STRICKLY SPEAKING
Hypocrites executive director and PerformInk contributor Kelli Strickland’s musings on performing arts management.

Anyone running a storefront theater company knows that funding for capacity building reigns supreme. Contributed revenue to make plays is much more competitive and difficult to come by, especially for storefronts. Certainly, all of the contributed dollars from your annual campaign can go to making your art. But I’m referring to those larger gifts. And not just from foundations. Savvy individual donors are keen to inquire about capacity building initiatives – especially those who are contemplating major gifts. Larger institutions will always receive the big injections of programmatic cash because the argument is that they have the capacity to run those giant, exciting artistic and arts education programs. I’ve had more than one board member enter into discussions about a major gift with the desire to see ‘increased capacity’ or sometimes ‘exponential impact.’  Those are not the same thing, but the implication is always that we should be doing something more, and we need to demonstrate how it is that we are doing more. I would like to argue that, perhaps, one version of success is that we are doing less.

Capacity building is good. When successful, it means that we run more efficiently, and we build sustainable practices. But often that is not how it feels. It can feel as if we are being introduced to a lot of best practices that we don’t have the resources (human and financial) necessary to execute effectively. Or we are executing them as consistently and effectively as we have the means to, but it’s not enough to move the needle, so to speak. We get discouraged. And we’re already stretched, so it’s easy to reach the conclusion that these efforts don’t work for us and to abandon them.

Perhaps talking about what capacity building means might help us determine how we use these gifts.  In conversation with others, I’m getting the impression that many think any capacity building initiative needs to lead to increased earned or contributed revenue. And sure, what company doesn’t want to increase both of those things? But capacity building does not necessarily mean either of those revenue sources increase – certainly not within the cycle of a grant or gift on which we must report. And there’s the trap. It takes time for newly implemented marketing and fundraising strategies to show up in our revenue streams. A fundraising strategy is especially difficult to place on a timeline. But restricted gifts for capacity building are almost always one-time gifts. At the end of the year, we may not have seen significant revenue growth.

Restricted gifts for capacity building are almost always one-time gifts. At the end of the year, we may not have seen significant revenue growth.

As part of having accepted the gift for a capacity building initiative, we needed to have identified measurable outcomes for that initiative. And the go-to outcome that we use in these proposals is a stated percentage of increase in revenue or our operating budgets. But capacity building is about more than the size of our budgets. The concepts of efficiency and sustainability are by definition part of capacity building. Might a meaningful measurable outcome of capacity building be a reduction in the number of hours required to complete a particular function in our organization? If we are running our organizations by working 55 hours/week instead of 60 hours/week, we are obviously more efficient and by creating a larger buffer between us and burn-out – more sustainable.   

I think an invaluable way to use a one-time capacity building gift is an executable, concise (for most of us 5 – 8 pages is probably plenty), limited plan. Strategic Plan, Fundraising Plan, it doesn’t matter. A plan. But the current method by which this is supported is not working. I have either participated in or observed a capacity building program led by a consultant or a team of consultants that presents a 100+ page document that in summary states, ‘Increase Contributed Revenue,’ ‘Increase Earned Revenue’ and ‘Focus on Board Development.’ Thanks, I had no idea.  

Often those three recommendations are supported by examples of how many other companies do these things. We all have lots and lots of ideas as to how we could improve our marketing, fundraising, and financial management. The struggle is how to get them done. How to continue to prioritize those initiatives. How to retain the patience to continue the work, even when we don’t feel like we see the results fast enough. How to communicate to those with many ideas that hearing more and more ideas can feel the opposite of helpful. It can seem like an indictment that we aren’t doing enough. I’m a big proponent of ‘Thank you for this list of 100 things that are helpful. I will do these two. And I’m going to do them for two years to see how they work. Let’s talk about the other 98 things on this list in 18 – 24 months.’

The truth is I love strategic planning. I love talking about capacity building initiatives. I love talking about board development. What I don’t love is that our environment right now is placing a premium on growth as if it is synonymous with capacity building. Sometimes I wish the categories for theaters weren’t always ‘Small,’ ‘Mid-sized’ and ‘Large,’ as a reflection of our budget size, but rather ‘Right-sized,’ ‘Growing’ and ‘Institutions.’  The implication is always that if you are ‘Small,’ you want to be bigger. And if you want to be bigger you need to start operating as if you are administratively ‘Mid-sized’ or ‘Large.’

Sometimes I wish the categories for theaters weren’t always ‘Small,’ ‘Mid-sized’ and ‘Large,’ as a reflection of our budget size, but rather ‘Right-sized,’ ‘Growing’ and ‘Institutions.’  The implication is always that if you are ‘Small,’ you want to be bigger.

Yes, yes. If you’re not growing, you’re dying. How about if you’re not evolving, you’re dying?

I took a very informal, unscientific poll of about 25 storefront theaters, all companies that have been around for at least 10’ish years. I asked their leadership to anonymously answer whether they intended to grow their budgets in the next three years and if so, by how much. 95% responded, ‘Yes,’ they intended to grow their budget. The average percentage by which they intended to grow their budgets was 27%. No one answered less than 20%. 60% of those companies intended to grow their budget by another 10% – 33% in the following two years. All told, nearly all of these storefront companies that responded planned to grow their budgets at least 25% and most by close to 40% in the next five years.

If I asked a small business loan officer at a bank to poll their portfolio of say, corner dry cleaners, about their intended growth in the next five years, that loan officer would think something was wonky if every single one of them said that they had a business plan that would increase revenue by 1/3 over the next three years. That loan officer would say, ‘What don’t I know that is about to revolutionize the dry cleaning world?’

But this is the consistent message that we are getting.  That this amount of growth (despite any demonstrated history) is the way we should all be thinking. Don’t get me wrong – I know that when you are small, all you want are more financial resources. I don’t believe that a company’s desire to have increased revenue is the problem. The problem is the expectation that we are creating for ourselves and our stakeholders. The belief that if we are not growing at these aggressive rates we are unsuccessfully implementing or executing these capacity building initiatives.

Two weeks ago when I wrote the Next Up title, I included the appendage ‘How big are we supposed to be?’ I thought this post would touch on that, but when I started writing my thoughts on that topic, I hit a wall.  Not for lack of thought that I’ve given to the subject, but because it requires us as a community and inside our companies to answer very hard questions. I will write about it.  But not this time.

A friend suggested that my Next Up title was akin to Rocky and Bullwinkle’s ‘Tune In Next Time’ teaser.  In that spirit: Next Up – The Big Blast or A Many Splintered Thing: Demonstrating Impact