Since mid-September of 2008, when the financial crisis became widely apparent, I have asked arts leaders how deep they think it will be and how long it will take for endowment asset values – and those of our donors – to return to last year’s levels. Much like the volatility of the stock market, I hear conflicting answers from many seasoned board and staff leaders. While no one knows for sure, in my view, the majority of economic pundits are probably correct in saying that the recession will be longer and deeper than anything since 1973-1974 (which very few of today’s arts leaders experienced professionally).

This economic downturn is also having an impact on some of the underlying principles that guide the way arts groups will operate in the future.

The rapid demise of some of our most venerable commercial institutions is a signal to our societal psyche that institutional history and a sterling reputation do not guarantee survival. With the fall of big companies like AIG, Merrill Lynch and Lehman Brothers, the message for arts groups is that longevity and high artistic standards alone are not enough to ensure sustainability. For arts leaders and funders, the challenge will be recognizing that constant uncertainty and an accelerating pace of change requires shifting our mindset from developing long-term strategic plans to creating a culture of short-term “constant planning.”

Although I have no definitive answers for navigating these uncharted waters, I urge arts leaders to reach internal consensus on disciplined answers to some provocative questions – in light of present circumstances, not past experiences:

Mission:

• Does our mission still serve our needs and those of our community of supporters?
• What systems do we have in place to understand the relevance of our mission to the community, and how it might be changing?
• Are there other nonprofits in our community whose missions overlap ours (in whole or in part), with whom we can explore an alliance? How do we define and measure success in achieving our mission?

Programs:

• Do all of our programs really serve our mission? Are we disciplined in using “artistic quality” and “community relevance” as rationales for supporting only those programs that generate measurable progress towards our mission?
• Which of our current programs are so valuable that, if we were not doing them now, we would add them even in these challenging times? Are we prepared to eliminate those that do not meet this test?
• Which new programs are so innovative and compelling that we will add them, whether or not we have incremental funding? Are we prepared to reallocate resources from existing programs or fixed costs, to invest in these new programs?
• Are there ways to decrease the program planning timeline, so that the scope of programs can be adjusted to meet actual resources?

Customers:

• What can we do to attract and retain audiences whose personal finances may also be stretched?
• How can we “hard-wire” an audience feedback mechanism into our operations to ensure that we are always being responsive to our customers?
• How can we maintain our institutional presence in the marketplace with limited marketing resources? Are there opportunities for marketing collaborations with other arts groups or better trade deals with media outlets? 

Finances:

• Are there ways to reduce fixed costs, or turn fixed costs into variable costs, without compromising the mission?
• Are we operating as efficiently as we can? Can we share administrative functions with other nonprofits?
• Can we increase our working capital, or build a contingency into our operating budget, in anticipation of unpredictable budget variances?
• Do our performance measurement systems enable us to adjust plans rapidly as needed?

I have confidence in the inherent value of arts and culture to make our lives better, especially in times of great stress. But, this is not a sufficient value proposition, on its own, to get through these challenging times. I do not mean to suggest that arts leaders should make wholesale changes indiscriminately. What is needed is a disciplined, ongoing process of evaluating goals, strategies, programs and financial plans in light of these uncertain and constantly changing times. There must also be recognition that staying the course, or retrenching to core programs, will not be enough to weather a long recession. Visionary leaders will also use the challenges as an opportunity to pursue creative, strategic alternatives and to invest in innovative solutions wherever possible. more...

This article is one in a series outlining strategies for dealing with the current economic environment and its ongoing impact upon arts professions. These articles are published as a newsletter, Sounding Board, from WolfBrown Consulting - a company working to help funders, nonprofit institutions and public agencies understand their potential, set priorities and fulfill their promise.