million budget and a $615,000 deficit when she arrived. She helped the company retire its debt in five years and build its endowment from $675,000 to $3.2 million by the time she left.

The key to future funding of the arts has got to be based on people understanding the value of the arts, she says one recent afternoon during a quick turnaround visit to Sacramento. The arts contribute to a region’s economy, but that’s a message that we don’t always spread very effectively. There’s a core of people who love the arts and want the arts in their lives and in the lives of the next generation. I think their devotion is something that arts groups can build on, if they ask these very committed people to speak up: to attend city council meetings, go to the board of supervisors, go to the media, and point out how important the funding and the moral support can be.

On the other hand, Hill says, Artists and arts groups shouldn’t sit back and whine about what they don’t have. They have to get themselves to the table and be part of the discussion that affects their lives. 

Hill is particularly proud of the local alliance she helped create: Regional Arts Managers, or RAM, which saw the Sacramento Philharmonic, Sacramento Ballet, Sacramento Opera and, eventually, California Musical Theatre assisting each other on productions and even facility usage. In fact, in 2009, a new private-public partnership with the city will have those groups sharing new rehearsal and office space at The E. Claire Raley Studios for the Performing Arts, at the corner of 14th and H streets, adjacent to the H Street Theatre Complex that houses Sacra-mento Theatre Company and Music Circus’ Wells Fargo Pavilion. The Sacramento City Council committed $9 million to the project and extended a $5 million bridge loan. In June, local philanthropist Joyce Raley Teel donated $5 million to the complex, asking that it be named in honor of her arts-loving mother.

Hill is asked why the successful CMT&emdash;which, through its Broadway Sacramento and Music Circus productions comes closer than other groups to supporting itself through ticket sales alone&emdash;would throw in with the smaller groups.

Well, I think it’s pretty simple, she says. If you’re a great big rhinoceros, are you really going to be bothered by a chickadee landing on your butt? CMT has nothing to lose by helping other groups and everything to gain, by forging friendships and improving the arts scene for everyone.

Trodding the (Volunteer) Boards 

There should be no best-kept secrets among arts groups, says Peggy Shannon, artistic director of the Sacramento Theatre Company since 1998. We should all be sharing with each other our successes and our challenges. What has hurt all of us, and I include myself, is being territorial.

Shannon says she learned a valuable lesson about the connection between the arts and the private sector when she ran Seattle’s A Contemporary Theatre some years ago. Her board set a daunting goal for her: to raise $35 million to move the theater company from its older, Queen Anne neighborhood to downtown, so it could become an anchor for redevelopment. Soon, Nordstrom department store moved into the area.

In Seattle, there was a connection in businesspeople’s minds between economic development and the arts, she says. There weren’t a lot of corporate headquarters there at the time&emdash;Seattle was kind of sleepy&emdash;but we knew from studies that the city had more people who were readers, per capita, than any other city in America. That was something to build on: Smart people support the arts, in all of its forms. We went after them, not just for monetary support but to serve on our board of directors.

Shannon notes that some people get on boards for status, social opportunities or to network for their businesses. A number of people serve because their companies want their people engaged in the community at a grass-roots level, and that can be a real plus. But overall, I’ve found that the most effective board members are the ones who aren’t afraid to roll their sleeves up and do some serious work.

More Is Better

If Sacramento’s nonprofit arts scene has a professional cheerleader, it’s probably Rhyena Halpern, executive director of the Sacramento Metropolitan Arts Commission, currently celebrating its 30th anniversary as a city/county grant-making and consulting agency for the area’s artists and arts groups.

Quite frankly, I’m amazed at the level of cooperation in this town, she says. Small organizations are working together and allying themselves with larger organizations. There’s a new willingness to partner together, to share resources. She smiles and glances out the window of her Del Paso Boulevard conference room. It certainly wasn’t always like that, she adds. It wasn’t like this in the early 1990s, when schools were forced to eliminate art programs and local government was forced to cut back on its funding of arts projects. There was a lot of unhealthy competition. But somewhere along the line, arts people started to realize that the more arts groups and choices there were, the better it would be for everyone.

Halpern agrees with others interviewed for this article that there’s a measurable link between an area’s economic prosperity and a vital arts scene, and swiftly offers an example. Just look at the restaurant boom in downtown Sacramento, she says. When the galleries all hold receptions on Second Saturday, or on a play’s or concert’s opening night, you have to scramble to get a table.

Halpern has been in Sacramento for 10 years. She likes the growth she’s seen, both externally and internally. We’re really becoming a major metropolitan area, she says. There’s been a great influx of people from the Bay Area and the Silicon Valley, and they’ve supported the arts because doing so was part of their DNA.

I think it’s interesting that everyone made horrible predictions about how all of the arts would fold during the economic downslide after 9/11, she continues. But to the best of my knowledge, not a single arts organization in Sacramento went out of business because of that. A lot of groups learned how to ask for money the right way, by showing potential donors that both sides would benefit. They learned how to write better, more targeted grants applications.

And the best part is that along the way, Sacramento started shedding its inferiority complex about who we are as a city and an arts center. I have friends who come here every month for Second Saturday&emdash;because they love the art and they love the area. To me, that says something about our future.

Follow the Money: Earned Versus Unearned Income

For nonprofit performing-arts groups, fundraising efforts usually involve the same first step: explaining to potential contributors that even though organizations sell subscriptions and individual tickets to their performances, very few can survive solely on earned income (those sales).

One that does exist totally on ticket sales is the Sacramento Community Concert Association, which will produce five concerts this season. Dorothy Alden, who’s been the group’s executive director for the past 12 years (and was its volunteer president before that), says her annual budget is somewhere around $160,000, depending on the artists we bring in and how many concerts we have in a given season. Alden is swift to clarify, however, that her organization is almost entirely volunteer-staffed and has zero overhead.

At the other end of the spectrum, but still surprisingly self-supportive, is California Musical Theatre, which includes the summertime Music Circus series and fall-through-spring Broadway Sacramento productions. Richard Lewis&emdash;executive producer, president and chief executive officer of CMT&emdash;says that the organization’s gross revenues for the fiscal year that ended on June 30, 2007, amounted to $16,207,971. Of that total, 93.8 percent was earned income and 6.2 percent was unearned or contributed income (donations, grants and bequests). For the current year, Lewis says he’s budgeted $20,394,000, of which he expects 95.2 percent will be returned in ticket sales and 4.8 percent in contributed income. We have Jersey Boys this season&emdash;the musical about the singer Frankie Valli and his legendary pop group, The Four Seasons&emdash;and that’s huge for us, he says. Nonetheless, Lewis says that CMT all but breaks even because the shows they produce (the Music Circus) or simply present (Broadway Sacramento) are very expensive, and our goal is to always keep our [ticket] prices affordable.

Rod Gideons, executive director of the Sacramento Opera, reports that his group grossed $1,455,041 in sales for fiscal year 2006–2007; 64 percent of that was earned income, 36 percent contributed income.

Kerri Warner, executive director of The Sacramento Ballet, says her group’s annual budget is $2.5 million. For the season that ended this past June, 23 percent came in the form of contributions (It’s usually between 20 and 25 percent, she says) and 77 percent was earned income (Again, this varies annually.).

For the Sacramento Philharmonic, Charlie Weiss, the organization’s director of development and marketing, says, Our annual budget is $1.3 million. We pretty much are at the 60/40 level of most orchestras&emdash;40 percent earned and 60 percent contributed. In fact, our donor campaign is ‘Be Part of the 60% Solution.’&emdash;Ed Goldman

Some Disclosures and Digressions

There is, unquestionably, a bias in this story of the state of the arts: I love them and want them to thrive.

In the 31 years I’ve lived in Sacramento, I’ve been a consumer, supporter and, as a painter and writer, a beneficiary of the local arts and culture scene. I’ve also served as a member of several volunteer boards of directors, including the Sacramento Theatre Company (of which I’m the current vice president) and, more briefly (attributable to a family crisis), the Sacramento Philharmonic, Discovery Museum and Women Escaping A Violent Environment.

As part of the city of Sacramento’s Convention, Culture and Leisure department, the Sacramento Metropolitan Arts Commission was a marketing client of mine for a number of years. I’m also involved, as an unpaid volunteer, with the effort to create the California Academy of the Arts.

This story grew out of discussions I had with the editors and publishers of Sacramento magazine about a sea change I hoped I saw developing among the region’s arts groups: a new commitment to work with one another but also a recognition that companies increasingly viewed philanthropy as marketing decisions from which they were (in my mind) entitled to expect some sort of returns.

As Ann Lucas, executive director of the Nonprofit Resources Center told me, It’s important for all of us to keep in mind that companies and individuals don’t have to give their money to the arts or other good causes. After all, it’s their money. They made it; they can spend it as they wish.&emdash;Ed Goldman